April 2009

It was a dull morning on Wall Street, so we focused on trading in boring, trendless markets. June Gold promised to deliver a very tradable, $8 rally never theless -- and later did -- while the E-Mini S&P appeared bound for a midpoint resistance or higher. We also contemplated a buoyant Industrial Average that was headed for an imminent trend failure. Were there clues?

The futures were falling hard around 3:20 a.m., down a little more than ten points and trading near their lows. However, the selling was steady and left no obvious reference points, even on the 5-minute chart, to plot ABC coordinates and a target. My hunch is that the selling will continue to at least ____, a vague midpoint support whose 'D' sibling lies at _____.

I've flagged a trade in Crude as a Pick of the Day because of the felicitous price action at the Hidden Pivot midpoint. This is a price pattern I dwell on in the Hidden Pivot seminar -- a quick ABC followed by a grinding CD leg that in this case has yet to develop.  The chart triggered a moment of deja vu tied to a gold chart in the course manual, but we probably won't know until morning whether history repeats.

I'd projected a downside target at 44.36, but June Crude appears to be making a turn from a so-far low at 46.72. The rally projects to ____, and that target has already been affirmed by the precise stopping power of its sibling midpoint, 49.09.

We keep asking our inflationist colleagues when and where those big price increases they've been predicting for the last ten years will first emerge, but the answer, evidently, is not in Spain -- or even in euroland. Here’s the New York Times link to the story, ‘Spain’s Falling Prices Fuel Deflation Fears in Europe’ .

I mentioned this in the chat room today, but let me make it official by recording it as a tout: The Dollar Index looks like it could bore bulls and bears alike to tears for the foreseeable future. The weekly chart is unmistakably bullish, and that is why I think the stalemate will be resolved to the upside, hard as that is to believe. But the daily chart shows dueling impulse legs -- bull feints followed by bear feints -- that suggest the conflict

A Hidden Pivot at _____ is equivalent to the ______ downside target in June Gold, with the same odds. The trigger for an in-your-face bullish turn would come at _____, but there are no places to bottom-fish Tuesday night that look as promising as the Hidden Pivot support flagged in Gold.

Continue to use 911.90 as a bullish trigger, since the would create an impulse leg that would be unstoppable over the near term. Failing that, the futures will remain an even-odds bet to fall to at least 845.20 before they make their next important low. If there is weakness today, the best place to try bottom-fishing would be at _____, a midpoint pivot that can be tied to a stop-loss as tight as four ticks (0.40).

With the stock market giddy as ever yesterday, gold held up surprisingly well. The June Comex contract was off just slightly even though Dow Industrials tacked on 128 points. Ordinarily, with the broad averages in a moderate short-squeeze, we would have expected bullion futures to give up more of the gains they'd achieved on Friday. In a bigger picture gold looks even more impressive, since it has fallen by only six percent while the Dow has risen 24 percent since the bear rally began on March 6. The inverse correlation between gold and the stock market has become so pronounced lately that a nimble trader could practically arbitrage one against the other tick-for-tick. Why should gold and stocks be moving in opposite directions these days?  The reason is simple: Gold has at last come to reflect anxiety about the true state of the global economy, and there are times like now when that anxiety momentarily abates. Gold bugs can only sit patiently on the sidelines, amusing themselves with the high and low comedy that will always accompany bull traps like this one.  For instance, there is the amusing story of how Citi's trading desk made a whopping $4.69 billion in the last quarter, even though the bank lost money in every other area of its operations. Basically, the bank bet heavily against itself and won. Our friend Dan Denning at The Daily Reckoning lays out this fascinating tale in all of its louche details, so if you want the full story, click here.    June Comex Scorns Target Getting back to gold, we are impressed with the way it has absorbed the body blows of stock market rallies such as yesterday's. We should also note that the June Comex contract has stubbornly refused to pull back to an 845.20 target that