Monday, March 28, 2011

From Asian Times online, here's an excerpt from a superb analysis of the Middle East by Spengler:  "What might emerge from the Arab world two or three generations from now is beyond anyone's capacity to foresee. As individuals, Arabs are as talented and productive as anyone on earth. For the time being they are caught in the maelstrom of a failing culture."  Click here for the complete essay.

Buyers have receded in the face of withering supply from the BOJ, the Fed & Friends.  Let's see how fearsome these bullies look when they encounter Hidden Pivot support not far below. The first, a midpoint, lies at 1.2173; the second, at 1.1917.

We'll continue to look for a buying opportunity, but only on optimal terms risk-wise.  Because Friday's treacherous rally altered our correction target a tad, I'll suggest lowering the bid for 400 shares to  41.96, four cents above a promising Hidden Pivot support. A 41.71 stop-loss is suggested.

Silver is putting up more of a fight than Gold here, but if it heads lower nonetheless in search of a solider launching pad, look for the turn near 36.600.  That's the midpoint support of the pattern shown, but if it gives way its 'd' sibling at 35.950 would be in play. Either can be bottom-fished with a stop-loss as tight as four ticks.  Alternatively, bulls would need to goose this vehicle to at least 37.580 today to put the squeeze on silverdom's bad guys.

We'll shift to the June contract for a moment, just to adjust our eyes. A decisive downside breach tonight of 1425.30, a minor midpoint support, would imply more weakness down to at least 1417.30.  You can bottom-fish there with a stop-loss as tight as four ticks, but keep in mind that if it's hit, the futures would skid an additional 3.00 points before finding traction.  Below 1413.30, we should put Hidden Pivot aside and use a 1411.50 Fibonacci level to gauge when a healthy correction may be at its apogee.  Alternatively, the futures would need to hit 1440.00 today to put the bad guys on the run. ______ UPDATE (9:56 a.m. EDT):  The futures have bottomed so far today at 1411.50 precisely.

We hold four April 53 puts whose cost basis has been reduced to 0.37 by profit-taking on March 57 puts that we rolled at expiration. Since the most we can lose on the entire position is about $150, we can forget about it for a while.  But just in case, enter a good-till-canceled offer to short four April 50 puts for 0.40.  If successful, we'll have legged into a $3 vertical bear spread with no risk and $1200 of profit potential. Regarding the Cubes, the hourly chart will remain bearish until such time as 58.37 is exceeded to the upside.

As we have seen, hitting each and every minor-rally target within a tick or two is no great trick -- nor is taking a partial profit on short positions initiated at these highs before the futures reverse course and resume their upwardly drift.  Two such targets remain for the near term: at 1317.75, a Hidden Pivot broached here earlier; and at 1334.25, the end of the line for the hourly chart. The first is short-able with a two-tick stop-loss, but the second is to be shorted only with camouflage cover, since it would represent a breakout above some key highs made in early March. Alternatively, it would take a print below 1270.75 by Wednesday to threaten bulls.

Bullion and index futures were roughly even late Sunday night, the latter showing little remorse over the three-day spree that capped last week's cravenous surge.  Note in today's tout that the yen has been knocked down a peg, bringing the bullies of the central banking world into possible conflict with some compelling Hidden Pivot supports.

Watching the Dow Industrial Average cavort in the thin air above 12000 while the world goes to hell, we’re reminded of the famous exchange between Senator Joseph McCarthy and U.S. Army counsel Joseph Welch during the Army-McCarthy hearings:  “Have you no decency, sir?” asked Welch after the Commie-baiting McCarthy had smeared a junior lawyer from Welch’s firm with a ruinous accusation. We might ask the same question of the decision makers who in recent weeks have been driving stocks higher no matter how grave the news or world-shaking the event: Have you, the Masters of the Universe, no decency?  Apparently not -- at least none capable of registering even a mote of doubt or concern about what is going on in the real world. Granted, there was a fleeting loss of confidence in the literal wake of March 11’s epic earthquake and tsunami. Some investors wondered how global manufacturers would fare with their most important supplier of just-in-time parts out of commission. Others grew nervous that Japan’s very financial stability was in jeopardy. But it didn’t take long before such anxious speculation gave way to the sunny notion that it would take vast quantities of capital investment to rebuild Japan.  Ka-ching!  That was more than a week ago.  Since then, Japan’s predicament has grown increasingly menacing. Radioactive waste is spilling into the sea, a reactor containment vessel appears to have cracked, and there is no longer even a timetable for fixing the problem. Will Geiger counters in L.A. have to go crazy for Wall Street to at least act as though all of this matters?  And it’s not as though Japan’s problems were the only thing threatening to tilt the world off its axis economically and geopolitically. In Egypt, jihadists appear certain to carry the day, negating what little chance