Tuesday, July 12, 2011

The somewhat unintuitive pattern shown in the chart projects to 91.08, but it becomes more compelling if you extend an imaginary downtrend as I have here. The 93.51 midpoint looks like a good place to try bottom-fishing, although using camouflage is strongly suggested because of the close proximity of the July 1 low at 93.45.  _______ UPDATE (11:50 a.m. EDT): The futures dipped to an overnight low of 93.55, four ticks from the hidden support noted above. If you used camouflage to get long, entry would have come at exactly 93.79, signaled at 4:10 a.m. on the one-minute or tick chart. This gambit exceeded its 'D' target by 11 cents, providing a partial profit and cushion for the bumpy ride higher that remained.

Silver may need a kick in the shins from Gold to knock the moroseness from yesterday's dirge. It has continued into the night, and although the so-far low of the c-d correction leg at 35.660 is well above a midpoint support at 35.395, a decisive breach of that Hidden Pivot would indicate more weakness over the near-term to as low as 34.690, its 'd' sibling. You can bottom-fish the midpoint with a stop-loss as tight as three ticks.

The 1557.60 high of yesterday's roller-coaster ride conspicuously failed to get past the key peak at 1559.30 recorded on June 22, but the futures looked unintimidated at the close. This suggests a consolidation with the potential to launch a rally hitting 1574.70, 1577.20, or perhaps even 1589.40 in the days ahead.  The futures would need to drop by $30 today to introduce any doubts about the short-term. ______ UPDATE (3:24 p.m. EDT):  The futures exploded as we watched them in real time during an impromptu online trading session. The intraday high achieved was 1574.40, just three ticks from the lowest of the targets given above. The otheres remain valid. .

Yesterday's low mildly overshot the 1317.25 target, telegraphing the weakness that has ensued. It projects most immediately to the 1304.00 Hidden Pivot target of the pattern shown, although an upthrust that hits 1327.25 first would signal a likely end to the good feelings bears may have imbibed from the nearly 50-point selloff begun off Friday's opening feint higher. Below 1304.00, the selling could snowball to at least 1288.50, but there are few promising structural supports all the way down to 1255.

No sooner did I take this vehicle off the sheets out of boredom than it fell, finally, to within a hair of a longstanding target at 1.5859. We found a camouflage opportunity to get long briefly during yesterday's impromptu webinar as the futures were making the turn, and although the position went marginally profitable on the five-minute chart as we watched, they were sinking again in the early evening  The target remains valid nonetheless, and I would therefore encourage night owls to use it for camouflage if it is reached on the implied slight dip beneath Monday's low. Incidentally, these impromptu sessions, where we look for real trades in real time, are open to all Rick's Picks subscribers and great fun. If you want to join us for the next one, and to access a 24/7 chat room frequented by seasoned traders from around the world, click here for a free trial subscription. _______ UPDATE (11:37  a.m. EDT): Slippage far beneath the target last night couldn't be worse news for the pound, since the pivot was a clear, major Hidden Pivot support. This is not withstanding the sharp dead-cat bounce that is occurring at this moment.  The breach of the support implies the pound is on its way down to at least 1.4396, with 1.1827 possible over the longer term.  Who thought the sun had already set on the British Empire!

It warmed the cockles to see the Dow Industrials and Gold moving in opposite directions yesterday, even if the latter swooned a nasty $15 intraday before scaling the wall a second time to close near the highs.  The world somehow makes more sense to us when gold prices are rising and shares are falling.  Isn’t that what’s supposed to happen when the central banks are hell-bent on trashing their respective currencies, and every economy outside of China’s continues to grind toward cliff’s edge?  The news wasn’t all bad, either. For one, scientists have apparently made some progress in figuring out why Lyme’s disease recurs in some people. Much closer to Wall Street obsidian heart was a report from Alcoa that profits had more than doubled in the second quarter.  Unfortunately, you’d have to be an old-timer to remember when good earnings from the likes of Alcoa was enough to push the U.S. stock market higher.  Anyway, probably a dozen Alcoas would not have made up for the deepening gravity of Europe’s financial plight. Whereas it supposedly was only Greece that was in need of critical care, now Italy has joined the short list of financial basket cases close enough to disaster to take the whole system down. And yes, we are being deliberately ambiguous when we avoid mentioning which “system” might come crashing down.  Europe’s financial house of cards?  The global banking system? The world economy? Frankly, we can’t even guess how far the damage might spread if “confidence” in Greece, Italy…Spain! were suddenly to evaporate.  We’ve put quote around the word “confidence” because only an imbecile could fail to see that whatever confidence exists is egregiously misplaced.  Even so, misplaced confidence is better for the time being than no confidence, since it’s all that’s keeping the global financial system