February 2011

As detailed here yesterday, the futures need to pop above a 30.885 peak recorded on January 3 to refresh the bull trend on the lesser charts.  It's currently 2:00 a.m. EST and the March contract has been easing lower for the last nine hours.  The pullback has decisively exceeded a midpoint support at 30.140, implying more downside to its 'd' sibling, 29.930. Night owls can try bottom-fishing this Hidden Pivot with at 29.935 bid, stop 29.920. If the turn comes before the target is reached, the rally would become weakly impulsive on the two-minute chart with a print at 30.125.  _______ UPDATE (10:49 a.m. EST): The target evinced no support whatsover, so anyone bottom-fishing as advised would have lost at least $75 on the trade.  The eventual turn came from 29.635, a number for which I can find no technical rationale.

A 96.88 rally target that I first proffered a while ago is still valid, even if we've grown tired of waiting for it to play out.  In the meantime, we shouldn't overlook the very compelling trendline shown in the chart. It puts support today at around 85.77 on a slope that is rising a rate of about 0.075 points per day.

Without really knowing why, the futures went all funny as The 'Nank's testimony dribbled out onto the Web yesterday. As soon as the Street's trading algorithms recover their composure today,  look for the rally to continue to at least 1330.00; or if any higher, to 1335.25.  Both targets were given here earlier.  They are subordinate to a more important one at 1356.00 that (according to my friend Doug) apparently "everyone" has been expecting.  We'll want to get short up there, of course, but we'll do it with camouflage, not by standing in front of The Little Engine That Could.

Bulls sashayed up to the threshold of Tuesday's high yesterday but had to pull back for a running start to clear it.  This strongly suggests that the Bonds are not fixing to make a meaningful turn here on the basis of some vague notion that QE3 was ruled out by Heli-Ben's testimony before Congress. More likely is that the March contract will continue lower, to the megabearish 112^28 target given here earlier (see chart), and that long-term rates will climb well above 5% in the process. In the meantime, don't be surprised to see feints, head-fakes, foot-fakes and all manner of hysteria in the vicinity of 117^18, the midpoint pivot associated with the target.

Silver looked to be correcting early Thursday morning to a Hidden Pivot below $30, and so, for night owls,  I've detailed instructions for bottom-fishing.

A by now well-advertised Hidden Pivot ar 1379.80 is still my minimum upside projection for the short term, but if it gives way easily we could be looking at 1393.80 shortly thereafter.  The price coordinates that yield the latter target are shown in the accompanying, hourly chart.

A nifty trick you can perform with the Hidden Pivot Method is predicting long periods of tedium based on the presence of “dueling impulse legs.” We found them in copious supply in the chart of the Dollar Index, but also, correspondingly, in the euro’s intraday and daily charts. The markets were flatlining on this day, but we tried nonetheless to force a bullish trade in the E-Mini S&P. Alas, it continued lower without tripping a “camouflage” entry signal. We also discovered a possible breakdown shaping up in Crude, with a similar pattern already developing in Copper.

Someone in the chat room mentioned seeing something unusual in the daily chart, but I can find nothing of interest myself.  Although I am hard-pressed to come up with reasons why the dollar should remain more or less stable for an indefinite period, 'dueling impulse legs' on the daily, weekly and monthly charts suggest that the picture could remain boring for weeks or even months.  While a breakdown below 70 seems unlikely any time soon, it would take an upthrust exceeding 92.63 to end the bear market begun nine years ago.

Shortly before 3 a.m. EST, the futures had recouped about half of the shallow pullback that followed Tuesday's sharp upthrust. They seemed a little timid, but in any event, a push today exceeding a 30.885 peak recorded on January 3 is needed to revitalize buyers for a challenge of a more important peak at 31.275. Once above it, the March contract would have clear sailing to 32.520, a Hidden Pivot that comes from the daily chart (where A=25.050 on November 16).