Member-only content. Please Login or get a free trial of Rick's Picks to view.
From the monthly archives:
May 2011
Member-only content. Please Login or get a free trial of Rick's Picks to view.
Because Silver has gotten hit much harder than Gold, it would take a far more powerful rally to reach a bullish threshold equivalent to the 1528.70 midpoint resistance that I’ve flagged for the June contract. Specifically, July Silver would need to close above 44.000, the Hidden Pivot midpoint of the pattern shown. A lesser but still important threshold lies at 39.565, but it will take no less than that to put the bad guys on the run. (Click here if you would like to find out more about the Hidden Pivot Method and the monthly webinar that hundreds of traders have taken.)
The chart I’ve furnished with today’s commentary proffers a minimum rally objective at 1536.30, a Hidden Pivot midpoint that looks likely to produce at least a minor stall. However, and as noted here yesterday, it will take a close above the 1528.70 midpoint of a larger pattern to prime the futures for a powerful thrust over the near term to as high as 1594.90, the ‘D’ target associated with the midpoint. Bulls could put the bad guys in deep freeze, however, with a thrust today that exceeds the 1543.50 peak recorded May 4 on the way down.
No change. Because we’re short the E-Mini S&P from prices well above these levels, I’m offering a gambit in the QQQs that will allow traders to leverage the dead-cat bounce that looks likely to occur shortly. The downside target is 56.02, a Hidden Pivot, and so I’ll suggest buying four June 56 calls if and when it is closely approached (i.e., within about 6-10 cents). Stop yourself out of the position if the QQQs trade 55.87 or lower. The calls look like they should be trading for around $1.10 or so if the target is reached, but the price could easily vary by 10 cents or more.
We remain short from 1363.00, shooting for a gain of at least $5000 per contract. The futures have picked up support from a longstanding target at 1310.00 but look too tired to bounce. Accordingly, I’ll continue to advise scalping against the downtrend (and, effectively, against our position) by bidding 1303.25 for two contracts, stop 1302.50. Since the canny dirtballs who work the night shift can move this pup on very light volume, you should be on the alert for a bottom that falls a tick or two shy of our target. Camouflage would be the way to go under the circumstances, since it has the capability of getting us aboard regardless of whether the futures reach the target. _______ UPDATE (11:05 p.m. EDT): The futures have rallied from a low of 1302.50, stopping out the trade for a loss of $50. The overshoot may have seemed slight, but it is probably sufficient for us to infer that the rally won’t amount to much.
I’ve made much ado here lately about a possible bottom in Treasury rates, but take gander at the chart I’ve included with today’s tout for the June 10-Year Treaury Note. If the futures blow past the 123^21 target I’ve been drum-rolling ostentatiously for the last week or so, the implications are bullish beyond anything I’ve yet to imagine, let alone comprehend. I’d be most interested in any comments you might have about this in the chat room, so don’t be afraid to let your imaginations run free.
I’ve taken another look at the 123^21 target on charts of various time frames, and it still looks compelling as a place for a top of at least intermediate importance to form. However, if the futures were to blow past it, and especially if they were to do so effortlessly, it would have implications potentially so bullish that I’ve yet to imagine them. Using the continuous weekly chart, you could make a case for 137^08 (!). The rally would kick off in earnest following an upside penetration of the 124^03 peak recorded in November. Frankly, I’m not quite sure what kind of world we’d be living in at that point, economically speaking, since it suggests among other things that all of the world’s capital will have flooded into Treasurys — presumably for the sake of ”safety.” Incredible!
The futures spent yet another day in limbo Monday, leaving my outlook unchanged. It was given earlier as follows: Silver has held a crucial midpoint support at 32.300 for more than a week, but it has made almost no headway on the bounce. On balance, I’m bullish for the near term, but buyers will need to pop above the 39.565 look-to-the-left peak recorded May 4 to seize the advantage. Otherwise, the futures may demand a test of the 32.865 Hidden Pivot midpoint of the pattern shown. This stands to be an important number because, as you can see, its decisive breach would augur a further drop to as low as 29.28.
Gold Lies Just Shy of a Bull Trigger
by Rick Ackerman on May 25, 2011 2:26 am GMT · 6 comments
Bullion futures could still have one last relapse before the correction from early May’s record peak has run its course, but odds of this occurring are diminishing by the day. We told subscribers Monday night that Comex June Gold would be out of the danger zone if it closed above 1528.70 yesterday. In the actual event, the futures got as high as 1529.00 – three ticks above our minimum target – but they were unable to sustain altitude and dropped back $9 before getting second wind. Bulls seized the advantage by recouping about half of the loss as the session drew to a close.
Looking just ahead, if the June contract rallies on Wednesday and is sitting above 1528.70 at the final bell, we’d rate it an odds-on bet to continue rising over the near-term to at least 1594.90. That would represent a rally of a little more than 4%, and we would expect that it would take about 6-8 days to play out. As of Tuesday night, chances of this occurring looked good, since the June futures were in a pattern projecting to 1536.30 over the very near-term. That’s a “Hidden Pivot resistance,’ and although we’ll be looking for a pullback precisely from that number, a moderate retrenchment could leave the futures holding above the 1528.70 threshold noted above. We have inferred that Gold would be pulling Silver along with it, since the latter needs to rally from a current 36.560 to 44.000 to trip the same go-ahead signal as Gold.
Both Gold and Silver have been moving very precisely to our targets in recent weeks. The May 2 peak in June Gold at 1577 fell just $4 shy of a longstanding target we’d been using at 1581, and subsequent retracements in both Silver and Gold futures came down to lows that almost perfectly matched our forecast. We’d called for a potentially important low at 1470.00 in June Gold and at 32.300 in Silver. In fact, Gold hit 1471.10 and has been moving higher since, and Silver has been doing likewise since bouncing off 32.300 exactly. (Learn how to calculate these targets and to use them yourself by taking a free trial subscription to Rick’s Picks. This will allow you to access a 24/7 chat room that draws veteran traders from around the world.)
July Crude on a Ledge
Since we never want to chisel our expectations in stone, we are keeping a close eye on several other trading vehicles, including Crude Oil, the Dollar Index and the 10-Year T-Note, whose behavior will have implications for bullion. In particular, July Crude looks primed to drop 15% in the weeks ahead, to around $85 a barrel. If so, precious metal quotes will fall too. A strengthening dollar would also make strong rallies in gold and silver unlikely. Although the greenback has lifted off sharply off early May’s lows, the move has been balky, pausing for breath at each minor resistance. This is not the way powerful rallies typically begin, and that’s why we think this one will be short-lived, Even so, we’re prepared to run with the bulls, at least for a while, if the rally appears to pick up steam. Most immediately, that would imply a pop today in the Dollar Index to 76.44 – 48 cents above their current 75.96.
(If you’d like to have Rick’s Picks commentary delivered free each day to your e-mail box, click here.)