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).
From the monthly archives:
June 2011
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.
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.
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The Gold Bugs Index looked like a good bet to fall to at least 469.69, the ‘D’ target of the corrective pattern shown, but yesterday’s upthrust was so robust, exceeding no fewer than four ‘external’ peaks on the hourly chart, that bulls could get a reprieve. If so, we should expect this vehicle to retrace a bit of the rally today and then take another leg up exceeding the labeled peak at 541.69.
The swift selloff that sprang yesterday’s bull trap has come down to the exact, 1545.40 midpoint of the corrective pattern shown, but any lower will be indicating 1538.80. You can try bottom-fishing there with a stop-loss as tight as four ticks, but if it’s hit the futures would be signaling more weakness and a possible test of Monday lows several points beneath. _______ UPDATE (11:17 a.m EDT): The Hidden Pivot at 1538.80 evinced nary a bounce — only three hours’ worth of oscillations that turned out to be distribution for yet another wicked leg down. This has done no serious damage to the hourly chart, believe it or not, but the selloff would become menacingly impulsive were it to breach the 1504.90 low recorded May 23 on the way up. Alternatively, and based on today’s so far low at 1515.00, the August contract would need to rally above 1532.20 today to regain the advantage. That’s where a small but important peak was made on the 5-minute chart as the futures plummeted this morning.
Notice in the chart how yesterday’s head-fake failed by a single tick to get past an “easy” look-to-the-left peak recorded on June 12. This is ample reason for us not to give bulls the benefit of the doubt when trading gets under way today in earnest. This mildly unsettling sign of timidity would be mitigated, however, by an upthrust touching 36.775 — and decisively negated by a further push to 37.645. But if the high turns out to have marked the onset of a minor correction, look for the futures to grope their way down to at least 35.150 in search of traction. ______ UPDATE (11:05 a.m. EDT): The futures have indeed fallen hard today, hitting a so-far low at 34.800. On the hourly chart, the bounce-less, 35-cent overshoot of a Hidden Pivot support has put into play a new target at 33.310 (A=37.860 on June 9; B=34.400 on June 14. Camouflageurs could look to get short on a rally to around 35.040, the C-D midpoint of the pattern.
Yesterday’s nasty head-fake squandered a minor, bullish impulse leg on the hourly chart, but a bigger one is very much intact and presumably waiting to be exploited by DaBoyz. The proximal cause of the selloff was a downbeat pronouncement on the economy by Bernanke, who evidently can no longer hope that “bad” news will be received on Wall Street as “good” news for stocks. Perhaps if the Fed considers taking administered rates below zero, traders will get back in the spirit of things, always hoping for yet more easing whenever it looks like the economy is doing another kamikaze.
Concerning the E-Mini futures, I’ve displayed them on the 240-minute chart so that you can see how little damage was done when They pulled the rug out late in the session. In theory it will take a rally of at least 9.50 points to get a C-D follow-through leg under way. From that point, the move would have an additional 28 points of upside potential — equivalent to a Dow rally of close to 300 points. Most immediately, with the futures in a tightly engineered holding pattern shortly after midnight, night owls and camoflageurs should monitor the 5-minute chart for the subtly impulsive blip that could signal a resumption of the bull trend. ______ UPDATE (10:40 a.m. EDT): We’d grown so accustomed to short-squeeze rallies launched off shallow corrections that this morning’s long-squeeze collapse off a shallow distribution came as both a surprise and a delight. It always feels right as rain when stocks are moving synchronously with the economy, and so the selloff has come as a bracing acknowledgment of a darkening reality. Pivoteers may have noticed that the so-far low came within less than a single point of the 1258.75 target predicted on the hourly chart by these Hidden Pivot coordinates: A=1293.75 (June 22, 3 p.m.), B=1274.50 and C=1278.00.
Helicopter Ben was deep in denial yesterday following a two-day Fed meeting, telling reporters he’s puzzled by recent signs of deterioration in the economy. “We don’t have a precise read on why this slower pace of growth is persisting.” Is this guy a hoot, or what? Earth to Bernanke: The Great Recession never ended! In fact, the term “Great Recession” itself is popularly used by plain folks to assert that economic hard times are very much with us, notwithstanding brazen statistical claims to the contrary. As anyone can see, many trillions of stimulus dollars have yet to improve a dismal employment picture one iota — only kept it from getting worse; nor have those “dollars” boosted household incomes or real estate prices. What they have boosted are bank profits and the prices of stocks, commodities and basic goods. Surprising no one, Mr. Bernanke also failed to mention the still-deflating housing market as a possible reason for the punk economy. Who but a Fed chairman could fail to connect the dots? It seems not to have occurred to him that consumers are no longer binging because their homes have continued to plummet in value – another 4.2% in the last quarter alone. » Read the full article
Street’s Talented Crooks Shake Down the Elderly
by Rick Ackerman on June 24, 2011 12:02 am GMT · 10 comments
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.
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