Monday, December 16, 2013

The March contract was looking relatively placid Sunday night -- until about 30 seconds ago, that is, when the steeply diving price bar shown materialized on the chart. Minutes later, the futures have already recouped half of this nasty shakedown, but my hunch is that it's not over, since the so-far low at 1754.00 exceeded D=1757.00 (the green line) by three points. If this proves to be the case, look for more slippage to 1744.00, the target calculated by sliding 'A' up to 1798.25. _______ UPDATE (10:57 a.m. EST):  1754.00 was in fact the low -- quite a low, actually, since DaBoyz were subsequently able to jack this hoax all the way up to 1786 before they ran out of bears to brutalize. The last piece of the rally (15m, A=1777.00 at 9:45; B=1786.25, C=?) was bullishly impulsive, so there would appear to be a second-wind surge in the offing.  If so, it could be tradable via camouflage.)

Friday's rally  tripped a buy signal at 1233.80, but the implied $1400 of entry risk per contract is more than the usual $40-$60 we typically abide. Camouflageurs should trade with a bullish bias, drilling down to the three-minute chart or less  to find a suitably relaxed entry opportunity. The short-term bullish case would become more compelling if buyers are able to push this vehicle above the 1249.50 red line today or tomorrow. That's a midpoint Hidden Pivot resistance, and its breach, especially if decisive, would portend more upside over the near term to the 1280.70 target or higher.

Copper futures are within easy distance of a crucial Hidden Pivot resistance. Since a breakout could have bullish implications for bullion, as well as for the economy, I'd encourage you to check out today's tout and chart for high-grade.

I’ve had my doubts that Quantitative Easing would ever be throttled back, even asserting here several times that this was about as likely as a Martian invasion. However, it would now appear that at least some nominal change in Fed policy is nigh.  For one, the news media have unleashed a torrent of ostensibly bullish recovery data that, even if it is believed by no one save editorialists, economists and Obama spinmeisters, is sufficient to provide PR cover for just a smidgen of tightening. And for two, Fed policymakers themselves have been promiscuously encouraging talk of tightening for about the last two years -- talking their book, as it were. Assuming the momentous, long-awaited announcement comes this week, we shouldn’t be surprised, if the central bank’s oh-so-clever expectations managers propose some alternative to QE that smacks of…more easing.  Suppose, for instance, that the Fed announces a reduction in the amount of ginned-up money it uses each month to mop up unwanted Treasury and mortgage debt, from $85 billion to $60 billion. If this portentous shift were to be accompanied by, say, a reduction in the amount of interest the Fed pays on banks’ excess reserves, think of how eager the banks would be to recoup all that lost, risk-free income. Why, they might even have to crank up their own printing presses with promotional lending offers that would make today’s “zero percent-loans-for-18-months!” specials look like usury. Whatever the Fed does, its actions will be geared, as always, toward pumping up home prices and the stock market. What do you foresee, readers?

Copper  futures, which have a canny way of anticipating the economy's ups and downs, are closing on a crucial resistance (see inset).  The red line, a Hidden Pivot midpoint that should be regarded as a short-sale opportunity, comes in at 3.3838.  However, shorting there would be somewhat riskier than usual, since a print at that level would exceed some prior peaks on the weekly chart, signaling a possible breakout. My hunch is that the red line will be surpassed this week but that the follow-through will be relatively feeble. Whatever the case, price action over the next week or so could have significant implications not only for the economy but for bullion, since no surge in copper prices is likely to occur without a corresponding move in gold and silver. _______ UPDATE (December 17 at 9:54 p.m. EST): Interpolating for the continuous March contract, the red-line pivot comes in at 3.3829, 0.0044 above yesterday's high. _______ UPDATE (January 6): The futures have fallen sharply after double-topping near 3.42. A short was signaled from 3.4160, but it's likely that few bears would have been feeling up to the trade by then.