Monday, September 22, 2014

The futures obliterated an 18.130 Hidden Pivot support on Friday, implying more downside to the 16.820 target shown. Because a tradable bounce from that Hidden Pivot seems likely,  I am recommending bottom-fishing there, albeit with a very tight stop-loss (or with a 'camouflage' bid on charts of 3-minute degree or less).  The futures have already slightly exceeded the 17.715 midpoint pivot (p1) associated with A=32.802 (1/25/13), so the new midpoint support (i.e., 16.820) is potentially a very important number. Notice that its easy breach would put an 8.776 'D' target in play. ______  UPDATE (Sep 23, 9:22 p.m. EDT): A Hidden Pivot at 16.270 should also be mentioned as a downside target if the selling snowballs. It comes from a so-so, 'sausage' pattern on the weekly chart, where A=24.865 on 8/30/13. _______ UPDATE (September 30, 3:53 p.m.):  The low of today's selloff came within 3 cents of the 16.820 target flagged above.  For reasons noted above, this Hidden Support must not fail. _______ UPDATE (Oct 1, 9:23 p.m.): To remind you (and possibly buck you up): There are two never-say-die pivots not far below with the potential to generate a bounce:  16.500; or if not there, 16.270, as noted above. The lower number is the more conservative and promising place to try bottom-fishing with a tight stop. ________ UPDATE (October 3, 4:37 a.m.): The 16.820 target flagged above is holding, but the futures haven't gotten much loft after falling within three cents of it last week.   It would take a run-up to above 17.520 for this vehicle to get out of jeopardy.

December Gold Futures The pattern shown is sufficiently clear and compelling that we should use the midpoint Hidden Pivot support at 1126.05 as a minimum downside target for the next 2-3 weeks. The support is ostensibly very important, since its decisive breach would imply more downside to as low as 813.80.  That would be a far cry from the bullish tone change I said I was expecting by mid-October.  I based that on a conversation I'd had in August with Richard 'Doc' Postma, a regular guest on the Korelin Economics Report.  In the past, Doc has shown remarkably good timing in calling gold's intermediate-term swings. In this instance, we agreed on several key points that appeared to favor an imminent upturn in bullion, including the ability of mining shares to hold their ground when bullion price have been weak. I am keeping an open mind about this, but even Doc has pushed back his timetable. He notes that rather than being a turnaround month, October could produce yet more angst for gold bugs. This, too, is of course highly speculative. But rather than try to parse the logic of it, I'm simply going to trust my charts to tell me what's likely. In this instance, I would say there's an 85% probability of a fall to the 1126.05 target. If so, that would represent a drop of 7.4% from Friday's settlement price. As for a further drop to 813.80, it would become an even-odds bet if 1126.05 is exceeded on a closing basis for two consecutive months, or if it is exceeded by more than $19 intraday. Alternatively, if a bull market is brewing, we should expect not only a robust bounce from within a few ticks of 1126.00, but one that clears the two labeled peaks without pausing for

Index futures were groping for a foothold early Monday morning after easing moderately lower on thin volume. The E-Mini S&Ps have been down as much as much as 12 points -- equivalent to about 100 Dow points -- but that usually means that DaBoyz are eager to accumulate stocks at fire-sale prices before they trigger off the next short squeeze. This is just business as usual at the start of a new week; however, if the futures were to fall a further 10 points, even a few of us cynics might be ready to concede that something interesting was happening.

This week's commentary spotlights three forecasters of renown who think the bull is dead, or soon will be. And the redoubtable Elliott Wave Theorist went as far as to flatly assert that Friday's high in the broad averages was THE top. We'll see. Late Sunday night, the  futures were looking mildly bullish, down 10 points. This usually means that DaBoyz are letting stocks fall in order to dry up sellers.  This little trick, which has been repeated successfully probably 300 times since the bull market began in 2009, sets up an overnight short-squeeze on almost no volume.  Might there be another scenario? Yes: DaBoyz take stocks down, only to be hit with a second wave of selling before they are able to put the squeeze on bears.  The Masters of the Universe would be on the run by then, which could send stocks plummeting for the remainder of the day. It has been so long since this occurred, however, that I cannot even remember the last time.  Wouldn't it be a surprise if a bunch of chartists actually turn out to have gotten it exactly right, even if it took a dozen? Meanwhile, shortly before 1 a.m. EDT, the futures were the unwitting slave of Hidden Pivot forces, bouncing, so far feebly, from within a tick of the 1992.00 target shown. As always, the strength of the bounce can help us determine whether bulls, or bears, will hold sway over the near term. If the bounce exceeds 2006.50, assume it is the former.

When will the bull market end? With money velocity collapsing and ominous divergences developing in both the NYSE Advance/Decline line and the New Highs/New Lows summation, U.S. stocks closed at an all-time high last week. If this were not disconcerting enough, the Hindenburg Omen, which signals an increased probability of a stock market crash, flashed red on Friday. There was also this unequivocal pronouncement from the Elliott Wave Theorist after the Dow Industrials came within a single point last week of fulfilling their long-term rally target at 17280: “Next week, the U.S. stock averages should begin their biggest decline ever.”  As for your editor,  Rick’s Picks has been drum-rolling a key “Hidden Pivot” target at 2028 in the S&P 500 Index that has been 27 years in coming. On Friday, the index hit a record 2019. Is a major top at hand?  It is often said that bells do not ring to signal the end of a bull market. But if the broad averages were in fact to plummet in the weeks ahead, never forget that bells did indeed ring. Of course, permabulls and Wall Street managers charged with throwing Other People’s Money at stocks will not likely have noticed, so intent have they been on headlines proclaiming the soundness of America’s alleged economic recovery. Over the weekend, one such story that would have goosed their confidence to giddy new heights concerned the recovery of home prices in the exurbs.  To the OPM bozos, nothing says “recovery” like renewed growth in subprime mortgage debt. Flashing Red For those trying to decide the bullish/bearish case for themselves, let me add the opinions of three heavyweights in the guru world with whom I’ve corresponded over the years: Peter Eliades, Alan Newman and Bob Hoye. Hoye’s latest Pivotal Events insightfully answers the question

The stock's low on Friday occurred just 0.03 from the 65.91 target I'd projected during Thursday's impromptu technical-analysis session. Because this looked like a great trading opportunity to me, I made it explicitly clear during the session that I was very confident RGLD would achieve the target. However, I hadn't imagined the stock would fall so sharply -- more than 4% -- that it would accomplish this in a single day. I also said I was very confident that a tradable bounce would occur from the target.  It did, and the bounce so far has been 54 cents -- sufficient to warrant taking a partial profit on any longs bottom-fished at the low. Although the bounce was bullishly impulsive on the very lesser charts, RGLD has come down so hard that I wouldn't count on the support to hold for long. In any event, if you did the trade, perhaps even shorting to the target as I'd suggested, please let me know in the chat room so that I can provide tracking guidance for the position that remains. ______ UPDATE (Sep 22, 8:23 p.m.): Sellers crushed the support after it held for just a day, implying more weakness is coming. If so, we should expect a test of support near the 58.86 low recorded  in late May. _______ UPDATE (Sep 24, 7:27 p.m.): A weak rally has lifted RGLD off recent lows, but the move would need to hit 66.49 to turn the very lesser charts impulsively bullish. The nearest Hidden Pivot resistance of importance lies at 66.22, so take encouragement if there's an easy move through it.