Monday, June 6, 2011

Index futures were up only slightly around 1 a.m. EDT, suggesting DaBoyz were distributing rather than accumulating, but that they were not enjoying much success.  If the broad averages fall anew, I've provided a minimum downside target for the E-Mini S&P that looks likely to yield a tradable bounce.

The rally from mid-May's lows has suspiciously failed to surpass a key peak at 559.61 recorded on the way down earlier in the month.  Now, if the minor downtrend shown in the chart exceeds its 'd' target, we'll have confirmation of further weakness for at least the next 3-4 days.  The bearish scenario would of course be negated if HUI gets second wind and thrusts above 559.61.

B of A shares got short-squeezed viciously the last time they flirted with the $10 threshold, but it should be clear to everyone by now that there is something dreadfully wrong that has yet to hit the news.  This is notwithstanding the fact that DaSleazeballs were able to distribute stock to widows and pensioners at a 50% mark-up over last November's lows.  We'll be better able to tell how much longer they'll be able to fool most of the people most of the time when we've seen how the stock acts after breaching the watershed low at 10.91.

From these levels it would take a 12-cent thrust to turn the daily chart bullish, since that would create the first bullish impulse leg in nearly three months.  Failing that, however, we should expect the weakness to continue down to 4.0255 over the near term (i.e., 3-5 days).  That's a Hidden Pivot support, and it can be bottom-fished with a stop-loss as tight as four ticks. ______ UPDATE (June 23): Lest we become bored to death, let's avert our eyes, since the futures have come down to 4.0240.  That's 15 ticks below the midpoint support, indicating more weakness to come.

Silver's ascent Sunday night is more than a vague waft, since the so-far high is 70 cents above Friday's settlement.  Even so, the futures will need to rally another 30 cents, surpassing a peak at a peak at 37.190 made Friday on the way down, to re-energize the hourly chart. Night owls should be prepared to seize the advantage if there's a pullback from two or three ticks above that high, since the follow-through burst could come quickly.  I've include a chart that sketches out such a possibility. ______ UPDATE (4:18 p.m. EDT):  The futures popped above 37.190 to create potentially usable camouflage, but the buying opportunity we were looking for has yet to materialize. Instead, a back-and-fill downtrend has eaten up the day, yielding no follow-through C-D rally, nor even a point C' low so far.

The nearest short-term resistance lies at 1556.50, a Hidden Pivot that can serve a our minimum upside target for the now.  Shortly after midnight, camouflage was difficult to come by, since the seemingly enticing pattern shown lacks an adequate b-c pullback as well as a single-bar 'C'.  Please note the 1595.60 target of a larger pattern going back to April 12 remains viable. (It's equivalent to the 1594.90 target given here earlier for the June contract.) Its midpoint 'p' sibling lies at 1529.80 -- the exact low of Friday's target-affirming pullback.

Friday's low occurred in the tight range between two Hidden Pivots I'd flagged. I had to redraw the chart with 120-minute bars to see why. As it happens, there's a Hidden Pivot midpoint at 1294.75, a single tick from the actual low at 1294.50. The bounce from it was nasty if you were short, but now we at least 'know' that a breach of the pivot will consign the futures to more slippage down to at least 1273.50, its 'D' sibling. There is also the 1276.50 'D' of the larger pattern, so a strong bounce from either number, or from the tight spread between them, is extremely likely if the futures get down there (as seems likely). Which they will.