Friday, October 21, 2011

Gold went impulsively bullish on the hourly chart at around 11 a.m. with a thrust that had good camouflage potential. Notice in the chart how the A-B leg got past the required internal and external peaks without disturbing a "marquee" peak at 1631.60 that we should hope attracted the rapt attention of our competition . The pattern even has single-bar coordinates all around, so it was ideal for hitching a ride north. Entry was signaled at 1682.60, but the so-far high at 1631.00 is $2.10 shy of the 1633.10 needed to rationalize taking profits on half the position. That would be what we classify as a "successful" camo trade, but it would take a run-up to the 1642.10 'D' target to produce a camo "winner."  If the futures can do just a little better, surpassing the small peak at 1645.60 recorded Wednesday on the way down, that would leave bulls in good position to recoup some lost ground come Sunday night.  

Index futures were unchanged as we went to press around 7 :30 p.m. EDT. Although for technical reasons I've emphasized a bullish scenario over a bearish one in the S&P tout, my gut feeling is that Thursday evening's worrisome headlines were unlikely to produce a happy outcome by morning.

Downside to at least 479.62 appears likely, although any further slippage would augur 470.18.  These Hidden Pivot supports are, respectively, the 'p' midpoint of the large pattern shown, and the 'D' target of the smaller one, and they are probably the best that bulls can hope for over the near term.

The recovery in the second half of yesterday's session stalled at the 1214.50 midpoint resistance of the pattern shown, but if it gives way, look for a follow-through to at least 1236.00, its 'D' sibling. Since Euro-angst remained unmitigated yesterday afternoon, we should probably allow for a negative outcome as well. If it comes, the first place we might look for a turn would be around 1180.75.  That's a Hidden Pivot support, but I don't recommend using it for bottom-fishing (other than via camouflage), since it coincides with some structural supports created last week. _______ UPDATE (12:18 p.m. EDT):  A powerful rally sent the futures soaring 25 points today -- to a 1235.75 high just a single tick from the target I'd proffered. I hadn't explicitly advised a short there, but I hope you were able to make some hay either coming or going.

Eerie, isn’t it, watching the U.S. stock market dog-tail the headlines stirred up by Europe’s never-ending financial crisis. The mainstream media would have us believe that whatever U.S. stocks do on a given day can be attributed to the latest news concerning Greece. In fact, the world’s newsrooms are sinking deeper and deeper into hallucination, since nothing has occurred to alter Greece’s inevitable slide toward default. Halfway into yesterday’s NYSE session, the financial headlines at Google news were telling us that stocks had fallen because of supposed uncertainties over Greece.  An hour later, when stocks rallied to end the day slightly higher, we learned that the “zigzagging” price action had been caused by a series of “conflicting headlines” concerning European debt. Merkel and Sarkozy were not to blame for this, either, since all they did was issue a joint statement that EU leaders would have a bailout plan for Greece in place by Wednesday. We can hardly wait to see what they’ve come up with. But if it triggers more riots in Athens, how are investors supposed to react?  A few months ago, rampaging torch mobs were seen as evidence that austerity measures imposed on Greece were sufficient to satisfy lenders. Now, however, lenders should fear that any futher tightening will send the country irretrievably into civil disorder and chaos. It would be naïve to think that such a spectacle would not have its effect on Occupy Wall Street. But riots? We’d bet against it, at least for the foreseeable future. The difference between Greece’s mobs and America’s emerging tent cities is that the latter are coming to austerity one small step at a time rather than having it shoved in their faces via government edict. But that is not to say that America’s descent has been imperceptibly gradual. That