Wednesday, March 2, 2011

Gold and Silver futures were both in shallow pullbacks Tuesday night that could yield low-risk buyng opportunities for night owls.  Trading details, including charts, are contained in Wednesday's touts.

May Silver was in a shallow correction early Wednesday morning that suggested possible opportunity for night owls.  Try very tightly-stopped bottom-fishing at 34.405, or at 34.225 if it fails.  Both of these Hidden Pivots are shown in the accompanying chart.  The larger charts yield targets, most immediately, at 35.74 and 36.350. Their respective Hidden Pivot midpoints -- potentially useful for camouflage entires on pullbacks -- lie at 33.725 and 34.030.

Yesterday's heroic leap cleared three major peaks going back to early November, implying bulls are likely to dominate for the foreseeable future. More immediately, they have pulled back sufficiently -- to the tick, 1428.20 -- to be  considered recharged for another thrust to as high as 1458.60.  The pattern is shown in the chart, but we should allow for a larger correction of the bigger pattern also shown. As of around 1 a.m. EST, the futures were in a minor abc correction projecting to as low as 1426.00, but with reversal potential from its sibling midpoint, 1428.70.  Both of these Hidden Pivots can be bottom-fished with tight stops provided the point 'C' of the pattern, 1431.40, has not been exceeded to the upside.  The pattern can be found on the  15-minute chart, where A=1433.60 at 7:45 p.m.  _______ UPDATE (9:39 a.m. EST):  The overnight low was 1428.20, so it would have been very easy to catch a ride as suggested above.  For your guidance I'll assume four contracts were bought and that two were exited at 1433.00, midway into the move. That leaves two contracts whose cost basis is 1423.40.  We'll shoot for a minimum 1441.70 on one, using a fixed stop on both contracts for now at 1432.60. _______ FURTHER UPDATE (1:24 p.m.):  Today's modest rally topped at 1441.00, suggesting that bulls can move Gold higher even when they are just marking time. We'll assume a third contract was exited at 1440.00 on a trailing stop, effectively lowering our cost basis for the contract that remains to 1406.80. Use a stop-loss tied to the creation of a true bearish impulse leg on the 15-minute chart. As of 1:29 p.m, that would imply a print down at 1434.60.

Having handily exceeded a 100.17 target, the futures should be presumed bound for the next, 107.01; and thence, 110.90. Whether you use these Hidden Pivots to manage the risk of being long or getting short, keep in mind that even the most delicately precise price patterns in this vehicle require about 21 cents of leeway for targeting.  There are other bullish targets besides the ones given above, so you might say that all paths lead higher. _______ UPDATE (9:39 a.m. EST):  I have mentioned many times that oil trades require targeting leeway of at least 21 cents, even when the price patterns seem very precise and compelling. Since crude has topped this morning within six cents of the 107.01 rally target I'd provided, and then plummeted by $2.01, I am establishing a two-contract tracking position for you further guidance.  If you haven't done so already, take a partial profit on one contract now, with the futures trading around 104.93.  We'll carry the other with a bost basis adjusted upward to 108.80. Ties it for now to a 105.97 stop-loss, o-c-o with an order to cover at 105.05.

The bearish pattern begun from last Friday's peak projects to at least 11921, a Hidden Pivot that you can bottom-fish with an 11923 bid and a five-tick stop-loss.  I've used a distinctive one-off point 'A' to calculate this target (shown in the accompanying chart). If the support is easily breached, that would shorten the odds that we are seeing more than a garden variety pullback. _______ UPDATE (4:52 p.m.):  Today's flaccid rally did nothing to alter either the outlook or our plan. Look for more downside to 11921 over the near term.

We hold a single February 57 put which owing to earlier profit-taking can do no worse than make us $12.  In fact, our paper gain is currently $124 with the put valued at 1.12.  We'll continue to hold this position, oblivious to the ups and downs of the QQQs, since we've earned the right to think we may finally have precisely caught the Mother of All Bear Rally Tops.  If you are a new subscriber who took this trade for cheap thrills, offer the put for $350 -- the price of a year's subscription -- good till canceled. From a technical standpoint Da Cubes look southbound to a minimum 56.63.  That's a Hidden Pivot midpoint, and if it's breached on a closing basis more weakness over the near term to as low as 55.21 would be implied.

Yesterday’s newsworthy satisfactions were marred only by the passage of a spending bill that unfortunately will allow the U.S. Government to avoid shutting down.  Putting aside this disappointment, which was not unexpected, all seemed right with the world: stocks got bitch-slapped for a change, bullion prices screamed, Charlie Sheen and Col. Qadaffy appeared headed for well-deserved oblivion (Sheen could conceivably fare better than his Libyan counterpart, since there will be no Kadhafi reruns), and winter temperatures here in Boulder, Colorado, hovered near the mid-60s. What more could one have asked?  Actually, our perfect day would have doubled or even tripled the Dow’s 168-point decline, since every significant selloff helps bring America closer to the day when investors and the world-at-large forsake the matrix of lies, delusions and hubris that have made true economic recovery all but impossible.  Alas, the spinmeisters and news media, if not the rest of us, continue to cling to the Bernanke narrative that the economy is returning to health, albeit very slowly. That’s despite deflation in the real estate sector so severe and prolonged that even optimists no longer regard it as cyclical; soaring food and energy prices; and budget crises at all levels of government that will ultimately push unemployment to heights not seen since the 1930s. Under the circumstances, you can hardly blame us for betting against every stock-market rally. We’ve been doing this reflexively for months: getting short at each minor Hidden Pivot rally target in expectations that one of them will prove to be The Top – the whimpering end of the Granddaddy of All Short Squeezes launched almost exactly two years ago.  Locking in Gains  Our strategy has benefited from consistent (although not necessarily repeatable) success at predicting tradable tops, even if none has proved particularly enduring. A week ago, for instance, Rick’s Picks