Friday, October 28, 2011

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

Copper is nearing the completion of a textbook pattern that targets 3.8660.  It is interesting that while stocks were catching their breath (until yesterday) amidst their steady climb, Doctor Copper gave back almost all of its October gains during the third week of the month.  But this seems to have been a misdiagnosis, and the good doctor reversed course into a blazing rally.  Being a volatile industrial commodity, the metal was kind enough to retrace its initial up-move by 35%, and the follow-through has resulted in a classic pattern.  The dollar risk involved in shorting 3.8660 will be substantial if the recommended stop at 3.8715 is used.  Alternatively short-sellers can look for a small bearish pattern just below the pivot.  (Posted by Doug "harry" McLagan)

Thursday's powerful rally in equities left our active patterns in the dust, and a new one that emerged after the day's high is under threat as the futures drift lower in night trading.  The bull trend which launched off of the October 4 low still lacks "structure" in that the pullbacks along the way are too small to serve us as BC legs.  In other words, the S&P500 is still impulsing upward 210 points later.  This move will become serious business if and when it gets past the highs of early and mid-2011, less than 100 points further up.  The small pattern that emerged yesterday targets 1303.00.  Its midpoint is half a point below "B" (the rally high) and therefore not well hidden.  Traders shorting 1303.00 should use a very tight pair of orders.  If the "C" point at 1274.50 is touched or surpassed, the pattern will be voided.  This is shown in the attached chart, which also illustrates why we all should have made a killing yesterday.  (Posted by Doug "harry" McLagan)