Tuesday, May 15, 2012

The full extension of the pattern show puts this vehicle down as low as 1301.00 before it finds traction.  The over-the-falls 'A' yields a somewhat less bearish 1310.00, but at that point, whose counting?  I'll make the lower number my minimum downside objective nonetheless, although camouflageurs are encouraged to take a stand at the higher if you can get in with under $50 of theoretical risk per contract.  Shorting the little sonofabitch will not be easy if that is your preferred strategy, since price action over the last six days has been as herky-jerky as Bruno Hauptmann's EKG in the last moments of his life. ______ UPDATE (2:58 a.m. EDT): Shortly before 3 a.m., the little s.o.b. was in a mild short-squeeze that could yield opportunity from the long side for night owls.  A 'b-c' pullback just above from 1344.75 (2.75 points above the so-far short-squeeze high) would be the ticket. FYI, the bearish targets given above will remain valid in theory until such time as 1370.25 is exceeded to the upside.

There are numerous bearish patterns we can use to project a potentially important low, but the one  that I like most has three single-bar coordinates, all sharply etched.  They produce a 358.38 'D' target, and although I cannot guarantee that will be where the carnage ends, it would most surely be worth bottom-fishing with a tight stop-loss.  My best-case scenario implies that the low was made yesterday at  390.63, just 0.59 points from the 'D' target shown in lavender. To take the offensive, bulls would need to push this vehicle to 422.47 by Thursday.  _______ UPDATE (May 17, 2:41 a.m. EDT): Bulls would need a print today at 402.85 to mount a credible offense into week's end. At that price, the hourly chart would turn quite constructive.

I'm now projecting a minimum 147^27, based on a rally pattern that has a quite few things going for it. For one, the point 'B' high narrowly exceeded February's 143^01 peak, legitimizing the impulse leg;  for two, the B-C pullback is sufficient to have recharged the futures for a successful thrust to 'D'; and for three, the 'A' I've used is nicely one-off.  Getting aboard for the last piece of the ride will be catch-as-catch-can, preferably via camouflage, but shorts can use a 147^26 offer and a three-tick stop-loss (although camouflage is again the preferred way to initiate the trade).

One downside target remains at 23.70, although the ones that have fallen so far allowed us to avoid the temptation of augmenting our position on the way down.  Unfortunately, that target is not the worst-case I promised in today's commentary. That distinction goes to the 18.60 Hidden Pivot 'D' of the large pattern shown.  While my gut doesn't expect Silver Wheaton to fall that far, we'll rely nonetheless on technical analysis alone to divine things that logic and instinct perhaps cannot.  Meanwhile, I would encourage bottom-fishing at the 23.70 target in either of two ways:  1) bid 23.74, stop 23.59 for 400 shares, or 2) via camouflage, by four June 25 calls (which would be selling for around 2.00 with the underlying shares at or near the target. Stop yourself out of them, though, if they trade for 0.25 less than you have paid. _______ UPDATE (10:50 p.m. EDT): The 23.70 target gave way so easily that we should brace for a washout to 18.60 over the next 7-10 days (if not sooner).  Losses from either trade advised would likely  have totaled less than $100.  Today, nimble scalpers could play for a tradable rally from 22.15, the 'D' target (on the 240m chart) of A=31.03 on 5/1, B=25.57 on 5/9.  Alternatively, bulls could get back in the game with a thrust today exceeding 24.90. Don't pass up a chance to buy following a 'b-c' correction from just above the 5/15 peak located at that number._______ UPDATE (May 17, 2:44 a.m.EDT): 24.90 is still the number to beat for bulls to get back in the game. A 'b-c' pullback from just above it could provide camouflageurs with a relatively low-risk way to get long, although this may be possible from lower levels on the lesser charts.

July Silver's breach of a clear and compelling target at 28.100 was not a good sign.  I've nonetheless provided a sequence of targets in Silver than can be used to detect a possible bullish turn. In any case, December's watershed low at 26.500 will turn magnetic by such time as Silver futures have achieved the lowermost of my immediate targets.

There’s no point in pretending it’s those sleazy, child-molesting bullion bankers at Morgan Stanley, Goldman Sachs and  J.P. Morgan who have been pounding on mining stocks and bullion futures in the last few months.  Lately, it has felt like the whole world has been dumping them.  For the record, we are ourselves cautious buyers of bullion futures and select mining stocks at these levels, since many popular trading and investment vehicles that we track are closing on important Hidden Pivot correction targets. (Want to find out the exact prices at which were are doing the buying? Click here for a free trial subscription to Rick’s Picks, including real-time guidance and a 24/7 chat room where the discussion never stops.) When bottom-fishing in markets that have been falling as steeply as gold and silver have been falling, we recall the advice of our friend, the late Malcolm Watts: “When attempting to catch a falling piano,” Malcolm, a PSE option trader and gifted technician, used to say, “wait until it has bounced three times.” (It was not a falling piano that felled our friend when he was in his thirties, by the way, but the stresses of the market on an apparently defective heart.)  So, have bullion futures bounced the required three times yet? By our count, there have been more like four bounces since February. And although that may not mean it’s perfectly safe to buy the precious-metals complex at current levels, it does imply that those who waited are happy they did. By and large, however, precious-metal bulls are probably feeling shell-shocked by now, since many of the stocks that they hold dear  – quality companies like Silver Wheaton, Newmont and Yamana – have been sold nearly to death.  The shares of these firms and many others looked like great