Tuesday, October 11, 2011

T-Bond futures have already broken down beneath late September's lows, but it remains uncertain whether the Dollar Index is about to do the same.  If so, it will lend further buoyancy to stocks, crude and precious metals; if not, we should see the dollar's rebound gain momentum over the next 2-3 days.

Bulls will face a key test at 549.59, the midpoint resistance of the pattern shown, and if they can get past it, closing above the pivot for two consecutive days, its 'D' sibling at 580.04 will be well in play. In the meantime, we should use the lower number as a minimum upside objective for the near term.

Copper has been beaten down so hard that it was overdue for a sharp reaction. The one that has occurred thus far off the recent low near $2.99 looks quite strong, since it has run up nearly 15% so far without correcting on the intraday charts. A further rise of eight cents from these levels would add yet another peak to the impulse leg's conquests and the second 'external" in the series. The actual high lies at 3.4215, and if it is exceeded before the futures effect a b-c correction on this chart, it would suggest there's enough buying power to keep copper buoyant for at least 3-5 weeks, if not longer.

We should brace for more upside, since minor-thrust peaks yesterday routinely exceeded their targets, if not by much. There's also the not inconsequential push at day's end past 1190.00, a visibly distinctive high recorded on September 27 that presumably would have been more trouble  if this short-squeeze rally were lacking in gumption.  Most immediately, as of around 12:30 a.m., the futures were working on a short-term target at 1201.00 whose coordinates are shown in the chart.  We should infer more strength if it's easily exceeded, but leveraging it, even via camouflage, could prove tricky because of the two imposing peaks near 1214 that were created in mid-September.

So long as silver remains below the 33.585 level, the outlook is for bearish follow-through action.  Unlike gold, silver has not yet revisited its first rebound high from the deep low of September 26.  That rebound high of 33.585 is, for now, the "C" point that we should be using to judge how low silver might go before its long-term uptrend resumes.  The steep plunge began from the 40.770 level, and the corresponding midpoint pivot is just above the low, at 26.275.  The "D" target of 18.965 is difficult to imagine, but this is the silver market after all.  Should follow-through selling take silver through the midpoint and the low of 26.150, the biggest obstacles to its reaching the 18.965 "D" target will be the 2008 high of 21.350 (spot price), and the round number of $20.  In fact, the odds of a reversal around the 2008 high would have to be considered quite good, given the familiar "kiss goodbye" pattern in which former resistance becomes support.  The very short-term silver charts are not telling us much about imminent action.  (Posted by Doug "harry" McLagan)

The gold market is going to have to tell us whether it is back in bullish gear or merely retracing before another leg down.  Just after 6:00pm Eastern Time, the futures popped up through their recent high of 1681.50, which cancelled all active bearish patterns for the time being.  But our method tells us that gold probably has some unfinished business on the downside, given the recent strong decline to 1535.00.  That move came all the way from 1923.70, but it intensified greatly from 1819.40, which we can use as an "A" point if and when such a pattern is confirmed.  The decline from there has already retraced by more than half, which ensures that the midpoint (if confirmed) will be above the 1535.00 low.  In the meantime we should watch two levels in particular: 1701.50, the "D" target of a pattern which began at 1629.20 (20-minute chart or lower); and 1756.30, the midpoint of a large pattern with "A" at 1481.0 on the weekly chart.  If gold's current buoyancy is only a BC retracement in progress, one of these levels might become the "C" point that we are looking for.  Traders shorting the 1701.50 target should put their stops no lower than 1702.10.  (Posted by Doug "harry" McLagan)

The protest that started nearly a month ago in the Battery now has a name – Occupy Wall Street -- and we’re sorry we didn’t think of it first, since the catchy title – “Occupy (fill-in-the-location)” -- seems destined to go viral worldwide. We’re not sure whether the demonstrators’ demands will eventually skew right or left politically, or perhaps in neither direction, but Mr. Obama and Rep. Pelosi have not wasted any time getting the jump on the Tea Party and GOP frontrunner-by-default Mitt Romney by presenting the demonstrators with verbal fruit baskets and bouquets – everything but the key to the city, which as of this writing was still in the safekeeping of Mayor Bloomberg.  To her credit, Ms. Pelosi zeroed in an actual reason for the demonstrations, even if the protestors themselves haven’t quite figured it out. It’s about jobs, she told ABC News in an interview -- and that is undoubtedly on many of the protestors’ minds. But it seems predictable that the movement will come to be “about” many more things as the months roll by. What is not so predictable is who will assume leadership, or perhaps try to co-opt the movement from outside, as it spreads to every city, town and village in the Western world. But if protests should turn violent – a possibility that we’d rate an even-odds bet at this point, it’ll be interesting to see whether the Establishment that has rushed to embrace the demonstrators will start cracking heads. Whatever happens, the protestors have nearly a year to build up steam ahead of the national political conventions.  Charlotte, North Carolina, will play host to the Democrats in early September, and although the event, with 35,000 delegates reportedly planning to attend, is expected to generate $150 million in business for the