Friday, June 24, 2011

Today's tout for July Silver includes a chart that is intended to stretch the imagination of the precious-metals crowd. If you're not squeamish about pondering a worst-case scenario, I'd suggest taking  look.

No down-leg since the futures topped on May 2 has created a bearish impulse leg of daily-chart degree, since no more than one prior low was surpassed in each instance. Although that is not bullish per se, it does suggest that sellers lack the guts to push the correction beyond the 31.205 midpoint support of the pattern shown, assuming the futures don't turn from nearer these levels.  Scary as a fall to 31.205 might seem, such a washout would represent a potentially excellent buying opportunity.  However, we shouldn't fail to notice that the 'd' target associated with that number lies at 22.945 (!). If such a spectacular fall is coming, however, it would imply a deflationary "black swan" this summer the details of which are presently difficult to imagine.

Yesterday's impressive shakedown stopped a single tick shy of a key structural support on the hourly chart ( see inset), suggesting that the whole episode was strictly business rather than evidence that bulls have changed their minds. Why should they?  Anti-gold hubris is probably near a cyclical peak, what with: 1) the end of QE2 (yeah, sure...), and 2) the release of crude oil from a virtual "strategic reserve" that will power the world's engines, generators and ferris wheels for all of about 13 hours.  We'll start to worry about the intermediate-term if the futures dive anew today, breaching the 1504.90 low from May 23. That would create a powerful impulse leg on the hourly chart (although it would take 1446.10 to do so on the daily).

Considering the dumbfounding stupidity of this week's price action so far, we'll probably do well to sit back on a Friday and let whatever happens happen. Depending on which of the two points 'A' shown in the chart you prefer -- it's a toss-up, as far as I'm concerned -- the futures could achieve either 1294.50, or perhaps 1298.50.  Their respective midpoints have been smashed to smithereens by the short-squeeze that has developed in the early evening, so it looks like DaBoyz will finish the dubious project they began at yesterday's lows.

Stocks performed a fright-mask swoon yesterday as traders collectively demonstrated yet again that one morning’s perfect knowledge does not necessarily a perfect afternoon make.  It was tricky going for all of us, although in retrospect the selloff merely mirrored the flaky, gratuitous rally that occurred earlier in the week. Our own near-term expectations for stocks had been bullish Wednesday night, but that’s not to say we were surprised by yesterday’s quasi-criminal shakedown.  Many widows and pensioners will have crashed on the tarmac, blowing out their portfolios at the lows -- which  in the case of the Dow Industrials amounted to a nearly 240-point deficit. A pity so many seniors probably took it in the shorts, since the Indoos recouped fully three-quarters of their losses by day’s end. Those who hung on for dear life are bound to feel better after yesterday’s adroitly engineered hoax has played out in full with a rally that could take the September E-Mini S&Ps back up to 1298.50 – equivalent to a Dow rally of about 320 points from Thursday’s bottom.  Incidentally, you could learn to calculate these targets (and trade entry-points) yourself – and it’s not nearly as hard as you might imagine.  Click here for details about the upcoming Hidden Pivot webinar on June 29-30. Speaking of calculations, we can save Goldman some time where predictions for the price of Brent Crude are concerned.  The dastardly firm’s “energy team” evidently was in a tizzy yesterday over the day’s Big Surprise, the release of 60 million barrels of oil from the strategic reserves of a bunch of countries. Whoever authorized this global distibution of swag, presumably to launch the U.S. dollar into the doomed trajectory of a bottle rocket, must have thought that crude oil was in danger of not falling by itself.  They

Daniel Greenfield, aka 'Sultan Knish,' has written a provocative essay that sums up the contradictions of New York City, where a glitzy veneer can no longer hide the alarming growth of immigrant slums. The tired, the poor, the huddled masses may still flock to the Big Apple to live, but they do so bereft of such opportunities as beckoned their forebears.  Click here to read the essay.