Monday, September 26, 2011

The Swissie looks like it's headed below par, to a Hidden Pivot support at 0.9845.  That would be a far cry from the four-francs-to-a-dollar price that obtained when we traveled in Europe during our college days, but it would nonetheless go a considerable ways toward ameliorating the price disadvantage that the country's manufacturers have suffered in recent years.  Although we asserted here earlier that the Burgher mentality would eventually prevail, rescuing the currency from the global dungheap of competitive devaluations, the tradeoff of a cheaper swiss franc for higher import costs may prove bearable because  the currency was so overpriced to begin with.

It would take a print down at 476.39 to break the spirit, if not necessarily the spine, of the long-term bull market. The significance of this number is shown in the chart, but you should keep in mind that the move would have to occur without leaving any discernible, uptrending b-c corrections of daily-chart degree.

Although there are no compelling starting points for this selloff, we'll use 3.9975, the best of a mediocre lot, to tell us where the futures might turn. My worst-case target is 2.612, subject to a possible midpoint pounce and corroboration at 3.00. The latter number can serve as a minimum downside objective; an upthrust to 3.4950, the price where bulls would regain the upper hand.

A powerful downdraft in commodities has brought March Corn down to within a hair of a 644.50 traget disseminated here a while back. Traders can still bottom-fish that number as originally advised if camouflage is used to limit risk, but this recommendation should be considered expert play, since the dramatic selling in precious metals could create air pockets in the "softs."

With a swift plunge of more than $10, December Crude has crushed the $78.60 midpoint support of a target I gave here a while back, bringing into focus its 'D' sibling at 66.25 (see inset). That is now our minimum downside objective, but the case would become even stronger if the futures return to 78.60 in the days ahead.  A secondary target at 68.21 should be considered and , like the higher number, be used to bottom-fish. It comes from the one-off  'A' at 99.77, but if it were to be exceeded by as little as 60 cents, 66.25 would be in play.  There is also a minor target at 70.67 shown in the chart, and it too could foster a tradable bounce. _______ UPDATE (October 4): The futures have indeed rallied to 78.60 -- exactly -- affirming the accuracy of the more important downside target at 66.25.  If and when the December contract gets down there, we should be prepared to bottom-fish aggressively. _______ FURTHER UPDATE (October 5, 7:30 p.m.):  The futures eventually moved higher, but the 66.25 target should still be considered affirmed.  For now, though, will have to wait and see if the rally flies or dies. My hunch is that it's a hoax.

December Silver is getting nuked Sunday night, trading well beneath the worst-case target at 27.105 that I gave here last week when the futures were trading $5 higher.  With index futures getting hit as well, though not (yet?) so severely, it is clear that whatever was troubling traders last week has spilled over into this one.  Because 27.105 was such a compelling support, at least in theory, we must infer that there is still pent-up selling. Regardless, the futures are so breathtakingly oversold already that they could conceivably stage a powerful snapback rally at any time.  If there is a logical spot on the hourly chart whence this might occur, I'd go with 24.420, the 'D' target of the pattern shown.  There is also a case to be made for 25.590, for reasons that will be apparent when you view the chart.

Nearly all ABC pathways point lower right now, but we should use the leastmost of them (see inset) to produce a minimum downside objective for the near term. It lies at 1606.20, just 1.00 beneath tonight's so far low, but if that Hidden Pivot is breached, brace for more slippage to its 'D' sibling, 1546.20.  Alternatively, buyers would signal a credible reversal if they can push above 1704.90, visible in the chart as an imperfect "external" peak made Friday on the way down.

A heavily manipulated rally Sunday night appears to have fizzled into a bull trap.  After rising the equivalent of more than 100 Dow points, the futures are back to unchanged at the moment, their nefarious aims submerged in the presumptive distribution pattern that has prevailed since early August.  Charts above the intraday level do not tell us exactly when this deadly game will end, but it should be noted in any event that tonight's goosing has left an ostensibly bullish pattern on the hourly chart (see inset). Night owls should attempt to board only if they are adroit in the art of camouflage trading, since my confidence is low that there will be news overnight that DaBoyz can leverage into a follow-through upthrust.

Shortly before 3 a.m. EDT, December Gold has bounced almost precisely from a Hidden Pivot target disseminated to subscribers when it was trading $66 higher.  This could be the washout low we've been looking for, although December Silver still has a ways to fall before it reaches a corresponding target. If Gold's so-far tentative bounce is going to pull Silver out of its tailspin, it'll require a move exceeding 1592.70.  (That would turn the 3-minute chart impulsively bullish.)  Otherwise, look for Silver to dive to its target, presumably pulling Gold down with it.