Friday, September 23, 2011

Hidden Pivots aside, and notwithstanding the 1709.20 target I've been drum-rolling here and in the chat room for the last week or so, it would be just like this vehicle to dip ever so slightly beneath the visually compelling bottom at  1705.40 recorded on August 25 before taking flight.  In any event, camouflageurs looking to get long should be on high alert with December Gold trading anywhere from 1695 to 1712, since a tradable turn from somewhere within that range, if not from the Hidden Pivot itself, seems both psychologically compelling and technically likely. _______ UPDATE (12:04 p.m. EDT): Sellers have crushed the 1709.20 support and gone on to exceed, just moments ago, the 1662.80 downside target of a lesser pattern (hourly chart, A=1818.30 on 9/21). Because the pattern that produced the target is so clear, its breach spells still lower prices, although not necessarily much lower. With all corrective Hidden Pivot patterns on the daily chart now spent, we can use a 0.618 retracement of the bull leg from the July 1 low as a target.  The Fibo support lies at 1647.01, $10 beneath today's so far low.

Actually, I was kind of looking forward to it after last winter's postponement. But take a gander at today's chart and analysis for the shares of Goldman Sachs.  My worst-case number is technically impossible, as you will surmise, but a fall below $30 is hardly unthinkable.

Who would have imagined just a few short years ago that a torrent of capital from all over the world would ultimately seek safety in the bonds of a country whose debts, public and private, and unfunded liabilities tally an estimated $160 trillion dollars?  That is very clearly what is happening, and it seems entirely predictable that it will all end badly once the entire financial world has piled onto the same side of the trade. Be that as it may, you can see in the continuous monthly chart a Hidden Pivot rationale for further upside to at least 152^02.  This target comes from a continuous chart and should not be used for precision shorting, but it is nonetheless valid as an analytical benchmark. If so, 4 percent mortgages are coming as promised, even though it is doubtful that many borrowers will qualify.

As anticipated, stocks have finally fallen out of the ominous distribution pattern begun in the wake of early August's heavily oversold lows. For the Dow, this implies more hard selling all the way down to 9569.  Note in the accompanying chart that the sibling 'p' midpoint of that Hidden Pivot, 10643, was exceeded yesterday by 46 points -- sufficient to imply that a further fall to 'D' has become an odds-on bet.  Our bias as traders should therefore be bearish for now, although a dead-cat bounce today exceeding 10940 would offer bulls a very faint glimmer of hope for the near term.

Hey, don't get me wrong, I was actually looking forward to doing that grass-skirted hula dance in lower Manhattan -- the one that emergency surgery postponed last winter.  But at the rate this cinder block has been falling, it may yet deny me the opportunity, since my hula pledge would be negated by a drop below $30.  That doesn't seem to be in the cards at the moment, since Goldman shares bounced yesterday from within inches of the Hidden Pivot midpoint support shown in the chart .  The bad news -- bad for Goldman and its shareholders, that is -- is that the fairly precise midpoint bounce has corroborated its 'D' target of minus 9.69 (!).   Now, we know that can't happen, of course, but let me remind you that negative targets came up for Lehmann, Bear Stearns and Fannie Mae in the infamous forecast that I sent out several years ago, just ahead of the bank stocks' capitulation.

This interview was to have concerned my recent editorial concerning Amazon’s avoidance of sales taxes. However, with stocks and commodities plummeting on Thursday, we instead talked about the likelihood of further carnage as the ‘risk trade’ unwinds globally. We also discussed the deflationary implications of all this, notwithstanding the relatively piddling inflation that is likely to continue at the grocery store.

Don’t let this nasty shakedown in bullion scare you. For the record, we are quite confident that gold and silver will be back on track soon, bounding toward new record highs. But both may have a little farther to fall if forecasts disseminated earlier to Rick’s Picks subscribers prove correct. Specifically, we’ve been drum-rolling a possible 1709.20 bottom for Comex December Gold, and a 35.70 low for December Silver.  As of yesterday, the latter had overshot its target by 17 cents, hitting a 34.53 low that in a single day shaved 10 percent off the value of the world’s store of silver.  Gold, for its part, didn’t quite reach the 1709.20 target, instead turning higher from 1723.20. We think the December contract’s so-far $29 bounce from that number will prove short-lived and that the futures will make an important low at or very near 1709.20 today or Monday. If so, this is likely to put pressure on Silver, perhaps pushing quotes below $35 for a day or two. In any event, if the selloff in bullion is not over already, it will be soon. Those who follow Rick’s Picks closely would not have been surprised by yesterday’s across-the-board avalanche in commodities and currencies.  The night before, a commentary bearing the headline “Strong Dollar Predicting Europe’s Breakdown” went out to subscribers and readers. Our actual target for the Dollar Index lay well above, at 79.86, but yesterday’s explosive move came within 1.06 of hitting it. We remain confident the target will be achieved, albeit earlier than we might have expected.  If so, and the dollar's rally has further to go, yesterday’s dramatic unwinding of the so-called “risk trade” will continue apace. How much farther?  We’ve provided subscribers with a precise target for the December E-Mini S&P futures, and although the carnage could conceivably