September 2009

The futures blew past a 2.9048 midpoint resistance so easily that we should infer that the _____ Hidden Pivot target with which it is associated is very likely to be achieved.  A pullback to the midpoint should be viewed as a buying opportunity, but I'd wait for the turn higher, assuming it comes, so that you can board on a "camouflaged" signal.

With the G-20 meeting in Pittsburgh just two weeks off, we didn’t expect gold’s widely anticipated push past $1000 to be a piece of cake. Indeed, Bernanke & Friends are probably throwing everything they’ve got at gold right now to suppress its price. And for all we know, Uncle Sam has loaned every ingot (supposedly) in Fort Knox to carry-traders at J.P. Morgan and Goldman Sachs. The ability of these well-connected bullion bankers to borrow more or less unlimited quantities of physical gold is for them even better than a license to print money, since money itself is most surely not what it used to be. The feather merchants have repaid the government’s kindness by sitting on gold futures prices. This price-fixing operation is all the more impressive because its perpetrators have managed so far to peg bullion to $1000 even though the U.S. dollar has broken some key technical supports in recent days. This is quite a trick, but there are some powerful reasons why the bankers are not likely to prevail in the end. For one, strong and persistent global demand for gold has been feeding on mounting fears concerning the dollar’s integrity. Those fears are not about to abate any time soon. Consider who is in G-20 besides the U.S.:  South Korea, United Kingdom, Russia, Canada, France, Germany, Japan, Mexico, Italy, Brazil, China, Turkey, Vietnam, Iran, Indonesia, India, Egypt, Philippines, Nigeria, Pakistan and Bangladesh.  How many of those countries do you think are comfortable sitting on a growing pile of U.S. dollar reserves? The answer, even including such Friends of Bernanke as Japan and Britain is: zero.  Bernanke’s Cronies Bernanke may be working behind-the scenes with a couple of G-20 cronies to keep a lid on gold, but all of them (except Great Britain, perhaps, which has shown

The futures look like they are still on track for a predicted surge to 1053.00, although the bullish argument would weaken if they haven't accomplished this by Friday.  Although the September contract failed to push past some key, late-August highs near 1038.00, most of the action took place close to those highs and well above the meatiest part of the supply zone beneath them. Night owls can try bottom-fishing at 1029.75, a midpoint pivot, using a stop-loss no wider than 1.00 point. If the trade works, consider taking partial profits or implementing a trailing stop as early as 1033.00. _______ UPDATE (1 a.m.): The pullback went no lower than 1030.75, missing our bid by a full point. Signs now point to a minimum ______, or _____ if any higher. Either can be shorted by scalpers using a very tight stop-loss, but you'll be on your own thereafter.

tocks were climbing steadily higher, and although a bullish target we were using for the E-Mini S&Ps implied that a strong rally was imminent, we decided it would be premature to look for a camouflaged entry opportunity. That’s because timid action on the lesser charts hinted of tedium for at least a few more hours. Even so, we found a way to play the move, if and when it occurs, by using call options in the Diamonds. Specifically, we considered calendar-spreading an out-of-the-money strike. The discussion of this strategy was a digression of sorts but well worth your attention, since we have seldom discussed the leveraging of options in such detail during the weekly class.

A minor Hidden Pivot resistance at 10.57 is the nearest impediment, but if UNG gets past it and a peak at 10.75 made in late August on the way down, it would be clearing the path for yet more upside. The implications will not affect the daily chart, however, until 16.27 is touched.

The E-Mini S&P spent all of yesterday pussyfooting below a not-so-formidable peak made a week earlier, so we should not regard the bullish target at 1053.00 given earlier as chiseled in stone. In fact, it would take only a dip below 1017.50 -- just seven points below current levels -- to turn the hourly chart bearish.

Yesterday's patently spurious plunge should look more like a swoon by Wednesday mid-morning, when I expect gold will have recovered. The sell-off was very obviously caused by the nasty bull trap that ran stops placed slightly above a 1008.80 high made shortly after 4 a.m.  In a bigger picture, the _____ target given here earlier remains valid, although I should introduce another, lesser one at _____ that looks capable of showing some stopping power.  The less stopping power it displays, the more quickly and powerfully the next thrust is likely to develop.

Yesterday morning, an hour into the new trading week, we covered a small short position in the Diamonds, booking a loss of $92 on some September put options. This speculative bet, initiated on the closing bell Friday, was inspired by a hunch that if Mr. Market really wanted to catch investors with their pants down, the Tuesday after Labor Day would be a perfect time to do it. Alas, even with news that should have been helpful in catalyzing a stock-market plunge, stocks trudged higher. The news concerned consumer credit, and it could have left no doubt about the dire condition of  the American consumer. He in fact reduced his borrowing in July by a record $21.6 billion, for a seasonally adjusted 10.4% drop to $2.472 trillion. This was the sixth straight month of declines, and it would seem to cast a pall on whatever “green shoots” Mr. Obama’s spinmeisters have reported sighting lately. Because U.S. GDP is 70% consumption, rapid credit growth is the only way to keep the economy nominally afloat, let alone growing. Although this blunt fact may not have registered on traders’ tiny brains yesterday, its importance was not lost on some who frequent the Rick’s Picks chat room. One denizen pronounced the consumer credit report “absolutely stunning. Simply put,” he explained, “it is rugged, first-line evidence that there is no recovery taking place. Yet the market paid no attention.”  Indeed, the market might have shrugged off the outbreak of nuclear war just as easily. It’s a cyclical thing, of course, and stocks seem likely to remain in a “don’t-worry-be-happy” phase until the day when some piece of seemingly insignificant news causes them to plummet as they have not in recent memory. It’s Not Ignorance Mysterious cycles that we will never fully understand are at work, and

Silver's most recent peak at 16.860 fell ___ cents shy of a clear Hidden Pivot at _____, so we should assume the December contract has at least a little further to go before it hits something solid. Position traders should consider lightening up, with the goal of replacing on the pullback any shares sold near the target.  If the futures close above _____ for two consecutive days, or trade more than 10 cents above it intraday, that would be a very bullish sign going forward.