Tuesday, September 6, 2011

I'll be tracking March 2012 Corn closely in the weeks ahead, based on the prospect of increased demand from China as discussed in the chat room. Although camouflage entry will generally be the preferred entry strategy, especially until we find the range and rhythm of this vehicle, I'll use conventional tactics at times so that relative novices can participate. For now, though, I'll suggest using the 15-minute chart or less to buy four contracts using 'camo' at the 739.25 'd' target of the following retracement pattern on the 60m chart: a=787.00 (8/31); b=749.75 (9/1); c=776.50 (9/2).

Although silver reversed four cents below our midpoint pivot of 43.540 at the top of Friday's rally and has remained lower since then, the charts are saying that silver wants to keep moving up.  A move above 43.540 would put the August 22 high of 44.295 in the crosshairs, with "D" targets at 46.050 and 48.265 next up, on the way to the all-time high just above $50.  Traders looking for short-side scalping opportunities based on smaller patterns should use Monday's low of 42.390 as a "C" point.  (Posted by Doug "harry" McLagan) _________ UPDATE (11:58am EDT): In today's silver forecast, published just before midnight last night, we suggested that traders looking for shorting opportunities use the 42.390 low as a "C" point.  This alluded to a chat-room discussion that took place late yesterday morning (around 10:00), in which we posted a pattern with specific order levels: "sell SIZ1 @43.305 // stop @43.345."  At 1:51am today, silver peaked at 43.320, one tick below the pivot of 43.325, and then dropped by more than a dollar and a half.  The maximum gain per contract from our suggested selling price (so far) was $7,950, while the suggested risk was $200 plus commissions.

It looks like we are about to find out how interesting the gold trading will be in the vicinity of its recent all-time high of 1917.90.  The futures have extended Friday's rally to within a few dollars of our first benchmark, the "D" target of 1912.80 which we described here on August 31.  At that time we also observed the midpoint pivot of a very large pattern just above the record high, at 1923.80.  The sibling "D" target of that midpoint is all the way up at 2142.30, so we took another look at the charts in search of a pivot somewhere between those two levels, and ideally not right on the round number of $2000.  The resistance that held gold back for most of last week led us to a "D" target of 1981.10, shown in grey on the attached chart.  This level might be just the place to get with the anti-gold cartel in front-running the dreaded two thousand.  If that pivot gives way, then 2011 is going to be Y2K for gold.  (Posted by Doug "harry" McLagan) _________ UPDATE (11:58am EDT): For the last week, in three of five daily gold forecasts, we have emphasized the importance of the pivot at 1923.80, including last night when today's forecast was published.  About three hours after publication, the futures surpassed the former all-time high and peaked a single tick below our pivot, at 1923.70.  Within two hours of the high, gold had plunged by almost $62 per ounce.  It then retraced most of the drop but has since come back down and re-tested the low, which has held for now.  Was this the precious metals call-of-the-day?  Maybe, but take a look at the silver update before you decide.

We're short a single contract from 2004.25 after covering three others on the way down. I'd suggested a wide stop-loss for this trade, since the futures broke sharply after our "camouflage" entry at 1200.00.  Labor Day trading has sent this vehicle plummeting anew, yielding a target of 1129.00 as of around 11 a.m. EDT (see chart).  Based on a so-far low of 1138.25, leaving 10.50 points of profit potential, and risk:reward held constant at 1:3 throughout the trade, we should be using a stop-loss no higher than 1141.75.  However, because the futures have bounced and are already trading above that number, let's use a "structural" stop-loss at  1148.50 that lies a tick above a peak-let made this morning enroute to the low.  The stop should be worked one-cancels other with a closing bid at 1129.75, three ticks above the target.  If we cover at the higher stop, the theoretical profit per contract would be about $2775. _______ UPDATE (9:55 a.m. EDT): With the futures in a headless-chicken frenzy of pointless, panicky  ups and downs, we covered near 1148.50 around 3:10 a.m.  The theoretical gain would have been slightly less than $2800 per contract. At the moment, the hourly chart reflects "dueling" impulse legs, although a print down at 1132.50 would settle the skirmish in bears' favor.  This is what I expect to happen, and I would therefore suggest that you look for opportunities to get short rather than long.  Alternatively, a rally exceeding 1162.50 would tip the short-term outlook bullish.