Wednesday, August 17, 2011

The futures have gone bullishly impulsive on the hourly chart, hinting of  a possible end to the tedious chop that has dominated since May. The key price on the chart is the 1.4551 Hidden Pivot midpoint resistance that amply contained late July's rally. If it is breached on a closing basis for two consecutive days, I'd infer that more upside impends to its 'D' sibling at 1.5291.

We shouldn't get too fancy with the day-to-day predictions, since Silver has gone nowhere for the last month. The dominant trend remains bullish nonetheless, and the most obvious rally target for the short- to intermediate term ist he 44.510 Hidden Pivot shown. The crucial importance of its sibling midpoint, 40.770, a number flagged here earlier, is shown in the chart.

Yesterday's rally transformed into dross the bearish head-and-shoulders pattern that some will alway want to see. In the process, buyers gave new authority to a rally pattern projecting to as high as 1893.00 over the near term.  Its midpoint sibling lies at 1809.50, so let's use that number as a minimum price objective for the near term. It will have maximum predictive value if breached -- especially on a closing basis -- since that would imply significantly higher prices over the near term.

The choppy action of the last two days has created "dueling" impulse legs, a usually reliable sign of more tedium to come. In this case, however, we should probably infer no more than that confusion and uncertainty reign, but that this could end with a vengeance if some piece of news unsettles traders as it inevitably will. Use a 55.88 rally target -- slightly higher than the one given here earlier -- to buy four September 55 puts. As before, if the puts trade for 0.25 less than what you paid for them, exit the trade.  I will further suggest that if the position is showing a profit of at least 0.30 per option, close out half of the puts.

As of around midnight, Tuesday night's lows have fallen within three ticks of an 1185.75 midpoint support whose breach would be telegraphing more weakness over the near term to at least 1175.50, its 'd' sibling.  The bounce thus far is ostensibly bullish, but it will have to go a bit further to provide us with the kind of easy entry opportunity that we look for.  Specifically, traders should use the 1190.50 peak-let shown in the chart for camouflage, provided the thrust that exceeds it slightly retraces to set up a C-D follow-through with a conventional 'x' entry point.  All of this is sketched out in the chart, so check it out.  Want to learn how to identify and use "camouflage' trading set-ups yourself in just six hours? Click here for information about the upcoming Hidden Pivot Webinar. _______ UPDATE (10:34 a.m. EDT):  A pattern very similar to the one shown in the chart played out overnight, generating a C-D rally that got within two ticks of its 1199.25 target. The 'buy' signal came at around 5 a.m. for an entry at 1190.75.  In theory, the trade could have produced a gain of as much as $400 per contract if you exited at the target.  The futures have moved higher since to a so-far peak at 1206.75, so if you held onto any part of the original position, you'd be reaping further gains.  The 1227.25 target given here earlier remains valid.