Thursday, September 8, 2011

Silver looks better than Gold at the moment, so let's give it the benefit of the doubt as both metals struggle to recoup this week's nasty losses.  In fact, for subtle reasons, the 120-minute chart is still bullishly impulsive despite the pounding the December contract has taken in the last two days. In this regard, there are two things to notice in the chart: 1) the pullback has not returned to the level of the one-off 'A', so the uptrend is intact; and 2) point 'B' was legitimately impulsive, having surpassed the prior 'external' peak by a small but crucial margin.  Bulls would be back on the offensive with a print today exceeding a 42.370 external peak recorded Tuesday on the way down.

Very impressive.  Although I have seldom touted trades in the grain complex, I always suspected that the competition would be up to snuff. And so they were, setting up a long-entry opportunity that I would have rated as "ideal" for camouflage but which turned out to be a bull trap.  Although the point 'X' entry at 770.75 failed by two ticks to trigger and we did nothing, everything up to that point precisely resembled the hypothetical set-up I'd sketched for you in the chart presented here yesterday.  I'd mentioned earlier that we'll need to get the range and the rhythm of this little sonofabitch before we dive in, so yesterday's dry run counts as a learning experience -- one that alerted us to Corn's exceedingly treacherous price action.  For today, let's try to buy down near the 738.25 Hidden Pivot support shown. Entry should be via camouflage, presumably using the 15-minute chart or lower.  You can try it with a straight bid and a stop-loss risking no more than a penny ($125), but my assumption is that this will be riskier, if perhaps easier, than a 'camo' entry.  Please note that I am not using a one-off 'A' here, so there's a risk we could miss the trade if the futures turn higher without dipping first to our retracement target.  At the moment (i.e, Wednesday, 5:10 p.m. EDT), there's also the possibility the  turn has already occurred -- off the 757.75 midpoint support of the pattern shown.

After stalling briefly at the 1184.50 midpoint resistance noted here, the futures resumed their trek higher, presumably bound for the midpoint's 'D' sibling at 1233.00.  Pullbacks have been too shallow so far for camouflage, but I've identified two peaks that could help us find a tradable abc pattern Wednesday night if price action is felicitous.

Harry's correction target at 1763.80 looks quite compelling, so we'll continue to use it as a minimum downside target. The good news is that it should yield an excellent entry point if the futures fall that far, since a bounce from the pivot or somewhere very near it looks like a high-odds bet. Camouflage is suggested, especially since we don't want to miss an excellent opportunity if the turn should occur from somewhere above the pivot.  Alternatively, the first place where I would strongly infer a possible bullish reversal would be at 1834.30. The significance of this number is shown in the chart, so by all means set a screen alert at that price if you don't want to be caught unawares.