Thursday, June 7, 2012

The early evening was extending Wednesday's trends, effecting weakness in bullion and glowering contempt in the index futures.  They're up just a smidgen at the moment, but it'll take more than yesterday's hysteria to impress me. For the precise number where the E-Mini S&Ps would become interesting, check out the ESM12 tout.  Click here for a free trial subscription.

Bears refreshed the impulsiveness of the hourly chart within the space of Wednesday's steep decline, but considering how far T-Bond futures had come in recent weeks, a further correction down to the consolidation zone near 147 would hardly be out of line.  In the meantime, the September contract is a speculative buy for night owls who are camouflage-equipped, since the futures were noodling around near the D target of the pattern shown, as though fixing to disabuse shorts of the notion that profits would come easy in the wake of the recent run-up.

Silver's setback yesterday was not as painful as Gold's, and bulls will remain in command as long as there is not further slippage to beneath the 29.130 'external' low that I've highlighted on the hourly chart (see inset).  That would be bearishly impulsive, but even if it were to occur we could look forward to bottom-fishing at the 'p' midpoint of the hypothetical retracement pattern shown.  Alternatively, if bulls take this vehicle higher straightaway, there are numerous external-peak handholds to leverage on the hourly chart for purposes of getting long. _______ UPDATE (June 7, 7:11 p.m. EDT): Nothing to see here, folks.  Silver was building a distributive flag when we went to press, and a trader would probably need to be on the one-minute chart to extract something of value from current price action.

Bulls got sandbagged yesterday on the way to our 1653.30 target, but they'll be back. We should ratchet up our wariness just a tad, though, since the peak of yesterday's bull trap fell just shy of the external peak at 1649.30 that I've highlighted in the chart. It is not this structural resistance alone that constrained buyers, but also the ton of supply deposited in a sideways scuddle that stretched from mid-March to early May. Traders who use camouflage will have to make do with the ersatz 'external' peaks generated off yesterday's low, since all of them are technically 'internal' in relation to the rally since.  As of around 7 p.m. EDT, the five-minute chart was promising a modest opportunity via two peaks, respectively at 1624.40 and 1625.70, that could yield an impulsive pattern without the unwanted enticement of a breakout. _______ UPDATE (11:36 a.m. EDT):  With this morning's fright-mask selling -- induced, it would seem, by a global dive back into risk on news of Chinese easing -- August Gold has retraced half its recent gains. The initial rally was moderately impulsive, having surpassed two internalish-external peaks (although no true externals).  However, the immediate picture is of 'dueling' impulse legs -- a duel in which bears would seem to hold at least a small edge, since the impulse leg they created on December 29 took out a key low at 1537.00.  My expectation is for a sloppy, choppy market in the weeks ahead, with a worst-case possibility of a test of last July's 1491.00 low.

Call me persnickety, but I want to see yesterday's short-squeeze hysteria go the extra mile before I wax enthusiastic over the rally, which appears to have been driven, perversely, by Spain's near-death experience. Since we know that nothing has actually changed and that Europe's crisis will end not with a solution but with smoldering wreckage, we can safely assume that celebration on Wall Street and the world's other bourses will be short-lived.  Its singular goal is to distribute stock to the rubes, but we'll nonetheless take from it according to our needs. The 480-minute chart shown needs a print at 1340.00 for starters, but until then I'd suggest scalping off the lesser charts from the long side.  Click here for a free trial subscription to Rick's Picks, including access to the 24/7 chat room.