Friday, May 18, 2012

After staring into the abyss earlier this week, Silver has pivoted and turned higher, etching fresh impulse legs on the lesser charts with each new minor thrust. This is a healthy sign, but a demonstration of real vigor would require a push today exceeding the two peaks I've labeled in the chart. So far, as of around 2:33 a.m. EDT, the futures were stalled two cents shy of the 28.190 Hidden Pivot midpoint of the pattern shown. A move through it would portend more upside to its 'D' sibling, 28.595. Want to learn how to do this stuff yourself? Click here for information about the upcoming Hidden Pivot Webinar on June 6-7.

The June contract did all we asked of it yesterday and more, so we'll stay with the 180-minute chart to benchmark its further progress. It's encouraging -- not to mention, refreshing -- to see bullion rally at long last on a day when the broad averages have gotten creamed. A resumption of the long-erm bull?  We shall see, but at the very least, a strong rally should have been expected here, coming as it did after DaBoyz ran stops Wednesday with a wicked feint beneath December 29's watershed low, 1528.60. This was the nastiest bull trap we've seen in gold in quite a while, and the effect was to dump gold's faithful, unburdening this upthrust of would be profit-takers who would only slow it down.

A clear target at 1310.0 evinced no discernible support, telegraphing the weakness that was to follow and stopping us out for a loss of three ticks ($37.50) per contract. As of around 1:25 a.m. EDT, a minor ABC downtrend promised 1287.25 (5 min, A=1317.50 at 1:25 p.m. on 5/17). If that Hidden Pivot were to fail, we could be looking at a quick break to 1257.75, the target of the somewhat unorthodox pattern shown.  At this point, we are no longer looking to bottom-fish as has been out custom, but to attempt trendwise entries using camouflage.  As should be obvious to Pivoteers by now, projecting trend segments at the start of a (possible) bear market is inhibited by the relative lack so far of downtrending ABs.  Regardless, I'll suggest that you leave your mind open to the possibility that we ain't seen nuthin' yet.

[In the Rick’s Picks forum, where he is a regular contributor, Mark Uzick is a stickler for getting definitions right, especially when it is libertarian ideas that are under discussion. He describes himself as someone who hates to write but loves to argue. In the guest essay below, he overcomes his distaste for the former to mount a spirited defense of economic freedom, which unfortunately has never been more desperately in need of friends. RA] Of all the depredations of economic interventionism, one of the most disturbing is protectionism, which is nothing less than a declaration of war on life and liberty. When trading partners are treated as adversaries or exploiters, the next steps are inevitably envy, xenophobia, threats and violent conflict. When someone says, “There’s not enough wealth to go around,”what he really means is, “There’s not enough wealth to be looted.” That's especially the case when wealth creators are treated as marginally tolerable misfits and criminals; wealth doesn't "go around" - it's created and it belongs to those who create it to be traded for other forms of wealth from other creators. Some people confuse wealth with resources: Resources are only of value to those who put them to creative/productive use. Our society has little use for creative/productive people or enterprises, viewing them as exploiters/parasites of the poor and ruling classes; whenever possible, we make sure that resources are put off-limits to these "evildoers" - these "exploiters of the environment." In their Malthusian wisdom they believe that we were robbed of our wealth and resources by nations emerging from tyranny and moving toward market based reform - that their liberty equals our enslavement and that their creativity/productivity equals our destitution. But this is a perverse perspective because: If we all are free, then there is not only competition

Gold and Silver turned up sharply on Thursday, and although I am skeptical, we'll go with the flow as always.  (Our straddle in GDXJ gives us upside exposure, although premium erosion will be a concern going forward.)  I am about to head over to the CMRE conference and will report on it later.  Also trying to get the hang of East Coast time, adjusting to the fact that it is late afternoon and the markets are still bubbling away. ______ OVERNIGHT UPDATE (1:46 a.m. EDT):  A more-than-300-point drop in the Dow is implied by Friday's tout for the E-Mini S&Ps. I've included a chart so that you can judge for yourself the seriousness of the selling.