Friday, June 10, 2011

Silver is trading exactly where it was five weeks ago when the selling dried up to end early May's power dive.  On the hourly chart each and every rally of consequence has died just shy of surpassing an important peak to the left of it. Not that it would take much to re-energize the long-term bull. From a Hidden Pivot perspective, the key high needing to be exceeded is the tiny and obscure look-to-the-lefter at 39.955 recorded on May 4. I've set an alert there, and would suggest that you do the same, to wake us when this modest feat has been accomplished. Until then, the tedious standoff will continue.

Gold's nervous uptrend is running out of headroom, putting increasing pressure on buyers to make their move on early May's record highs. Today's tout for August Gold includes a chart and a detailed analysis to explain why it's time for bulls to ake their move, so check it our if you're growing weary of the wait.

The futures have been nervously biding their time in anticipation of a move above early May's all-time high, 1577.70. Now, however, they've run out of  pussyfooting room, since the June 6 peak at 1555.00 used up the last 'external' peak available for refreshing the bull trend. The next lies at 1577.70, and bulls have an immediate opportunity to get within pitching-wedge distance of it by completing the rally pattern shown in the chart. Signs on the lesser chart are promising, but it's time for buyers to put up or shut up, since more idling at these levels is going to increase the likelihood of a swoon.

It's difficult to say right now how much more mileage our oil taskmasters will be able to extract from OPEC's alleged inability to agree on output quotas, but technical signs point most immediately to 104.31, a Hidden Pivot that is shown in the chart.  A move to that number would not alter a bearish target at 85.07 given here earlier, however, since the point 'C' of the downtrend yielding the target lies at 105.16 (hourly chart, May 10).

I remain skeptical toward this rally, although it certainly wouldn't be a bad thing if it were to get legs and delivers us a fat short at higher levels. My hunch is that the broad averages will retrace at least half of the downdraft from the June 1 high, 1347.75.  In any case, because it is proceeding from almost precisely where Hidden Pivot analysis had predicted, we should trade with a bullish bias for the time being. There were no compelling camouflage opportunities as we went to press, but night owls may find things to do on the 5-minute chart if subtleties like the one sketched materialize.  (Want to learn how to reduce entry risk to a bare minimum using the Hidden Pivot camouflage technique? Click here for information about the upcoming webinar.)

Because the stock market has just received the kiss of death technically speaking, traders who are looking to get short should view rallies like yesterday’s as a gift.  Notice in the chart below how the S&P 500 exceeded three prior lows without an upward correction. It would have been bearish enough if the selloff had breached only two prior lows, since that is all our proprietary Hidden Pivot Method requires to signal a trend change. But by exceeding a third low for good measure, sellers revealed their eagerness to be out of shares before summer begins.  In the meantime, let’s hope the bullish hubris continues for another day or two, since it could set up the fattest trading opportunity bears might see for a while. (Want to learn how to predict swing highs and lows yourself -- with amazing accuracy? Click here for information about the upcoming Hidden Pivot webinar.  Or here for a free trial subscription to Rick’s Picks, including access to a 24/7 chat room that draws veteran traders from around the world.) According to the Wall Street Journal, stocks rallied yesterday because the economic news was moderately encouraging. We know better, though. It was more a case of the day’s flatulent economic news seeming moderately encouraging because stocks were rallying. The news item of the day -- not counting the salacious one about Rep. Anthony Weiner’s formerly private life (and private parts) -- concerned an unexpected contraction in the trade deficit in April. That’s good news, right?  In fact, the trade deficit declined a whopping 6.7% because Americans are buying a lot less oil. And while that may be good news for the global-warming crowd, it is ominous news for the economy, since it suggests that soaring prices for an essential commodity are beginning to severely impact