Monday, July 14, 2014

Silver Wheaton's mellow drift higher last week quietly cleared more running room for bulls by exceeding a key 'external' peak at 27.25 recorded last September. It means that the entire rally from  May's low at 20.03 is now bullishly impulsive on the weekly chart. The putative power of the move would increase geometrically if the rally were now to exceed August's 29.17 peak without correcting. Whatever happens, if you've been looking to get a piece of the next big thrust, the opportunity is likely to be there in the stock's retracement of the bull leg still in progress.  Lest you worry about being late to the party, notice that the theoretical potential of the stock in a bull market would be the 52.13 target shown.  _______ UPDATE (July 16, 12:20 a.m. EDT): The 25.15 target shown looks enticing enough to try bottom-fishing. Accordingly, I'll recommend bidding 25.17 for 400 shares, stop 25.06.

Index futures took some mincing steps higher Sunday evening, but it won't take much more than that to put them on track for a shot at new all-time highs. Monday's tout for the E-Mini S&Ps provides some precise targets by which we can judge bulls' temerity, so check it out if you plan to hit the ground running when stocks open in New York.

The financial system's interminable endgame continued last week with a hiccup in global markets that was attributed to liquidity problems at a Portuguese bank. Some might have hoped Europe’s problems were behind us, especially with the spate of ginned-up stories concerning Spain’s miraculous economic recovery – if not in statistical fact, then speculatively in the shrinking spread between yields on Spanish paper and the debt of countries whose economies remain a few more steps distant from eclipse. Most of us, however, recognizing that any country with 30%+ unemployment among college graduates cannot in fact be recovering, view the news from Spain as patently false. Europe’s ongoing economic implosion has merely been masked by yet another, increasingly faint, upswing in the mood of investors with memories so short they evidently cannot recall the Great Financial Crash of 2007-08. In the U.S., a different kind of story, just as false, has sustained the upward trajectory of the stock market. The economy has been creating more than 250,000 new McJobs jobs per month lately, supposedly recouping all of the positions lost in the 2007-08 crash. With unemployment now running at a dubious 6.1%, the Fed is finding it easier to pretend that the recovery is sufficiently robust to stand on its own. To drive home this point, which no one actually believes, and to further "manage" our "expectations," quantitative easing is scheduled to be phased out in November. Fed Pretends to Dither We read furthermore that the Fed has been dithering more intensely than ever over the question of when it should tighten. I remain quite certain that this will never occur, at least not deliberately, since subjecting a quadrillion-dollar derivatives bubble to even a small turn of the screw could trigger the collapse of the  entire shoddy edifice.  How many of us

The fact that Friday's low occurred within a tick of a 1953.50 Hidden Pivot 'midpoint support' (see inset) is evidence that the larger bull trend will continue. This follows the rule that strong bull trends produce corrections that only get halfway to their targets.  Under the circumstances, we should use the 1987.25 target shown as our price objective for the next leg up. That would equate to a Dow rally of about 220 points, and it would be predicated on a decisive move past the 1966.25 midpoint pivot of the larger ABCD pattern shown.  For purposes of getting aboard, the hourly chart has many hooks that can be used to fine-tune your entry signal. Pullbacks from just any of the five 'external' peak that I've labeled should be used in this fashion to effect 'camouflage' entry with greatly reduced risk.  I'll be in the chat room Monday to guide you, so don't hesitate to query me if you plan to trade this vehicle. _______ UPDATE (12:20 p.m.): ESU has gnawed through a 1966.50 target (on daily, A= 1719.25 on Feb 3). The target is both clear and important, and so the fact that it has shown little stopping power strongly suggests that higher prices are coming. If so, the uptrending ABC pattern at the rightmost edge of this pattern (A= 1936.25 on 6/26) points to D=1987.25. Since the 1966.25 midpoint resistance has been exceeded by 8 points, D would appear to be a done deal. The midpoint pivot is now support, so any pullback to it should be regarded as a gift.