Wednesday, June 1, 2011

If the E-Mini S&Ps achieve their newest rally target, it would imply a Dow rally of more than 300 points.  Our short-term bias will therefore be bullish unless the broad averages signal otherwise on charts of hourly degree.  As always, if the broad averages reach our bullish targets, we'll short them with very tight stops.

September Copper is within pitching-wedge distance of generating its first bullish impulse leg in more than a month on the daily chart.  Buyers need only push the futures six cents above the recent 4.2300 high, surpassing May 3's 4.2815 peak, to do the job.  Failing that, we might expect this vehicle to ease toward the 4.0255 midpoint support of a minor bearish pattern on the 'daily'.

The Gold Bugs Index created a bearish impulse leg of daily-chart degree since the last time we looked in on it, but it was answered with a bullish thrust of almost equal power.  This "duel" suggests that a lengthy period (i.e.,perhaps  3-4 weeks or more) of consolidation lies ahead, with neither bulls nor bears gaining much traction. Over the next day or two, however, the most bullish thing likely to occur would be a thrust above the external peak at 559.61 recorded May 4 on the way down.  Were that to happen, it would set up a likely test of April's resistance peaks near 600.

The futures have pushed above two resistance peaks without drawing a breath, suggesting that any pullback lasting more than two days is likely to be a consolidation and possible buying opportunity.  The chart shows why the move is not quite impulsive, however, since the peak labeled #2 is not an actual peak (i.e., it is  not preceded by a stick-down low). Even so, the rally looks to have enough power behind it to imply that the U.S. dollar will remain under pressure.

The futures have turned timid at the 38.470 midpoint resistance associated with a 'D' target at 40.720. If they pull back for a running start, expect the selling to come down to at least 37.475, the midpoint support of the pattern shown.  It's less than ideal for bottom-fishing, however, because of its close proximity to the prior low at 37.430.   Alternatively, bulls could launch a powerful offensive today with a print today at 39.570.

August Gold failed by more than $2 to reach a modest target at 1544.40 yesterday, which is short-term bearish.  However, the subsequent decline was mild, suggesting that bulls and bears may content themselves with playing toe-sies for a short while -- perhaps a day or two. If buyers surprise, though, and push above the 1544.40 Hidden Pivot to new recovery highs, they should be presumed bound for the 1561.50 target of the pattern shown.  Its sibling midpoint ls 1538.60, so any pullback to that number from above 1545.00 should be viewed as a possible buying opportunity.

Okay, don't rub it in:  No guts, no glory. We cashed out a small short position yesterday for a theoretical gain of around $1300 (not $600, as erroneously given earlier).  I'd originally considered holding out for a profit of at least $5000 per contract, but discretion has trumped valor, possibly sparing us the pain of watching all of our gains go up in smoke just so that we could tell our grandchildren that we shorted THE Top.  We shorted "a" top, however, and we aim to do it again...and again...and again, until such time as we nail the actual Mother of All Bear Rally Tops.  How much have we risked trying?  That's a question you can ask in the chat room if you're skeptical. In the meantime, we may see some good opportunities to get long in the days ahead, since the futures look bound for at least 1387.50, a 40-point rally from current levels, if they can close above 1346.00. They were wafting above that midpoint pivot in after-hours trading, but because this also put them above May 19's marquee high at 1345.50, subtle opportunities for a "camouflage" entry were going to be tough to find nil.  Incidentally, if you don’t subscribe to Rick’s Picks but would like to know more about the proprietary camouflage trading technique that we use to keep entry risk to a bare minimum, click here for information about the Hidden Pivot Webinar in late June.  You could also take a free week’s trial subscription that will give you access not only to detailed trading recommendations each day, but to a 24/7 chat room that draws experienced traders from all over the world.

When I got socked with a 25% increase in health insurance premiums last January, I’d assumed that that would be it for the year. In the past, like clockwork, there has been a staggering rate hike effective on New Year’s Day, but no more increases for the next twelve months. Not this year, apparently.  On Friday, I received a notice of yet another 20% rate hike, and it left me wondering whether my premiums will have doubled by the time 2012 rolls around. Like all such health insurance notices since the passage of Obamacare, this one attributed the increase to new rules and to healthcare costs that continue to spin out-of-control: “Your new premium appears at the top of this letter and reflects a combination of recent changes required by Health Care Reform,”  read the notice.  Specifically, there were two reasons given for the increase: 1) the birthday of a policyholder; or, 2)  an increase in claim levels by policyholders in my state, Colorado. This the very same “reform” that the new Republican majority in Congress swore it would kill and which the Wall Street Journal labeled the “Worst Bill Ever”.  No argument here. Unfortunately, for an execrable piece of legislation that a majority of voters despise, and upon whose egregious flaws Republicans trained their heavy artillery during last fall's campaign, it is doing quite a bit of damage without having been even 20% implemented. It were as though the Fed had announced a trillion dollar stimulus package: the mere anticipation is all that’s needed to set off a defensive panic by all who are exposed to the dollar.  In this case, the insurers will have exposure on the claims side that had previously been neutralized by their ability to peg rates to individual risk. No longer, though. One-size-fits-all policies