August 2009

Here's an excerpt from a must-read essay by James Lewis that you can access by following the link at bottom: "[Obamacare] is the result of fanaticism, not balanced thinking. That seems to be President Obama's way. This White House defines a goal like Arab-Israeli Peace in the Middle East, or Health Care for All, and goes hell for leather, damn the torpedoes, full speed ahead -- without ever pausing to think, or to listening to people who have spent decades dealing with these questions -- if they dissent from Obama orthodoxy. Any opposition is interpreted as bad faith rather than reasoned disagreement. Critics must be evil or racist. That is the state of mind of jihadis going on suicide missions. It is not how intelligent policy makers operate." (Here's the link:http://www.americanthinker.com/2009/08/on_being_ruled_by_fanatics.html)

I'm sticking rigidly to my vow not to initiate positions that have no Hidden Pivot rationale, but I am tempted nonehteless to stake out some spec shorts in the Cubes and/or Diamonds as they continue to meander with mind-numbing tediousness in a tight and more or less pivotless range.  Perhaps we can attempt this today using camouflage to reduce the risk nearly down to the vanishing point? _______ UPDATE (4:24 .m. EDT):  Something has spooked U.S. markets in the last hour, so getting short using camouflage will not be easy, especially after the NYSE opening, and assuming it's even possible.  Asian markets got whacked earlier tonight, with Shanghai down nearly 6%.  If  U.S. markets are now sniffing a rout of European shares, this could be the beginning of the global stock-market collapse, Stage II, that we've all known was coming.

Even if Silver goes nowhere for the next couple of weeks -- a good possibility, I'd say --  we should take longer-term encouragement from the fact that last week's high, 15.185, exceeded a midpoint resistance on the daily chart by a whopping 12.5 cents.  If buyers should take charge, though, pushing past 15.575 this week, that would be enough to set bears' fur ablaze. _______ UPDATE (2 p.m.): Regarding the drubbing the Silver is taking today, my thoughts concerning gold apply: It is not the beginning of some hellish decline, but rather a sudden easing toward buoyancy in a somewhat lower range.  _______ FURTHER UPDATE (2:54 p.m.) At the moment, with Silver trading 14.020 off a 13.820 low, I am expecting a tradable bounce from a little lower: 13.805, a Hidden Pivot that comes from the hourly chart.  An impulsive turn from above that number, however, would be bullish for the near term.

Shorts were mildly on the run when Friday's session drew to a close, but a somewhat bigger picture suggests the prospect of dueling impulse legs this week, with little net loss or gain over the few days.  The first sign of trouble on the hourly chart would come on a print below 157.02.

I don't much trust this bounce, since it came off a whipsaw low on Friday that had exceeded the previous day's low by a single tick.  However, if short covering should push the rally above 79.66 today,  we'd become raving bulls, at least for the short-term.

We shouldn't read too much into the feints, whoops, glissandos and diminuendos of late, since, let's face it, the futures have been stuck in a range since January.  That said, they are about to squander a bullish opportunity if they fall below _____, the point 'C' low that followed the creation of an impulse leg of daily-chart degree in early August. That would foreshadow, not some killer leg down, but, more likely, yet another period of lazy buoyancy at a somewhat lower level. More immediately, the December contract could fall to as low as _____ if it smashes the _____ midpoint associated with that Hidden Pivot. (Note to pivoteers: A=961.30 on the hourly chart, August 14 at 9 a.m.) 

Friday's run-up in the last 30 minutes is being mildly regretted and repudiated Sunday evening, but it's still too early to tell whether the weakness will pr0ve to have been yet another ruse for DaBoyz to accumulate stocks ahead of the next short-squeeze. I wouldn't turn outright bearish, however, unless the selling hits 978.00 today, since that's what it would take to create a bearish impulse leg on the hourly chart. In that regard, Friday's weakness perhaps reflected nothing more than DaBoyz' reluctance to attempt to punch through to a new level without sufficient "good" news to goose shorts. Night owls can attempt bottom-fishing at _____ with a stop-loss as tight as three ticks. The basis for this recommendation is shown visually in the accompanying chart.

Although we had vowed to let the by-now tiresome inflation vs. deflation debate simmer for a while, it came to an unexpected boil last week after some provocative comments were posted by "Senor Cuidado" in the Rick's Picks forum. Like us, the Senor finds it difficult to imagine how all of those printing-press dollars the banks are currently sitting on will find their way into the consumer economy.  So far, the banks have recoiled from the idea of lending out their digital funny-money, using it instead mostly to purchase U.S. Treasury debt.  In the meantime, although bailouts and guarantees offered by the U.S. Government supposedly total close to $13 trillion, the only person we know personally who has gotten a dime of it is our sister-in-law Patti, who recently traded an ancient Volvo for a brand new Honda SUV. The cash-for-clunkers program that enticed her to trade up would seem to be what the inflationists have in mind when they assert that inflation lies just around the corner. After all, the program put ostensibly inflationary printing-press money directly into the hands of consumers, who duly stampeded into the auto showrooms to buy new cars. But if the so-far $3 billion giveaway has produced even a blip of inflation in the auto sector, we have yet to read about it. Granted, the program involved only a relatively paltry sum in comparison to, say, the bailout of a sizable bank. However, we would argue that if cash-for-clunkers had been a $100 billion program, the inflationary consequences would still have been almost negligible. Try to Imagine... Try to imagine what would happen if the automakers were to respond to a $100 billion stimulus in the usual way, ramping up production and building new factories in the South, where union presence is relatively light. Thousands

Is Wall Street Ready for Obama’s Fall? The stock market’s powerful bear rally, now five month’s old, has fed on false hopes and delusional thinking, but it is unlikely to survive the coming collapse of the Obama presidency. Mr. Obama’s once-overwhelming popularity, though ebbing, has so far survived the voters’ growing discontent with his policies. However, disapproval is mounting, even on the political left, and it’s going to reach critical mass once the president’s ill-conceived plan for a government takeover of the healthcare system has gone down in flames. He will become a lame-duck president after less than a year in office... Read the Rest of the Article | Comments *** ‘All Roads Lead to Deflation’ When we dropped out of the inflation/deflation debate a while ago, we asked the inflationists to wake us when the price of suburban homes reached a quadrillion dollars. Wouldn’t that be nice for the fifty million or so Americans who owe more on their homes than they’re worth! Anyway, the topic continues to percolate in the Rick’s Picks forum, including this recent, astute post from “Senor Cuidado”. Like us, the Senor doubts inflation is lurking around the bend: Tahoe Billy, you priced gold and eggs but you left out oil. Oil is key to the U.S. economy. With gold at $3,000, what is the oil price going to be? And how are Americans going to afford the new stratospheric oil price? You also left out any interest rate prognostication. My advice is to read bloggers Ackerman, Shedlock, Denninger et al. and get a handle on... Read the Rest of the Article | Comments *** 2009 Promises to Get Tougher (Here’s the latest dispatch from our friend and colleague Larry Amernick, who thinks any stock-market corrections in the offing are going to be shallow.  If