Monday, November 17, 2014

Using call options, we've been trading an ETF proxy for this vehicle, TLT, but have been on the sidelines lately waiting for the correction from mid-October's spike high to run its course. You can just look at the chart and sense not only that recent price action looks like consolidation for an eventual move higher, but also that it could take more time for the process to finish.  Assuming the point 'C' low of the pattern holds -- an outcome which  I do not strongly expect at the moment -- the next major thrust would put the futures on course for a flight into outer space. Specifically, a Hidden Pivot target at 152^27 would be in play, implying new record-lows for long-term interest rates. Traders should approach entry with a bullish bias once 143^13 (green line) is touched, and to be even more aggressive following the breach of the 'midpoint pivot' at 146^18.  Both of those benchmarks could change if the futures head lower first, but that would not alter the very bullish look of the chart unless 140^08 were exceeded to the downside.

I introduced a 20.76 target a while back as the most 'traumatic' outcome I could see over the near term, but GDXJ appears to have cheated destiny with a rally from 22.34, well above the Hidden Pivot support. Even so, it looks like unfinished business on the weekly chart, and the target will remain viable in any case as long as the 46.50 point 'C' high is not exceeded.  As a practical matter, however, the reversal would become more persuasive if GDXJ can surpass an external peak at 28.17 that was recorded October 30 on the way down.  Although that would not negate the unachieved target, it would somewhat reduce the odds of its being hit.  More immediately, this vehicle looks bound for a Hidden Pivot resistance at 26.94; or if any higher, 27.27. An easy move through either would be encouraging.

The newspaper business is in a state of collapse, undermining the very health of democracy in America in ways that I shall explain. From a financial standpoint, the fatal problems of newspapers are well known, having begun with the encroachment of web-based advertising on crucial sources of revenue, most particularly classified ads. Adding to this problem is the death spiral of brick-and-mortar retail, a failure that has all but killed the big display ads that used to spread across two full pages. Newsprint and delivery costs have soared as well. The result is that newspapers can no longer afford to cover the news. This is true not only for small papers with circulation of less than 50,000, but for big metros such as the Chicago Tribune, Boston Globe, Dallas Morning News and the San Francisco Chronicle; and for newspapers with national or international reach, such as the New York Times, the Wall Street Journal and USA Today. All have dramatically downsized, not only in width and thickness, but in the resources they allocate to covering even the most important stories. Unfortunately, in an appalling number of instances, important stories are no longer being covered at all. I speak with first-hand knowledge, as the anecdotes below will attest. I was the state editor of a midsize paper myself, working for seven years at the Atlantic City Press after graduating from college in 1971. From my vantage point in the newsroom, I saw close-up how my employer’s uncritical coverage of New Jersey’s dawning casino era ultimately led to the ruinous decline of a city that used to be called the 'Queen of Resorts'. The Atlantic City Press was a weak advocate for the town, and casino operators seized on this to make their own rules. Why Atlantic City Died Atlantic City could

Friday's sharp reversal occurred within 2 cents of the 88.29 rally target shown. This Hidden Pivot resistance is a relatively minor one in the context of the powerful bull surge begun last summer from 79.74. Even so, I expect DXY to fall to at least 87.14 before it can find traction. If that 'hidden' support fails to hold, however,the next opportunity for a reversal would come at 86.84. However long the correction lasts, the long-term charts suggest that the next thrust will carry to 91.48. That would exceed two important peaks at 88.71 and 89.62 that were recorded, respectively, in June 2010 and March 2009.  It would also hold very bullish implications for the dollar going forward, since it would create a very powerful impulse leg of weekly chart degree. The last time this happened was nearly 15 years ago.

On Twitter early Friday morning, I was throwing in the towel on Gold at the very instant Comex futures went bonkers. Technically speaking, the surge in the December contract $1.20 shy of an 1194.10 target that could have been extrapolated from the previous Friday’s impulsive spike. I remain skeptical, but if buyers are able to push the futures past the target, and thence — without correcting — past a small peak on the hourly chart at 1202.80, I’d need to put my skepticism aside, at least for the time being. Gold’s rallies have often erupted when I was at my personal threshold of despair — but also from lows that, technically speaking, were just a tick or two from actual breakdowns (as was the case Friday morning). Whatever happens, we should keep in mind that each and every one of those rallies for the last 3+ years has been little more than a bear tease. According to the technical method I use — my own system — turning the daily chart bullish in a way that would suggest a decisive end to the long bear market would require the December Comex — currently trading for around 1189.10 — to hit 1297.70. Moreover, the rally would need to be uncorrected once the peak at 1255.60 recorded on October 21 has been exceeded.