Friday, September 14, 2012

The hourly chart leaves little doubt that this rally cycle will hit 104.93 over the near term. With $5 of upside potential from here, our trading bias should be aggressively bullish. However, if and when the 104.93 pivot is  reached, it will be a compelling spot to attempt getting short via camouflage. (We use this tactic here because, when trading crude oil futures in particular, even gorgeous patterns like the one shown need at least 21 cents of leeway relative to 'D' targets.)

The pattern shown, with a 1462.00 rally target, is as pretty a one as we're going to see. Since I haven't mentioned it before, it is sufficiently underexposed that I'll recommend shorting with a no-tricks, 1462.00 offer and a 1463.25 stop-loss.  Make no mistake, we're standing in the path of a potential juggernaut, and so we should be prepared to get steam-rollered. But if that happens, we'll at least have a visceral understanding of the power behind this rally. Since a theoretical 1.25 points will be at risk initially, partial profit-taking is advised on a pullback to 1458.25 (1462.00 - 3 x 1.25).  But if the trade is stopped out, you should assume the rally is bound for more daunting resistance at either 1470.00 or 1480.50, two Hidden Pivots flagged here earlier.  As noted at the time, camouflage should be used to short either of those two numbers (although in a pinch you could short the higher with a 1481.25 stop-loss).  We'll plan on taking the short home for the weekend only if the futures close 12 or more points below where the position was initiated.  ______ UPDATE (1:41 p.m. EDT):  Traders who got short at 1462.00 would have experienced only brief pleasure as the futures fell to  1460.00 after making an interim high at 1462.75. However, the position was subsequently stopped out at 1463.00 (enroute to a 1468.00 intraday high), resulting in a $50 loss per contract.  Although ESZ has fallen since, the fact that it exceeded 1462.00 at all -- by a decisive 6 points, in fact -- implies that buyers will be back when nedxt week begins if not sooner.

Alarms should have rung yesterday for subscribers who have been following my DJIA touts. Yesterday, the Indoos blew past a 13502 'midpoint' resistance, implying that a 'D' target at 14969 (!) is now in play.  It does sound incredible, I know, but them's the cold hard technical facts. We'll trade both sides of the market as always and no matter what, but for the time being let's try not to not scoff too hard at those who post insanely bullish predictions in the Rick's Picks forum.  Click here for a free trial subscription that will allow you to stay on top of this crazy forecast in real time and to leverage it in your own fashion with our timely e-mail updates.

Interesting times, for sure – and by no means accursed for those with the wisdom to have bought silver or gold before yesterday. Both took flight on word that Helicopter Ben has promised to do whatever it takes to bring U.S. unemployment down to more reasonable levels. If Americans knew what it will ultimately cost them to have the Fed target unemployment rather than the money supply, they’d be having second thoughts about this latest phase of Bernanke’s bold experiment.  Because trillions of dollars worth of stimulus have failed thus far to keep unemployment merely from rising, we can scarcely imagine how many trillions more it might take to actually push unemployment down. But for now, at least, because Bernanke has deigned to re-imagine QE3 with no limits, investors can be fearless about exposure to bullion. Too bad it took the ECB’s Draghi to show him the way. Recall that Draghi one-upped his colleagues a while back with a pledge to hold Spain’s borrowing costs down come hell or high water. We’re not sure which is more ambitious: ensuring the steady flow of cheap credit to Spain, with its 25% unemployment and a middle-class scramble to move savings out of the country; or creating jobs in the U.S., where restoring the illusion of prosperity will be possible only if home values can be goosed into another parabola. Damn the Torpedoes Whatever happens, some Rick’s Picks subscribers were in great spirits following Bernanke’s damn-the-torpedoes foray into uncharted waters.  “I was long [the gold miner’s ETF] last night, and this was the biggest single trade of my life,” noted one chat-room denizen.  “It was just plain unbelievable!”  Another spoke for those who have patiently waited for gold and silver mining stocks to spring to life:  “Today's action has helped me recoup a