Wednesday, October 12, 2011

Gold and silver have traded sideways, not far above their late-September plunge lows, for more than two weeks.  These trading ranges might appear very narrow, but the daily charts make clear that volatility has increased recently in these markets.  Yesterday's trading did not alter our forecast, in which both metals probably need to take another significant stab to the downside before the bullish all-clear signal can be sounded.  Yesterday gold narrowly made a new rebound high, and the subsequent selloff and partial recovery gives us an active bullish pattern that aims as high as 1714.50.  That level can be shorted with a stop at 1715.10.  Above there we have a midpoint pivot at 1756.30, mentioned yesterday, which is part of a very large pattern.  A decline to 1615.60 would confirm a pattern that is not quite as large but which gives us a target all the way down at 1402.30.  In the event of another new rebound high, these numbers will also move up.  (Posted by Doug "harry" McLagan)

Apple shares and March Corn yesterday signaled strong rallies ahead in the same way -- i.e., by slightly surpassing external peaks well to the left.  Check out my touts for both, since we'll be looking to jump aboard if the right opportunity should arise.

By exceeding the September 29 peak at 403.00 by 18 cents yesterday, Apple's recovery without Steve Jobs at the helm is belching fire. The rally spike created a legitimate impulse leg on the 240-minute chart, but it also left a slightly higher peak at 403 undisturbed. Pivoteers will see it differently, however, and so we'll be looking for a 'camo' entry opportunity similar to the one sketched out hypothetically in the chart.  I'll try to signal when it's time. Want to learn how to nail swing highs and lows precisely, and to manage trade risk with a simple approach? Click here for information about the upcoming Hidden Pivot Webinar on November 16-17 and a $50 discount.

[Our friend Rich Cash, a seasoned trader who has been through many bull and bear markets, has come up with some eye-popping numbers below for some of our favorite trading vehicles.  Silver at $10 an ounce when the Great Recession becomes something much worse? It’s just speculation now, but the point of the exercise is to mentally and psychologically prepare us for…anything. Read on for an old pro’s take on shifting paradigms. RA ] In August 1987, inspired by fellow Merrill Lynch Alum Arch Crawford and Harmonic Convergence bullish market hysteria, we commissioned a high net worth productive enterprise conclave at the Chemical Club, with its downtown view of the World Trade Centers and Statue of Liberty, all overlooking what was one of the busiest harbors in the world, since displaced by central planning mercantilist Shanghai, Singapore, Hong Kong and 9-11. Our topic was the unpopular if accurate one: The End of the Trend? Our turnout was less than the recent Buffett Obama Wall Street fundraiser at Four Seasons, “Tax Hikes for the Rich.” At the end of the trend, no one wants to hear about the end of the trend.  No one believes it and few bring themselves to trade it. So what if we are in decade-plus equity bear market, gold commodity bull market and  three-decade bond bull-market trends? Is there anyone on the street who thinks it even remotely possible that currently profitable paradigm trends will end? No? And we are unanimous in that. What about a Gedankenexperiment (thought experiment) financial fantasy just for fun and profit? Suppose Long Treasury interest rates, 2.694% as this is written, actually continued down to their current target of 0.8%, dead-as-a-doornail depression levels? Would it be fair to say there might be some changes in other asset prices? No man nor

Bulls tipped their hand yesterday with the little finishing stroke at the end of a nice rally (see inset). Notice how the intraday high at 664.00 bettered the September 28 peak, 663.25, by three ticks. That may not seem like much, but it is sufficient to tell us that buyers are eager to scarf up whatever supply is out there, big or small.  With a potentially powerful rally in the offing, we'll resume our vigilant search for low-risk entry spots:  either with the trend via camouflage, or against it at p and d retracement targets. We've been successful in recent weeks using both tactics in this vehicle, although we've yet to catch the Big Wave that may lurk on the horozon.  Stay tuned!

A presumably easy rally target at 1201.00 noted here yesterday is proving more troublesome than we might have expected, although it remains viable in theory.  It would appear that the entire supply zone from 1200 to 1214, and not just the peaks, will take some chewing through before DaBoyz can move this alleged "recovery" cycle to the next plateau.  Alternatively, a relapse today touching 1162.50 would suggest the short squeeze had come a cropper.