September 2011

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.

There is no doubting the persuasiveness of the 27.105 correction target shown in the chart, especially since its sibling 'p' midpoint at 35.700 was exceeded by 17.50 cents at yesterday's lows.  Also, we have to consider the possibility that Gold sellers are not yet done and that a finishing stroke to below $1700 would put renewed pressure on Silver.  Taking all of that into account, I'm nonetheless going to bet on a bullish turn in Gold from somewhere near $1700, accompanied by a more or less synchronous reversal in Silver.  That scenario flouts a Hidden Pivot rule that says Silver should achieve its 'D' target if it smashes a 'p' support, but so far the overshoot is only 17 cents, and the eventual low may not be much worse. _______ UPDATE (12:23 p.m. EDT) Although I've put out a new correction target for gold that lies just $10 beneath the so-far low created by today's avalanche, the 27.105 target for Silver noted above looks even more compelling as a result of the selloff.  In anyevent, bulls would need to push this vehicle back up to 33.080 to regain the advantage.

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.