Tuesday, May 3, 2011

Yesterday's hysteria projects over the very near-term to as low as 40.195, a Hidden Pivot support that you can bottom-fish with a 40.200 bid, stop 40.180.  The 43.695 midpoint support has already been breached by three cents, so my bias overnight will be bearish.  Alternatively, it would take a thrust today exceeding 48.085 to turn the hourly chart bullish.  Camouflageurs looking to ride the uptrend as of around 11:25 p.m. EDT should look for entry opportunities on the 3-minute chart.  I'll switch to the July contract tomorrow, but let me note for now that 40.375 is equivalent to the 40.195 target given for the May futures.

I had assumed the printdown at 1516.20 was an error, but apparently not.  That means that Gold's selloff yesterday was bearishly impulsive on the hourly chart, but also that the June contract will have a chance to get traction at the 1517.20 midpoint of the pattern shown. If the support gives way easily, however, it would indicate more downside over the near-term to as low as 1487.40, the 'd' target Hidden Pivot with which it is associated.  Night owls should pay close heed, since it wouldn't take much of a rally to invalidate point 'c'.

DXY couldn't muster the feeble rally to 73.39 that would have turned the lesser charts bullish yesterday, so let's focus today on the 72.26 downside target of the pattern shown. It looks like a lock-up to me, so if you trade currencies, I'd suggest shorting there or at least exiting longs ahead of the dollar's expected bounce. ______ UPDATE (May 3, 8:36 p.m.): Three days spent screwing the pooch has turned the short-term outlook for DXY into a coin toss. Continue to monitor the 73.39 benchmark, since its breach will at least postpone the predicted fall to 72.26, and thence to 68.36.

The so-far low Monday night is 1353.50, the exact midpoint pivot of the pattern shown. Using the 5-minute chart, pivoteers can get long using camouflage on any impulsive thrust if the low has not been taken out.  If it's breached, however, you can infer the more downside awaits to at least 1345.25, the midpoint's 'd' sibling. It can be bottom-fished with a stop-loss as tight as three ticks. _______ UPDATE (8:17 p.m. EDT): From a recent high of 1373.50, the futures fell yesterday to an intraday low just two ticks from the 1345.25 forecast.  Officially we did nothing, however, since our bid missed by a hair.

Buyers of pretty much everything got sucker-punched yesterday when the markets opened exuberantly on the delightful news of Osama bin Laden's death-by-bullet-to-the-head.  It's going to take a day or two for traders' egregiously misplaced confidence to return, so don't be surprised if the broad averages meander till mid-week.

Silver and Gold got thrashed yesterday, the latter falling hard in off-hours trading after the June Comex contract surged to a record high Sunday night at 1577.40. We’d warned subscribers of a potentially important top at 1581.20, a target derived from our proprietary Hidden Pivot Method.  The actual peak came close enough to the target to suggest that a significant correction may be under way. We give the pullback a good chance to at least equal last winter’s correction, which saw June Gold fall from 1437 to 1310, or about nine percent, between early November and February. Silver, meanwhile, sputtered out well shy of an equivalent Hidden Pivot target north of $50, and it got hit much harder than Gold in percentage terms. At day’s end, the May contract had fallen as low as 42.190, down 15% from last week’s 49.820 peak and as much as $6 intraday. Whatever happens in the days and weeks ahead, we seriously doubt that the long-term bull-market in precious metals is in jeopardy, since none of the fundamental factors that have been driving bullion quotes higher have changed.  In particular, we expect Fed easing to continue until the dollar collapses, taking the financial system with it. As for the odds of European-style austerity taking hold in the U.S., it’s a non-starter as far as we’re concerned – about as likely as the Fed pursuing the strong-dollar “policy” that Geithner and his predecessors have been blathering about for more than a decade. Avoiding Stress… We use purely mechanical means to forecast the ups and downs of stocks and futures, and that helps us stay calm whenever the markets are said to be at the mercy of inscrutable or even violent forces.  For instance, if May Silver were to show some pluck at 42.37, a Hidden