November 2011

Traders could have caught a nice ride yesterday from an interim low at 3.387, since it fell within 0.003 points of a Hidden Pivot support flagged in the chat room by 'Pivoteer' and amplified in my tout. The subsequent bounce would have been worth as much as $500 per contract if you'd exited before the futures relapsed down to a so-far low of 3.325 Wednesday night. That's a penny beneath my worst-case bottom, but I still expect a major rally from very near these levels, so camouflageurs are advised to remain diligent. I'll suggest using the 5-minute chart, since the bars are very thin if you go any lower.  If you'd prefer to use UNG, the NatGas ETF, the 7.32 pivot given here yesterday is still the place to look for a tradable turn. ______ UPDATE (11:35 a.m. EST): A 'camo' pattern launched at 4:50 a.m. from 3.341 would have triggered a long from 3.386. Half of a four-contract position would have been exited at the 'p' midpoint of the pattern, 3.401, and a third contract at 3.430, the 'D' target.  The remaining contract, adjusted for theoretical gains thus far of 7.50 cents, has an effective cost basis of 3.311. Let it ride for now with a fixed stop at 3.345.

Although U.S. stocks eventually did the right thing, plummeting to end the day, they were down only slightly for most of the session – a surreal performance, considering the hellish new tack of Europe’s financial crisis. If investors were already jittery about bailout-mania on the Continent, Wall Street bankers should be incontinent with fear over the rise in interest rates that has started to spread outside the high-contagion PIIGs zone. Even ostensibly top-tier borrowers like Holland, Finland and Austria have been getting socked with higher borrowing costs lately as investors have dumped triple-A paper issued by those countries. As for the deadbeats, Italy’s bonds pushed above 7% while yields on Spanish debt surged as high as 6.358%. Imagine a country trying to grow its way out of debt when it’s paying those kinds of rates on a Matterhorn of existing debts. The allegedly good news is that the technocrats who have replaced top elected leaders in Greece and Italy will come up with a plan to save the day. Yeah, sure. You can bet that Ben Bernanke’s got one they can try. Germany would veto it, for sure, and not because Germans remember the 1920s hyperinflation as though it were yesterday.  No, it is plain common sense that has prevented Germany from acceding to the populist solution of revving up the printing presses. Although Merkel seems eager to patch things up for perhaps another month or two by any means, there is resistance among German bankers to Belgium’s Plan A, which would entail selling bonds issued in the name of a federated Europe. This might sound like a great idea to the village idiot, or to Nobel economist Paul Krugman, but to anyone with common sense and no ideological allegiance to Karl Marx, it is simply a hair-brained scheme to

We don’t often venture onto the tick chart, but we made an exception during this session to scrutinize a possible opportunity in December Gold. The opportunity was there, as it nearly always is in the micro time frame, but we learned yet again that the ability to execute the trade without even a moment of hesitation can be crucial. We also looked at a pattern that was tradable only because we paid close attention to the length of the B-C retracement. If your understanding of k-A segments and the “window rule” is fuzzy, this lesson may be helpful.

Careful here.  The 34.95 midpoint support of a bearish pattern projecting to 33.41 has been breached by eight cents.  That in itself is sufficient to tip our short-term bias negative, but if the pivot should be exceeded on a closing basis, brace for more downside to the 'D' target.

Although we usually use Hidden Pivots to trade prospective reversal points, I'll suggest trying something new to break the deathly tedium of this corrective dirge, which is about to enter its fourth week. The pennant formation in the chart shown has picked up no fewer than five price points on the daily chart, and it would pick up a sixth if 1225.50 were reached to the downside today. You can bottom-fish this number with a stop-loss as tight as 1.00 pont.  FYI, the slope of the rising line would put our 'buy' point at around 1227.00 if the low were to occur on Thursday. A 1267.50 target should be used to get short if the futures instead rally today.

Like December Gold, December Silver failed yesterday by two ticks to surpass an obvious external peak, consigning the futures to tedium for the remainder of the session. The bigger picture is less bullish than gold's, however, and so the latter will likely have to pull the former higher today if bulls are going to romp. That would imply minimum upside in this vehicle to 35.540 (30m, A=33.130 on 11/10).

Once again, in the throes of a superficially impressive rally, the futures narrowly failed to surpass an obvious external peak (1787.90), telegraphing the pointless ups and downs that followed. The look of things on the lesser charts is bullish nonetheless, and so I'll suggest using the 1813.50 target shown as a minimum upside objective for the near term.  Its 'p' sibling at 1787.20 has already been exceeded by a few ticks, and while that's encouraging, it is not quite sufficient to imply that a finishing stroke to 'D' is a done deal.

There was some interest in forecasting Natural Gas prices in the chat room yesterday, so I decided to take a crack at it myself.  Lo, the moderately big picture, vivid in the 240-minute chart I've reproduced alongside, suggests the December contract is close to a potentially important low.  The actual low so far has already exceeded my Hidden Pivot target at 3.416, but not by much, and the pattern itself is sufficiently clear that we should expect a tradable price reversal from somewhere near current levels.  Please note that I have allowed room for a somewhat lower low at 3.336 that would result if we use a plausible higher 'A' as the starting point of this down-cycle. Let's try to get long using camouflage tactics near the 3.384 midpoint (5-min, A=3.456, B=3.390, C=3.417) of a pattern identified in the chat room by 'Pivoteer'. FYI, an ETF said in the chat room to mimic NatGas futures bears the symbol UNG.  If it were to bottom at a target equivalent to the one above at 3.416, the turn would come at around 7.32.  This is caveat emptor, since, as I've been warning subscribers for years, ETFs were created for the sole purpose of shorting puts and calls to rubes.

Obama surely didn’t get where he is today on the basis of ability. That’s the premise of an August 2011 essay that I received yesterday via e-mail from a friend.  It seems implausible that a piece so devastatingly critical of Obama would have appeared in the Washington Post, but the details ring true and so I am running it regardless of its source.  Click here for the complete article.