Tuesday, April 5, 2011

For anyone following Baja Mining (BAJFF), a recommendation that I aired in the chat room a month or so ago, my source called me yesterday to affirm that the company remains on track for significant revenue growth. Anyone interested in this stock should do his or her own due diligence. Baja is currently trading for around 1.18, but I would rate a Hidden Pivot at 1.66 as an odds-on bet if the stock blows past its sibling midpoint at 1.31.

We hold a 400 share tracking position with a cost basis of 42.51.  Subscribers who followed last Friday's tout precisely would in fact have been stopped out, since the intraday low occurred 9 cents beneath the stop-loss I'd advised at 42.36.  However, at least three subscribers reported holding the position anyway, and that is why I've established a tracking position for your further guidance.  If I can find a new entry price for those who bailed out, I will do so and adjust the guidance accordingly, along with the theoretical P&L. For now, sell a round lot to close on the opening.  For the record, let me say that I am generally very conservative about inferring position entries and will not usually track, for instance, a mini-futures trade if I have missed the relevant high or low by more than a single tick. ______ UPDATE (10:31 a.m. EDT):  After exiting a round lot on the opening for 44.02, we now hold 300 shares with a cost basis reduced by profit-taking to 42.01.

While gold was busy boring us to tears yesterday, Silver did its lovely thing, butt-ramming some bad guys who were attempting to sit on the futures all day. In the process, the May contract spiked through the key peak at 38.180 that I'd mentioned here earlier, recharging the bullish impulse for another upthrust yet to come. An important target at 41.275 remains my minimum upside objective for the next 8-10 days, but more immediately we should look for a continuation of the uptrend to at least 38.855, a Hidden Pivot target of the ABC pattern shown in the chart that is just inches above yesterday's high.

No change since yesterday.  The futures are still having difficulty getting past the 1442.30 midpoint resistance associated with a  1473.10 ‘D’ target, but the target will remain valid nonetheless as long as 1411.50 (aka point ‘C’) has not been exceeded to the downside.  A two-day close above 1442.30 is needed make the move to 1473.10 an odds-on shot.  In the meantime, we should use a lesser pattern with a 1427.50 midpoint (already exceeded) and a 1441.40 ‘D’ to gauge buyers’ mettle.

A well-publicized Hidden Pivot at 1336.50 is equivalent to the one that I've drum-rolled in the Mini-Dow, but it is not nearly as enticing a place to try getting short because it sits just below mid-February’s 1337.75 peak.  Exploiting the opportunity will most surely require a camouflage trading strategy if we are to pare entry risk down to the usual penny-ante threshold.  Even so, I am still recommending a short at a lesser pivot, 1335.25, stop 1336.25.  More immediately, there are no compelling bottom-fishing plays to suggest to night owls, since the futures spent all of yesterday having carnal relations with the pooch.  The result was a useless, still-meandering c-d leg that was stretching boredom mightily as we went to press.

Of all the rally targets I've aired in anticipation of a potentially important top in the very near future, I'd rate the 12409 Hidden Pivot in this vehicle as the most promising.  This is partly because, unlike in the S&Ps, the target is above earlier peaks -- in the middle of nowhere, so to speak, which is how I like 'em. I apologize for having drum-rolled the number, since the riff-raff is more likely to pick up on it; however, it's been so long in coming that the advance publicity could not be avoided.  Ordinarily, this is a number that I would short with a four-tick stop-loss and be done with it. But because it's been on the marquee for a while, a camouflage strategy will be the best and most risk-averse way to initiate the short.  I have reproduced the pattern yet again and am pleased to report that my eye continues to lock onto the ABC yielding the Hidden Pivot at 12409.  It is because the pattern is somewhat elongated and un-obvious that I am so enthused about the target.  _______ UPDATE (12:54 p.m. EDT):  During today's tutorial session, we shorted 12368 in real time via camouflage, covering half of the two-contract position at p=12358.  We remain short one contract with a profit-adjusted cost basis of 12378. A stop-loss at 12379 is advised, but if the futures continue to fall, hitting 12310, switch to a trailing stop tied to the creation of a bullish impulse leg on the 15-minute chart.

[Yesterday's commentary touched off quite a debate, and so I am running it for a second day to encourage further discussion.  However, I am supplementing the essay with a link to one of my favorite bloggers, Charles Hugh Smith, who offers his own, compelling reasons for asserting that hyperinflation is simply not in the cards.  Basically, he argues that it would not suit the interests of the rich and powerful, who after all are heavily invested in financial assets that would plummet in value.  I have argued the same point, albeit from a different angle, by asking the inflationists to explain why the supposed Masters of the Universe would permit hyperinflation when it would effectively allow Joe Sixpack to pay off his mortgage and all other debts held by the rich and powerful with confetti.  Smith's paper is entitled  The Mechanics of Hyperinflation:  Bankers vs. Politicos, and it can be accessed by clicking here.  He provides a further link to an Austrian analysis that explains why Weimar's money blowout was quite different from anything that might occur in the U.S.  The crux of it is that Germany's money supply was controlled by the political class rather than by such rich and powerful behind-the-scenes players as created and still control the Federal Reserve.  I would ask that anyone who joins in the discussion from this point forward be familiar with Smith's argument, if not necessarily with the Austrian treatise. Please note that if your additional comments are not published it is because I have raised the bar to eliminate repetition.  RA] I awakened Sunday morning on three hours of sleep, lucid of mind and filled with dread from an essay linked below that I’d read before going to sleep. Amidst the desiccated hell of Colorado’s, and the entire Southwest’s, pine-forest die-off and a disturbingly winterless winter, even my wife still doesn’t get it.  She seems to think that because peak real estate