Friday, April 1, 2011

I've hung out an ambitious new rally target in May Silver -- an imagination-stretcher at 41.275 that comes alive when you fill in the chart with your own parabola.  Do have a look if you're nagged by doubts that Silver's long bull run has become overstretched. On the evidence of this chart, I don't think so.

I haven't mentioned a target at 41.275 before, so let me do so now.  Looking at the chart, the eye wants the C-D phase of this rally to begin soon, lest it start looking weak relative to the impulsive A-B upthrust begun on March 17.   The Hidden Pivot midpoint of the pattern is 38.850, so that will be an important number to watch.  At that point, the futures will be trading well above March 24's key high at 38.180, so the bad guys won't have much to lean on. _______ UPDATE (10:37 a.m. EDT):  Silver is being dragged lower this morning by a shakedown in Gold, but it is not going docilely.  In fact, the bad guys have so far been unable to pull the futures down to  a 37.105 midpoint support, let alone its 'd' sibling at 36.235.  Let the bastards keep trying, since any weakness should be viewed as the buying opportunity it is.

I hate to queer a potentially great pivot at 1336.50 by drumrolling it, but it remains the hidden resistance that I most like among myriad possibilities.  You can still short the lesser pivot at 1335.25 with a 1.00-point stop-loss, but it will take a bit of luck for the potentially important top that I expect, to occur precisely at that number, given its close proximity to mid-February's watershed high at 1337.75.  My gut feeling is that the big winner that we permabears have been looking for will occur following a head-fake above the February top.  However, the only way we can be prepared for all possibilities will be to exploit every camouflage 'D' from this point forward.  This is a 24/7 job, and so I'm counting on the support of all you ace Pivoteers who frequent the chat room.

Some good technicians and a few world-of-finance celebrities have been talking bullish talk on the dollar (although I'd probably have to replay the Jimmy Rogers tape a few more times before I'm certain of where he stands).  Anyway, this tout is to reiterate my conviction, based solely on Hidden Pivot dynamics, that the dollar is going nowhere -- or at least, not significantly higher -- for the foreseeable future.  To underscore the point, it recently spent three full days in distribution below a not-very-intimidating peak at 76.46 notched on St. Patrick's Day. That pretty much says it all, for now.  Yes, there is always the possibility of some black swan event panicking the world's hot money into the misconceived "safety" of the U.S. dollar. But if the threatened ruination of Japan and the conflagration in the Middle East are not the black swan, then it's pointless trying to imagine what would be.  Putting the foregoing aside, if DXY can close for two days above the 76.15 midpoint of the pattern shown, we should infer it's on its way to at least 76.63 over the near term.

You've got to admire Google for its pluck.  Rather than cede even a dime's worth of advertising business to Facebook merely because Facebook is so aggressive and clever, Google is about to add "social" functionality to its search engine.  I'd like to think Google was encouraged to play hardball by the fact that Facebook had partnered with always-behind-the-curve Microsoft to develop customer information beneficial to Ballmer's Bing search engine. Anyway, who do you want to bet on? For my part, I've extrapolated the most bullish target I can from the hourly chart -- 610.12, a Hidden Pivot that can serve as a minimum upside objective target for the short- to intermediate-term. Consider it a lock-up if and when the stock closes for two consecutive days above its sibling midpoint, 591.57.  (Note:  One more minor resistance to monitor lies at 600.52.) Pivoteers may notice that I've treated the March 16-18 bend in the A-B impulse leg as non-existent. My justification for this is that it occurred before the rally had exceeded any external peaks.

Adjusted for theoretical gains recorded so far on an initial position of 400 shares, a hundred shares remain with a cost basis of 41.22.  I'd intended for this to be a long-term position, and so we will be selling call options against it from time to time.  Specifically, I expect the stock to reach 57.49 before the rally cycle begun in mid-March is due for a rest, so that is where we'll look to do a near-the-money covered write.  My confidence in the target is high because of a recent stall a penny from the 55.07 midpoint of the bullish pattern shown.  If and when Newmont settles for two consecutive days above that number, or trades more than 50 cents above it intraday, a finishing stroke to the target will become an odds-on bet. _______ UPDATE (April 6, 3:24 a.m. EDT):  A strong upthrust has brought Newmont within putting range of the covered write we'd planned. Accordingly, I'll recommend shorting one April 57.5 call if and when NEM gets within a dime of the target. You can use your discretion on this, playing it down to the wire, but please note that I expect  the stock to make a tradable top with 2-3 cents of the 57.49 pivot. _______ FURTHER UPDATE (April 6):  Newmont head-faked on the opening bar to 57.31, and I am not amused.  For now, maintain the short offer as suggested. _______ FURTHER UPDATE:  It appears that, for a rare change, we actually benefited from the opening-rotation sleaze factor, since the call option we were trying to short opened on the high of the day, 3.00.  This effectively reduces our costs basis on the stock to 38.22 while giving us $3 of downside protection.  Newmont would have to move above 60.50 before the covered write starts to limit our upside potential.  If that happens and we simply let the stock get called

The term “Great Recession” first came into popular usage a couple of years ago, a tacit acknowledgment that the economic quagmire we entered in late 2007 was qualitatively worse than any mere recession this country had previously experienced. As indeed it was – or if you prefer, continues to be. Home prices in the U.S. have plummeted more than 30 percent, while unemployment has risen to its highest levels since the 1930s. These symptoms have not only persisted, they are apparently getting worse. Earlier this week it was reported that the three-year decline in real estate valuations across the U.S. continued into January, further ravaging such already down-and-out cities as Las Vegas, Cleveland and Detroit.  In at least 11 other major cities, prices were reported to have fallen to the pre-boom levels of 2003 or earlier. But prices also fell to ten-year lows in places where real estate never got quite as pumped, such as Denver, Atlanta, Minneapolis and Chicago. Imagine having zero equity in a home on which you’ve been making mortgage payments since 2000.  According to the latest statistics, that is exactly the situation facing many homeowners in areas of the country where property valuations until recently had been holding up relatively well.  You could hardly blame 30 million property owners who are underwater for thinking the recession never ended.  For in plain fact it never did, and only someone with a PhD in economics could be so blind to reality as to maintain otherwise. Two economist we would cite in particular are Princeton University’s Alan Blinder and Mark Zandi, authors of a paper entitled “How the Great Recession Was Brought to an End”.  That’s an oxymoron, as far as we’re concerned, since, these days, when the term “Great Recession” is used, it is meant to connote a recession