May 2012

In another dramatic trading day, gold Wednesday turned a triple-bottom into a quadruple and then shot back up almost $39, leaving important prior highs again within striking distance.  The rally gave us the makings of a pattern which would project as high as 1592.60 if confirmed, although we would like the set-up a lot more if it had a single-bar 'C'.  The most important prior highs are at 1585.70 and 1601.40, and a move above 1601.40 would improve the odds that the support zone around 1530 will hold, after all.  A rally above the 'external' high at 1604.40, especially if it surpasses the high along the wall at 1611.10, would add to the bullishness of the picture.  But until and unless 1601.40 is taken out, we will continue to expect the 1530 support zone to be broken.  1456.40 remains our best downside projection, based on a pattern that we have been watching since last week.  (Posted by Doug “harry” McLagan)

It looks like the dam is about to break, sending the June euro plummeting to the 1.1946 target of the pattern shown.  The good news -- for Europe, anyway, although perhaps not for long -- is that a period of respite seems likely, given the prospect of a rebound in the currency.  It's difficult to imagine what sort of headlines will drive the presumptive dead-cat bounce, although one suspects that it will not cause Greeks to dance in the streets.  Calling the turns confidently while dramatically reducing the risk of trading are easier than you might think.  Want to learn how? Click here for information concerning the upcoming Hidden Pivot Webinar on June 6-7.

Silver continues to screw the pooch, ending Wednesday's session approximately where it was trading two weeks ago.  As noted here yesterday, it would take an upthrust to 29.005 for bulls to break the stalemate.  Alternatively, a bout of weakness would only have to hit 26.195 to put into play an old target at 20.370. That's the 'D' target of the big pattern shown, and a potentially last-gasp rally to the 28.985 midpoint pivot with which it is associated should be used by camouflageurs as an opportunity to get short, provided entry risk can be held to a theoretical $70 per contract.

In after-hours trading, the futures are giving up ground grudgingly following Wednesday's thrashing. The chart shows a short-term downside target at 1295.75, but I discern little opportunity in it, and it may be spent before the opening bell. Alternatively, buyers would need to push this brick to 1340.00 today to make up for yesterday's punk performance.

GOOG appears bound at least $20 lower, to the 574.91 'D' target of the orthodox pattern shown. This stock has always been easy pickings on the 15-minute chart, so I'll suggest camouflageurs start looking there for the expected turn.  If you'd prefer to use a straight buy order, try a 574.97 bid, stop 574.84, good-till-canceled. _______ UPDATE (June 1):  The stock gapped down $10 on the opening, printing 571.79 to begin the day and negating the trade suggested above. (Side note: If you had had a straight bid in at the bell along with the stop, the orders might have been filled at the same price -- i.e., a scratch, less commissions.) With all of the small stuff used up, it's time to open our bearish imagination to the prospect of a fall to 435.90, the 'p' midpoint associated with a 'D' target at -- better sit down for this, Google fans -- 201.55.  Here are the coordinates, from the weekly chart: A=716.00 (12/28/07); B= 247.30 (11/21/08); and C=670.25

The broad averages went against a forecast sent out Tuesday night that was based on a promising rally that had exceeded a midpoint resistance.  Going forward, we should hold this as a reminder that stocks may have entered a bear market and may no longer behave in the way to which we've become accustomed during the last three years.

The "drama" surrounding a possible challenge of gold's recent high near $1600 played out on Tuesday, in dramatic fashion.  Apparently someone did not want the downtrend to end just yet, and not long after the bullish signal was given, the opposing party hit the gold price over the head with a sledgehammer.  The decline was good for almost $37 during the day, and in evening trading the low has been pushed down by a couple dollars more.  At the moment there are no active bullish patterns of any significance on any timeframe.  This is always true at the moment when a market makes a major low, but we don't think gold is doing that right now.  The pullback from the $1923.70 all-time high has come close to 21% more than once, which establishes a clear support zone.  But 21% would be a very shallow correction to such a large move up (from $681 to $1923), and we doubt that the support zone will hold.  The best-looking pattern we have points to 1456.40, basis the new front contract for August delivery.  But the gold price could go a lot lower than that and still correct by a lot less than it did in 2008.  The decline from 1797.70 which began on February 29 has been grim and relentless, and there is no sign that trapped bulls will be given one last chance to exit at a respectable price before the low is made.  In the event of a successful goal-line defense, however, we promise to retract at least some of the foregoing when 1601.50 prints.  (Posted by Doug “harry” McLagan)

Bullion was getting a little boost in after-hours trading while index futures were refreshingly down a tad.  However, my touts for Wednesday imply that both trends will soon be reversed.  FYI, the weekly tutorial session will be held at 11 a.m. EDT as usual. It is open to those who have taken the Hidden Pivot course and who are registered, and also to everyone who is signed up for the June 6-7 webinar.  If you've been holding off, why not join us this time? You can do so by clicking here.

Silver fizzled on the launching pad yesterday, unable to muster the energy required to get it to a modest rally target at 29.245. Still worse is that the July contract ended the day below the 28.165 midpoint support associated with that number, turning it into resistance. We'd need to see a print at 29.005 today to infer that bulls are not in a coma, but barring that, the downside threat looks no worse than the obvious structural supports that I've highlighted in red.  As of around 6:40 p.m. EDT, I could discern no compelling trading opps, although the short-term trend was impulsively bearish on the hourly chart.