October 2011

As several eagle-eyed Pivoteers noted in the chat room, the conclusions I drew from the chart (see inset) were incorrect, since the external peak shown does indeed sit in the shadow of a higher one.  Thus, it would take a print above the11904.84 peak recorded on August 3 to truly refresh the bullishness of the hourly chart.  That wouldn't be as subtle as the erroneous 'breakout' I'd inferred, but it would nonetheless keep bulls on the attack.  Regardless, the bullish pattern at the right-hand edge of the chart is still tradable.

Silver has moved down and away from its rebound high of 33.585, cancelling Wednesday's impulsive bullishness and leaving us with a trendless picture.  The silver bears defended their "goal line" of 33.585 yesterday, pushing the price back down to, what, the fifteen yard-line?  After surpassing a whole collection of prior highs on Wednesday, silver turned around and wiped out the "C" point and both of the "A" points that we were watching.  That move down might emerge as an impulse wave that we can use, but we'll have to watch for a "C" point to emerge, and then we'll have to choose from among several "A" candidates.  So what is there to say?  We should continue to respect the magnetism of the rebound high of 33.585.  Somehow a breach of that level almost seems necessary before we get the follow-through to the downside that our method tells us is probably coming.  (Posted by Doug "harry" McLagan)

If the modest decline in gold and silver yesterday brought about a trend change, it was from slightly upward to perfectly sideways.  Gold fell below the "C" point of the pattern that we watched for a couple of days, and a small but elegant bearish pattern was emerging on Thursday evening (A=1686.10).  Traders should watch for this pattern to be activated and to calculate and evaluate the pivots for tradeworthiness.  Based on the size of the impulse wave, stop-losses should be at least four ticks below either pivot.  In the larger scheme of things, the charts are not telling us which way the next strong move will go, but it continues to seem reasonable to expect a follow-through move down, echoing the recent drop to 1535.00, perhaps after some further recovery.  It might be that the gold market will have to decide, as it were, whether to "wash out" with a deeper pullback low fairly soon, or to consolidate sideways for longer than a lot of traders might be expecting.  (Posted by Doug "harry" McLagan)

Mining-sector bellwether Goldcorp may have turned the corner with this week's impulsive thrust to new recovery highs.  We'll be following the stock more closely for potentially important clues, but for now, check out today's tout and the chart that accompanies it for some encouraging news.

Faint signs of life have appeared on the daily chart with Wednesday's impulsive thrust above an important external peak at 48.39 from September 27.  The old peak was exceeded by just 11 cents, but that is more than sufficient for us to infer that a second bull leg -- or at least an attempt at one -- lies in the offing.  Because of the elongated k-A segment (see inset) the stock will need to come down to at least 45.42 to be considered fully corrected for a follow-through thrust, but there is no worse than an even-odds presumption at this point that this will occur. Stay tuned, since a rally in bellwether Goldcorp would obviously have bullish implications for the mining sector as a whole.

The prospect of finding a 'camouflage' entry for the next leg up remains intact, since the bullish pattern that I flagged on the daily chart yesterday is continuing to correct in b-c fashion. While we should always be open-minded enough to allow for the somewhat unexpected 3000-point collapse in the Dow, my gut feeling is that the broad averages are headed higher over the next few weeks, especially since October is "always" the month when stocks get nuked, if they do.  One further contrarian possibility we should be willing to entertain is that the rally is not yet ready to correct, and that the AB impulse leg launched from 1068 two weeks ago will surpass yet one more "external" peak before DaBoyz allow bears to carry the dead and wounded from the battlefield. The external peak I am referring to is the 1223.75 high recorded on August 31 (see inset), and if it is exceeded from here with no intervening b-c correction on the daily chart, we might well infer that the Christmas Rally has already begun.  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.

[What does it take to live in America as a truly free person?  More sacrifices than you  might imagine, actually.  The author of the guest commentary below, self-described Anarchist Carole Gibson, never lets the government dictate the terms of her life. That means, for one, avoiding airports and commercial jets, where she would be subjected to all of the rules and intrusions that most of us have come to grudgingly accept. Not Carole, though. A regular contributor to the Rick’s Picks forum, she explains below how she strives to keep herself beyond the reach, both legally and literally, of Government. RA] Tired of living under the heavy hand of government? My advice is to stop complaining and do something about it. No, I don’t mean demonstrate, write “your” representatives or vote; I mean take your life into your own hands and create the freedom you desire without waiting for someone else to do it for you.  I have found ways to exist in this world maximizing my personal freedom and you can do it too. I believe that the best government is that which governs least.  In fact, my beliefs about government are anarchical.  My definition of anarchy is “a theory that regards the absence of all direct or coercive government as a political ideal and that proposes the cooperative and voluntary association of individuals and groups as the principal mode of organized society”.  Under this definition, I am absolutely an Anarchist. Governments that use force to impose their will on people without the people’s consent are incompatible with a free society.  When I write “consent,” I specifically mean each individual’s consent to be governed; I do not mean any implied consent supposedly given by the collective.  For example, my neighbor, my neighbor’s ancestor, or my neighbor’s representative cannot give their

Silver is in position to move strongly higher, if the bulls can push it up through the "D" target of a small pattern and then through the important prior high of 33.585.  Yesterday silver broke out of its triangle with a modest but very impulsive rally.  Only the rebound high of 33.585 remains, and a move through that level will probably be energetic.  The midpoint of the small pattern shown in green on the attached chart has held silver down for the time being, and its "D" target of 33.475 is just below the key level.  If that target is approached, bulls will almost surely gun for 33.585, and they'll probably get it.  If so, the next question will be how much damage they can do to the bearish look of the longer-term charts.  In this potentially explosive situation, we don't see any short-side trades that we can recommend in good conscience.  The enemies of higher silver prices are now playing a goal-line defense.  (Posted by Doug "harry" McLagan)

With Thursday's touts, I haven't gone very far out on a limb, but there's room nonetheless for a bullish play in the E-Mini S&Ps if traders remain intoxicated with the bullish "story" on Greece et al. Not that every one of them doesn't know it's going to end badly; just that each is acting as though he will be just ahead of the panic when it hits.