May 2009

We took a good look at July Silver, since it looks to be quietly consolidating for a major push. There were some promising ways to get long ahead of the move, and we examined them in detail. We also found a short in the E-Mini S&P that was in the process of delivering gains of as much as $500 per contract within the hour. Any rally that followed and which exceeded the ES target at 912.25 was all but guaranteed to reach 917.75, or possibly 933.50, for reasons made clear in this video. We also touched on some of the ways in which Hidden Pivot analysis can help bring us to a basic understanding of the psychology of the market.

Slamming the barn door shut after all the horses have escaped, the Federal Government has put the screws to the cozy arrangement that until a week ago obtained between lenders and appraisers.  The following comes from my Realtor, Scott Young: “The latest financial news to affect lenders, realtors, appraisers and ultimately consumers is the implementation of the Home Valuation Code of Conduct. Known as the HVCC, this rule was implemented May 1st 2009 and requires that all lenders and brokers use an appraiser from an Appraisal Management Company. “This ruling is of the utmost concern for it changes the entire appraisal process. Lenders and brokers no longer have a choice in who they get to use as an appraiser, and there can be no contact between appraiser and broker before a physical appraisal is given. Appraisal Management Companies will now be taking a portion of the cost of the appraisal, which means appraisers are now getting paid a portion of what they were paid before, for the same work, resulting in high quality appraisers simply leaving the industry. The AMC's choose the appraiser, and the appraiser could be from a neighboring city. That's tough for sensitive markets like Boulder where different neighborhood pockets get very different values, and knowing your neighborhood is very important in producing the best appraisal. “The HVCC was originally created to help stop banks from pressuring appraisers into inflating home values, but the reality is this rule is hurting all parties in the mortgage and housing industry. Ultimately, it's the homeowner that suffers the most. It's the homeowner that pays for the appraisal and it's their home that's under scrutiny. I think everyone would agree that homeowners would like their home to be valued by the most qualified appraisers, appraisers who are paid a fair wage

The September 10 calls that we bought a while back for 0.69 are doing nicely with SLW on the move. Let's try to eliminate our premium risk by shorting calls against them.  Offer four June 10 calls (SLWFB) short for 0.50, good through Thursday.

Index futures were getting hit Tuesday night, but not quite hard enough for us to infer that anything serious was going on. The short-term picture would darken, however, if the selling were to persist so that the E-Mini S&Ps, for one, generated a bearish signal on the hourly chart. Check my tout for the specific price, which as of midnight lay just four points away.

Google is stealing up on a midpoint resistance at ____ whose breach could signal more upside over the near term to as high as _____. That Hidden Pivot can be shorted with a stop-loss as tight as 22 cents, but don't attempt it if the stock initially gets within 20 cents of the target and then drops back more than 30 cents. Officially, we'll buy a September

We hold four Sep 84 (DAVIF) -May 84 calendar spreads for 3.45 and a September 76 put for 1.49. The May calls that we are short are showing suprising strength, so that we are showing only a slight gain on the spreads and a more than offsetting loss on the put. There is nearly $600 of theoretical profit potential between now and next Friday

UPDATE (9:58 a.m.): The futures went no lower overnight than 891.00, revealing the selloff to be just a routine shakedown by DaBoyz in thin trading. The obligatory short squeeze they engineered on the opening was impulsive, so look for them to come back to the table for seconds. Minimum potential will be to _____.

I try not to sugar-coat the outlook for Gold each day, but we should all have grown weary by now of looking for glimmers of hope in each and every bullish impulse leg that occurs on the 15-minute chart. Yes, I am still bullish on the long-term picture, and I do think Gold will make a run for $1000 when

Is the dollar about to collapse?  We'll know soon enough, since the U.S. Dollar Index fell yesterday to within a hair of an important correction target that we flagged for subscribers a couple of weeks ago. The actual target was 83.45, a Hidden Pivot support that lay just 0.05 points beneath yesterday's actual low. We'd expected a bounce from our target, and it came in the form of a sharp rally of 0.81 points off the intraday low at 83.50. However, the surge would need to continue to at least 85.29 by Wednesday's close to confirm a bullish reversal of the downtrend that has dominated since April 20. On that day, the corrective rally of an even larger downtrend topped at 86.82.    Putting the dry technical details aside, these numbers are important because they imply that the dollar is hovering at the edge of a cliff. Indeed, if the 83.45 support were to fail decisively, it would signal more downside over the near term to at least 80.05. A five percent decline may not sound like much, but there's a strong case to be made that any slippage below 84 will be the beginning of the end for the dollar. If so, we could expect a collapse in Treasury paper that would instantly devastate The Government's already doomed plan to resuscitate the economy by holding lending rates down across the yield curve.   Bond Gains Erased Treasury rates have surged since mid-March, when the Fed announced it would start monetizing debt via direct purchases of Treasury debt. Bond prices staged their biggest rally ever on that day, pushing yields down to their lowest level in many decades. However, any benefits thereof have been erased, since the slippage in bond prices since then has pushed yields above where they were when the