October 2011

As is the case with December Gold, the vicious selloff in this vehicle tonight is not quite as bearish as Friday's rally was bullish.  The bad guys could still take charge by pushing the futures beneath a 32.05 'external' low recorded on 10/25, but there's no reason to give them the benefit of the doubt before they have done so. Alternatively, bulls would be back on the attack with a print exceeding the 35.365 midpoint resistance of the pattern shown. if that were to occur, we should infer more upside is likely to at least 36.640, its 'D' sibling.

Gold is getting gratuitously pounded Sunday night, but the so-far $40 selloff has yet to negate the bullishness of Friday's impulsive thrust. Recall that that rally surpassed an external peak at 1751.80 recorded on September 3, refreshing the bullish energy of the hourly chart. In comparison, tonight's decline, as nasty as it seems, has so far fallen $2 shy of penetrating a 1707.20 'external' low from October 27 that is of roughly equal importance. What this implies is that bulls are winning a 'duel' so far against sellers who evidently are lacking in guts.  Although the good guys could go back on the offensive with a push above the 1731.10 Hidden Pivot midpoint of the pattern shown, bears could take command short-term by exceeding 1696.50 to the downside.

Not for the first time since its epic collapse of 2008, natural gas looks like it might have made an important low.  Many traders and investors keep an eye on the long-term natural gas charts in anticipation of another big uptrend from current low levels.  There was a healthy rally two years ago, but since then, bottom-fishing nat gas has been a mug's game.  Yet the clean-burning fuel undeniably has value, and every two or three years its price explodes upward.  The attached chart makes a hidden-pivot case for last week's low as a turning point.  The jagged intraday charts of natural gas futures are not to every trader's liking, but if you have the direction right, the rewards can come quickly.  Don't venture onto this battlefield without your hidden-pivot weapons, and strictly limit the risks you take.  (Posted by Doug "harry" McLagan)

Equity markets remain in bullish impulse mode, despite drifting lower since Thursday afternoon's high.  If we apply a rule of thumb which requires a 30% retracement before we start taking a BC leg seriously, a further decline to 1267.25 would give us something to work with, as is shown on the attached chart.  The bigger move up from 1068.00 on October 4 has pulled back by almost 28%, but because this has not resulted in a strong ABCD picture, we'd be skeptical toward a "D" target trade.  Watch for a smaller pattern to emerge based on last week's impulsive move up from 1216.50.  (Posted by Doug "harry" McLagan)

[In the essay below, Tom Waldenfels, aka “fallingman,” a regular contributor to the Rick’s Picks forum, explains how an America steeped in the ideals of freedom lost its way.  A political perversity of the day, he notes, is that one earns the label “progressive” by arguing for more  government control over our lives.  Is the system too far gone to save? Read on for Tom’s answer. RA] What constitutes progress for us as a species? Is it defined by advancements in science and technology?  Can we point to the rise in living standards these advances have made possible and say that’s what progress is all about? Sure, that’s a big part of it, but I’d like to suggest that this kind of visible and easily measurable progress is actually an artifact of an advancement that’s more fundamental and far less appreciated.  I’m alluding to the spotty but impressive progress we’ve made over the centuries in relating to each other on a non-violent, consensual basis. Lord knows, it wasn’t easy.  Those who enjoy dominion over others don’t readily give up their control, and much of the world’s population still suffers under the thumb of the some ruler or another who uses brute force or threats of violence to keep the people in line.  Subjugation by force is still the norm, unfortunately.  But a radically different arrangement has been pioneered in the last few hundred years where the power of the state and its thuggish rulers is minimized.  People are far more free to do what they want, with whomever they’d like, and that has changed the world, unleashing an incredible surge of creative energy.  The result?  A level of material prosperity no one could have dreamed of, for one, and the priceless ability to control one’s destiny. True Progress In this

The fascinating -- and pathetic -- thing about Thursday's stock-market melt-up was that not a single share was bought by anyone who actually believes the latest supposed bailout plan from Europe will save much of anything. Think about it. What kind of imbecile would buy into the notion that the feather merchants and alchemists can put Europe's financial house in order by borrowing into existence yet another trillion euros of metaphysical money?  Some of the buying that impelled Thursday's wilding spree was done by institutional traders who would  lose their jobs were they to resist the flow -- or in this case,  the torrent, of misplaced confidence. But the heavy lifting was all short covering, since merely bullish buying is never sufficient to push stock through resistance levels. And you had better believe the pros came in short up the ol' wazoo on Thursday -- and that they mistakenly got even shorter in the early going. With the week drawing to a close, these clowns appear to have learned nothing.

Shortly before 4 a.m., the futures had exceeded our 34.935 'D' target, a Hidden Pivot, by 77 cents, and gone on to exceed yet another at 35.655 by five cents.  This is healthy action and suggests it is Silver that will pull Gold higher today, rather than the other way around. There is but one rally target left that we can extract from the hourly chart -- 36.885, a Hidden Pivot whose pedigree is shown in the inset.  We'll use it as a minimum upside projection for now while noting that it would take a downdraft today to 35.055 to even hint of trouble for the short-term.

The rally nosed above 1751.80, an 'external' peak, refreshing the bullish energy of the hourly chart for another charge that should hit 1756.70, at least. The futures have retraced nearly $18 since, but that's not as impressive as what bulls achieved earlier in the day.  In fact, sellers would have to push this vehicle down a further $22.20, breaching a structural support at 1714.60, to negate the constructive value of  Thursday's surge.

[The Occupy Wall Street movement may not know it yet, but Ron Paul is their candidate. You would never guess this is so from the mainstream media's aloof, retrograde reportage of the campaign season. In the essay below, my wife, Marilyn, explains why the TV networks and the New York Times are missing a grassroots groundswell that will be seen as a Political Revolution by the time the 2012 rolls around. If this proves to be so, look for a shot across the bow when disaffected young people switch their affiliation to Republican so that they can get Rep. Paul nominated. RA] No one questions that “something” is brewing, or rather simmering beneath the surface in America. The discontent, having finally reached the heretofore silently and sublimely disaffected youth who are occupying Wall Street and any other street in any other town you might mention, is a phenomenon that has every journalist and blogger on the planet analyzing their heads off.  Is the OWS movement the left’s Tea Party? Will progressive politicians regret throwing in with the legions of urban campers? Do these people have a platform? Who is supporting  them? (Well, we actually know that Soros and the unions are doing that, because  they’ve pretty much told us) These are the questions everyone is pondering, and yet the most obvious issue – one that hasn’t been much written about --  is how, and, much more importantly, where will this whole revolution-in-the-making play out? Don’t bother reading the New York Times or tuning in to the nightly news, or even punching up talk radio on your way to work. By the time any of them  is onto the latest “breaking story,” the social networkers have already tossed it into the rerun heap, having dissected it to death in the preceding