Friday, February 17, 2012

The crude oil market has a well-defined resistance area between 103.90 and 105.80, with a pair of hidden pivots just above there at 106.39 and 106.60.  The late-2011 decline to 74.95 was the biggest pullback in the oil price since its historic post-bubble low.  A very fast rebound from 74.95 to 103.37 has been followed by sideways consolidation.  A number of prior highs ranging from 103.90 (the grey "B" on the attached chart) to 105.80 (in May of last year) establishes a strong area of resistance.  Just above that range are hidden pivots at 106.39 and 106.60.  If the oil price can breach the 106.60 pivot decisively, we might infer that it is on its way to challenging the post-bubble high of 114.83.  That will leave the all-time high of 147.27 as the only upside milestone remaining to be surpassed.  Oil bulls should look for camouflaged buying opportunities.  (Posted by Doug "harry" McLagan)  _______ UPDATE (2:25 a.m. EST, Feb. 21): The pivots which correspond to the ones highlighted in this tout are at 106.64 and 106.72 for the April 2012 contract, which is now the front futures contract for crude oil.

Yesterday's action in the gold market was dramatic but inconclusive with respect to which way the next big move will go.  The low of 1706.70 is visually outstanding but has not (yet) become part of any useful patterns.  Gold traders should now be watching a series of prior highs ranging from 1739.20 to 1818.80, as shown on the attached chart.  All of these priors would be surpassed if the "D" target of the pattern indicated were to be reached.  Yesterday's decline missed by three ticks the important low marked "C" on the chart, below which there was a lot of daylight.  The pattern mentioned yesterday remains active with a "D" target of 1690.10, but the market has moved back to being closer to the first notable upside pivot at 1763.20, which is the midpoint of the pattern marked on the chart.  Just as we noted yesterday with regard to long- and medium-term rallies needing further corrections, yesterday's relentless recovery from the low also needs to pull back.  We'll have to wait and see whether the market obliges.  (Posted by Doug "harry" McLagan)

Wednesday night's bullish tout anticipated the miserable stupidity of yesterday's rebound, which effectively transformed the previous day's equally stupid decline into a v-shaped swoon.  Where to next?  Probably higher, but does anyone really care? In any event, the rally created a bullish impulse leg on the hourly chart -- one with a short k-A segment that in theory will require little corrective action to set up another big bull leg. I doubt this will happen today, and so even on a camouflage basis, I cannot enthusiastically recommend looking for a way to get on board -- especially on a Friday, when the pathological forces that drive the markets are likely to be at their strongest.

Primer for Investing in Canadian Farmland [A while back, our good friend Tom McCafferty argued here that few investments are likely to outperform Canadian farmland over time. In the essay below, he explains how you can invest in Canadian farmland yourself.  Besides being a former farm realtor, Tom is the author of numerous acclaimed books on trading. His Options Demystified is a how-to primer we enthusiastically recommend to all who would seek to profit from puts and calls.  RA] “Put your money in land, because they aren't making any more of it!” This is the most famous of the Will Rogers quotes on land or real estate.  When I think about burying some serious money for the long run, I think of farmland.  In a recent op-ed for Rick’s Picks, I was very bullish on Canadian farmland.  My reasons: 1) Canadian farmland is very productive; 2) low cost on a global basis; 3) Canada is a stable country with a very adequate supply of water, energy and fertilizer; and 4) even the weather is cooperative as its growing season gets a little longer each year. Some of Rick’s readers ask for more details. When ever you invest in land as a non-resident, you need to check the local laws.  For example, when I was a farm realtor I had a group of Italians interested in buying a 2000-acre farm in Illinois.  Now Illinois has a law prohibiting non-resident aliens from owning farmland.  But it doesn’t prohibit corporations from buying farmland.  So, we created a corporation and bought the farm. How does this apply to buying a Canadian farm?  First, does Canada have any restrictions on how much land can be owned by non-residence aliens?  The answer varies by province, as it does in the United States by state jurisdictions.  Here’s