Friday, March 25, 2011

The dollar is having too much trouble sustaining altitude to suggest that a big bull move lies ahead.  We first diagnosed incipient weakness during Wednesday's tutorial session, but yesterday's oh-so-tricky feint higher on the opening adds to the evidence of distribution. We won't give DXY last rites, at least not yet,  but it'll need to pop to at least 76.67 over the next couple of days to avoid succumbing to gravity. Most immediately, though, yesterday's weakness points toward 75.35, (60m, A=75.89, B=75.46) predicated on the failure of a 75.65 midpoint support.

By popular request, and for the benefit of newer subscribers who missed our earlier ride in this stock, I'm going to try and get us aboard again with as little risk as possible.  This implies doing what we've just done in Newmont -- i.e., buying shares at a swing-low target, taking partial profits to reduce our cost basis, and then letting what remains of the position ride.  Let's get started by bidding 42.23 for 400 shares., stop 42.07.  Our bid is derived from the pattern shown, and it assumes that yesterday's weakness will go on to crush the midpoint support.

With index futures up slightly and bullion down slightly early Thursday night, there was little action on which to speculate. DaBoyz appeared to have shorts on the ropes in the Mini-Indexes, but the spike was so fleeting that perhaps bears are all-squeezed-out for the time being.  If not, I've provided a somewhat alarming target in the E-Mini S&P that is commensurate with a Dow rally of about 200 points.

Some subscribers evidently tried to hang onto shorts from 1304.75, but, much as we have come to expect, the little sonofabitch simply wouldn't go down. It did pull back some, though, allowing partial-profit taking that by now should be automatic any time we are short the broad averages and even slightly ahead of the game.  As of around 8:15 p.m. EDT, the rally had become a full-blown short-squeeze, spiking to as high as 1314.00 on one particularly vicious bar. That is an exact Hidden Pivot on the hourly chart (A=1261.50, B=1296.50), so it could mark a short-term top.  If there's another thrust, though, look for 1317.75, or perhaps even 1334.25 if the lower resistance fails.

The bullish pattern that had us trained on a 38.605 rally target was sufficiently compelling that we should view yesterday's failure to reach it, albeit by just 42 cents, as a potentially bearish development.  However, although the subsequent selloff from the 38.180 high was impulsive on the lesser charts, the downtrend failed to reach its target as well -- by eight cents.  This "duel" could be settled today, but the first clue bulls are winning would be an impulsive bounce from around 37.060, the midpoint support shown in the chart.

Yesterday's shakedown quickly changed the mood in the chat room from exultation to...could it have been despondence? It's too early for that, really, since, as you can see in the chart, the so-far wholly gratuitous feint has not passed even a single "external" low.  Granted, the move was bearishly impulsive on the 30-minute chart, and that warrants our attention.  And so does the fact that yesterday's highs slightly exceeded an important midpoint resistance without engendering a close above it.  But the April contract would have to fall another $19 (see inseet) to negate the bullish implications of yesterday's impulsive stab above the previous record high, 1445.70.

[With debt metastasizing out-of-control and the States threatening rebellion against Washington, we asked some frequent contributors to the Rick’s Picks forum how they thought the nation would look five years from now, economically speaking.  In the essay below, Ross Moyer predicts that America’s growing energy needs will force the exploitation of heretofore off-limits local regions such as the energy-rich Bakken Formation, which includes large swaths of North Dakota and Montana. He also expects physical gold to increasingly become the world’s standard of value relative to fiat money, even if a gold standard itself has not taken root. RA] If, by some strange quirk of fate, some of us have forgotten the following fact of life, we have, of late, been only too well reminded that a great many things in the realm of human affairs can change drastically in a very short period of time. Sometimes immense transformations are wrought by acts of God, as in the horrific earthquake and tsunami in Japan; but, more often than not, it is our own collective actions that leave us absolutely stunned at how radically altered, literally and figuratively, mankind's circumstances can become in what seems like no time at all. With this less than cheery idea firmly in mind, I was asked by Rick to compose a piece on my vision of what the economic landscape will look like some five years hence. While I was honored to be asked, I have to admit that I've found the task daunting. The truth is, I have just a few firm convictions about what will constitute our collective financial and economic condition in the U.S., let alone globally, come the year 2016. Still, I do have a few ideas, so, for good or ill, here is some grist for the mill.  The events of