Thursday, March 8, 2012

The gold price continues to consolidate in a large range under its all-time high and probably needs more time before making an assault on the $2000 barrier.  The chart since the 1923.70 peak is bearish, but the large patterns are defective and probably do not give us actionable targets.  The long-term supporting trendline from the 2008 low, which tags the late 2011 low, should be borne in mind: it is currently around 1575 and will reach 1600 in mid-April.  The late 2011 low of 1526.20 is another support level to watch, as are the prominent lows of mid- and early 2011.  The medium-term picture is dominated by last week's plunge, with the initial bounce giving us a 1623.40 target.  The near-term prospects are perhaps mildly bullish, however, as the market is oversold and has been drifting higher from the recent 1663.40 low.  A rally above 1702.30 would prompt us to view 1663.40 as the new "B" point for the pattern, which would then require some downward follow-through to confirm a new "C".  If the prominent prior high at 1692.50 can be surpassed, the bulls will set their sights on the priors above $1700, which are numerous up to 1740.00.  Above there, however, is the sheer wall of last week until 1776.10, a level which we do not expect to see in the very near future.  The abundance of nearby prior highs should provide traders with bullish camouflage set-ups.  But such long positions should not be treated as "investments," as there is probably more downside coming before long.  (Posted by Doug "harry" McLagan)

Will Tuesday's selloff turn out to be the usual bear trap?  To better answer this question, I've provided some precise benchmarks in today's tout for the Industrial Average.  The numbers are tradable as well.

The selloff on Tuesday was strongly impulsive, but we'll need to see how the C-D follow-through leg plays out before we can disdain it as a bluff.  One financial-page story noted that it's been a long, long while since stocks failed to bounce back after similar onslaughts in the past. Although it's certain that, one of these times, the bounce everyone is looking for will not come, for now -- fully three years into the Mother of All Bear rallies -- we'll have to continue to give bulls the benefit of the doubt. Regardless, we should watch for signs of fatigue at exactly 12859.77, the Hidden Pivot midpoint of the rally pattern (15-minute) a=12758.85 (3/7 at 10:30 a.m.); b=12842.17.  If it's breached, look for more upside over the near term to 12901.43, its 'd' sibling.  Either number can be shorted with the usual, preternaturally tight stop-loss or via camouflage. _______ UPDATE (March 9, 1:06 a.m. EST): The Indoos could still roll over in the manner suggested above, but the strength of yesterday's rally argues against this.  If the blue chip average were to close above 12997, bulls will begin the new week on Sunday with a running start.

Bulls shouldn't get too cocky, since the most notable -- and suspicious -- fact about yesterday's rally was its failure by three ticks to hurdle the external peak at 1354.75 created during Tuesday's selloff.  As always, Da Sleazeballs were looking Wednesday night to accomplish via a short-squeeze on non-existent volume what they could not during regular hours. The set-up for this all-too-familiar con-game is the relatively shallow pullback from Wednesday's intraday high, 1354.25.  Lest we mistake a push through that peak as significant, let's raise the bar to 1362.50 today -- a tick above a second 'external' peak shown in the chart.  If bulls can get there today, we'll have to take them seriously. Again. Would you like to learn how we use the ‘camouflage’ trading technique to significantly reduce entry risk? Click here for details.

[So many systems are failing – financial, healthcare, education and government, to name a few of the biggies – that one might think it had all been planned that way by the “experts” who hold sway over our lives.  In the essay below, a friend, V.R., a management consultant, takes note of some disturbing signs that things are likely to get worse before they get better. RA] Remember the bumper sticker “If you’re not outraged, you’re not paying attention”?  I propose that attention itself is an investment, and like all investments, requires vigilance in execution and bypassing the “noise,” The marketing pitch of “New and Improved” slowly engulfed our entire culture. It conditioned (i.e., brainwashed) everyone to believe more in what’s new than what has worked. We are, in effect, addicted to newness as a panacea, having little memory of what worked before. With U.S. education falling to about 30th in the world, we have a population that knows little and whose analytical reasoning ability is as shallow as the latest newscast.  This spells opportunity for some.  For example: Through the promotion of pharmaceutical medicines by “captains of industry” who had a vested interest in replacing what still works for a minority of believers, the medical world brushed aside the accumulated knowledge of natural remedies to sell patented pharmaceutical wonders. Also sidelined was the “prevention” idea, such as exercise, and only eating food not technologically tampered with.  The population has been conditioned to believe in drugs, despite glaring evidence to the contrary that is easily found (and discounted).  In this case “they” are the doctors who all attended medical schools funded primarily by big pharma, so what else could doctors know?  Vioxx, an FDA approved drug, was on the  market till 50,000 people died from it and Merck sold $2.5B

Back-to-back impulse legs on the intraday charts suggest that bulls are quietly building strength for an attempt at recouping Tuesday's big loss.  My immediate upside target is 33.550 (30m, A=32.860 on 3/7 at 11 a.m.; B=33.510, C=33.225). A thrust to that Hidden Pivot looked like no worse than an even-odds bet Wednesday night because its midpoint sibling at 33.550 has already been exceeded by six cents. Even so, it wouldn't take much from here to create a minor, bearish countertrend.  A print at 33.330 would suffice (30m, a=33.480 at 8:30), and completion to the 'd' target of the pattern would have bearish implications for the near term