Monday, March 5, 2012

HUI – Gold Bugs Index (Last:523.35)

– Posted in: Current Touts Rick's Picks

The HUI's tiredness is too obvious to require explaining -- just look at the chart -- and last week's dispiriting price action did nothing to improve the outlook for the near term (i.e., 6-10 days).  If this vehicle were getting ready to launch, it likely would have done so from the lower red line shown in the chart. That's the 'p' midpoint of a bullish pattern (still) projecting to 565.37, but it became resistance again last Wednesday when HUI crashed it, nearly returning to the 25% line in the process. While this vehicle doesn't look like it's about to go to hell, we should be prepared for a tedious, trying stay in purgatory.   The outlook would swing in bulls' favor if they can end this week above the 534.32 midpoint.

ESH12 – March E-Mini S&P (Last:1365.25)

– Posted in: Current Touts Free Rick's Picks

The futures have been struggling for more than a week to reach a modest target at 1385.25, but their slog evinced a hint of failure on Thursday with a peak that missed impulsing above the previous day's high by just two ticks. It is tempting to infer that the rally is losing its guts, even with a flood tide of global funny money to float stocks higher.  Lest we pronounce the Mother of All Bear Rallies dead prematurely, however, we'll infer that the broad averages are simply waiting for the mote of "good" news it will take to re-animate the hysteria of shorts to goose this vehicle to its next rally target. More than any other force, it is short-covering that has been driving the rally through resistance levels for three years. Meanwhile, and most immediately, night owls can use the 1362.75 target of the pattern show to bottom-fish with a stop-loss as tight as 1.00 point. _______ UPDATE (9:39 a.m. EST): Sunday night's stage-managed weakness overshot the target, bottoming at  1360.50 and stopping us out for a nominal loss per contract of $50.50.  The action is short-term bearish, notwithstanding the weak short-squeeze rally into this morning's opening.  For the record, if you'd tried to use "camouflage" for getting in near the low, there were no single-bar points 'C' to work with, and therefore no entry opportunities of the kind we seek. Would you like to learn how we use the ‘camouflage’ trading technique to significantly reduce entry risk? Click here for details

SIK12 – May Silver (Last:34.740)

– Posted in: Current Touts Rick's Picks

Like April Gold, May Silver has generated a minor, bullish impulse leg Sunday night, although its potential as we went to press was fading in weakness that threatened to breach the point 'A' of the rally pattern (see inset).  If bulls wind up stymied, it could spell a relapse to as low as 33.645 over the near term, with last-ditch support at that Hidden Pivot's midpoint sibling, 34.295.  Those two numbers can be found on the 15-minute chart, where A=35.680 (March 1, 3:30 p.m.) and B=34.375 (March 2, 1:30 p.m.). Either number could be bottom-fished with a stop-loss as tight as four ticks.

GCJ12 – April Gold (Last:1706.30)

– Posted in: Current Touts Rick's Picks

A small but technically significant structural resistance at 1740.00 is still the number that bulls must beat to show they are capable of shaking off last Wednesday's assault by sellers -- including, presumably, some big ones with friends in high places. Most immediately, night owls should pay heed to a minor, bullishly impulsive pattern that was evolving late Sunday night (see inset).  Based on the so-far low at 1713.70 -- a potential point 'C' -- a long from 'X' would imply about $180 of theoretical entry risk per contract, or more than twice what we generally risk on gold trades. You can try buy-stopping your way aboard nonetheless, but only via a 'camo' pattern of lesser degree.  Please be aware that if this rally cannot generate a C-D follow-through leg equal to A-B's 7.30 points, it would be a mildly bearish sign for the near term, auguring downside to at least 1696.10.  That Hidden Pivot was derived, on the 15m chart, from the following, somewhat unintuitive coordinates: A=1727.30  (3/1, at 3:30 p.m. EST); and B=1705.40 (3/2 at 10:15 a.m.).  _______ UPDATE (9:42 a.m. EST):  The target came within 60 cents of nailing this morning's 1695.50 low. Meanwhile, the bull trade never triggered.

Crude Oil and the Winds of War

– Posted in: Commentary for the Week of March 8 Free

After spiking above $110, the price of a barrel of crude oil receded sharply on Friday, suggesting that the winds of war had abated, if perhaps only temporarily. Oils ups and downs seemed to track Obama’s rhetoric concerning Iran over the weekend. It began with the President saying, in an interview with Atlantic Monthly magazine released late in the week, that he would never allow Iran to develop a nuclear weapon and that it was no bluff to say that the U.S. was prepared to use force to prevent this. But by Sunday, the President had somewhat changed his tune. In a speech before AIPAC, the pro-Israel lobby group, he said there was still time to give negotiations and sanctions time to work. This line landed with a thud at the AIPAC conference, although Obama drew cheers for insisting, in the same speech, that “I do not have a policy of containment; I have a policy to prevent Iran from obtaining a nuclear weapon.” He further noted, to much applause, that “I will not hesitate to use force when it is necessary to defend the United States and its interests.” We had suggested here a while back that readers tune out the speeches and headlines in order to gauge the odds of war with Iran. If a pre-emptive strike against the country’s nuclear facilities is coming, we reasoned, it seems certain to be reflected by a rise in the price of oil, much as occurred in the months leading up to the U.S invasion of Iraq in March of 2003. Unfortunately, our current forecast for NYMEX April Crude suggests a run-up to at least $120.18 over the near term -- about 12% above Sunday night’s levels near $107. Although Iran’s threats to shut down the Strait of Hormuz have presumably