Tuesday, March 13, 2012

Gold has begun to fulfill the bullish of our two scenarios outlined yesterday, but the lack of follow-through leaves the market in a neutral posture ahead of the Federal Reserve's policy meeting today.  The futures pulled back to 1692.50 on Monday and then rallied enough to confirm the bullish pattern that we suggested might emerge, giving us a midpoint pivot at 1712.70 and a "D" target at 1732.90.  The latter is a few ticks below the midpoint of a larger pattern that we described last week whose "A" point was on January 25 at 1652.20.  That pattern's midpoint is at 1733.60, and if gold can rally into that area it is likely to encounter resistance.  A move above $1735 would suggest continued bullishness.  By contrast, if the market declines to 1685.10, the large bearish pattern described yesterday would be confirmed.  A short-sale of the 1712.70 pivot should involve a stop no lower than 1713.20.  Traders should not have orders working at 2:15pm Eastern Time when the Fed announces its intentions.  (Posted by Doug "harry" McLagan)

Index futures appear to have gone momentarily bonkers Monday night, so I've backed off the short in the E-Minis. Because this eruption occurred in several vehicles simultaneously, it would appear to have been triggered by "whisper" news known at this hour only to the wily, oh-so-wired predators who work the night shift.  _______ UPDATE (9:48 a.m.): The oh-so-wired predators appear to have jumped the gun on news that never came. The markets have since settled back into their accustomed holding pattern, awaiting the 'news' that will conduce the next all-but-inevitable short squeeze.

The futures have ratched timidly higher in night trading, achieving a largely unimpeded gain of about 25 cents. However, the move was stalled shortly after midnight due to the presence of real resistance at 33.900 where an important peak was recorded earlier in the day on the way down. Night owls and camouflageurs should note the presence of two lesser 'external' peaks that lie, respectively, 2 cents and 5.5 cents below it, since a small pullback from just above either could set-up a low-risk entry opportunity.  I have sketched this hypothetically on the chart for your further guidance. Would you like to learn how we use the ‘camouflage’ trading technique to significantly reduce entry risk? Click here for details.

Monday night, with a news backdrop utterly devoid of interest, DaBoyz appear nonetheless to have  short-squeezed this vehicle an impressive 14 points -- equivalent to more than a hundred Dow points.  However, because nine points of the rally seem to have occurred in the space of a single one-minute bar, it's possible the price spike is a bad print. In any case, because of the haywire price action, you should no longer attempt to get short via camouflage as originally advised. (If you did so anyway via a straight 1181.00 offer, stop 1182.25, please let me know in the chat room how the trade worked out, since it's not clear whether there were any fills between 1379 and 1385.) If it turns out the spike was legit, it would imply the so-far 7.50-point pullback is likely to produce a C-D follow-through attempt.  If so, its strength should be telegraphed clearly by the ease with which it gets through the midpoint resistance.  On the 25-tick chart, as of around midnight, it lay at 1382.75, tied to a 1387.75 target.

[Armed to the teeth with U.S. weapons, technology and training, Egypt’s military is the most formidable in the Middle East. This could become a major problem for the region, however, if the economic bog into which the country has been rapidly sinking triggers riots and political chaos. In the analysis below, Larry Amernick, savvy editor of The Amernick Letter, offers a fresh perspective as Egypt seeks to break with the West and forge a new, Islamic identity. RA] February 11 marked the first anniversary of the resignation of Hosni Mubarak. Mubarak's departure was encouraged by President Obama, who arrogantly remarked, "Egypt will never be the same!" Future U.S. presidents will spend much time and treasure undoing the damage that this administration has done to U.S.  Middle Eastern prestige and influence. Since Mubarak's ouster,  the Egyptian economy has disintegrated to the degree that foreign reserves are down 50% since January 2011. The local currency, the Egyptian pound, is likely to lose 15% to 20% of its value in 2012. Already, many middle class businessmen are substituting the U.S. dollar  for the beleaguered currency. The last two bond auctions by the government failed as buyers were reluctant to hold worthless Egyptian debt. The average yield on three-year notes rose to 15.91%. On the heels of these failed bond auctions, Standard & Poor’s lowered its long-term ratings on the National Bank of Egypt, Bank Misr, and the Commercial National Bank of Egypt to a "B" rating and further stated that its long-term view was negative on all three institutions. The National Bank is a state-owned entity so a downgrade on the bank is a proxy for a downgrade for the country. Corruption and plutocracy are so entrenched that the new Islamic regime will not be able to deliver on its promises for increased