November 2009

You asked, we listened. I've switched from the cash index to the futures contract, since some subscribers evidently trade this vehicle.  It'll need a print above 75.175 today to turn the lesser charts in bulls' favor. Barring that, look for weakness over the near term to take the futures down to at least 74.440. An HP midpoint at 74.905 can be used to confirm.

The unintuitive ABCD rally pattern in the chart projects to as high as 182.06 over the near term, although Goldman's tired performance yesterday does not inspire much confidence that it will be reached any time soon. Those who say the bear rally has miles to go must explain how it will happen without the banking sector leading the charge. We're all ears if there's another stock or group of stocks that can take on a leadership role.

The 1134.50 rally target that has served us so well for months is not technically in play for trading purposes until the futures put a lesser Hidden Pivot at 1111.90 behind them.  Monday's punch-through high at 1111.70 obviously didn't do that, but it would take only 1113.10 or so intraday to get the job done.  To that end, yesterday's leap to nowhere, gratuitous though it may have seemed, was constructive in that it demonstrated that the futures are having more trouble going down than up. Note in the accompanying chart how the corrective abcd reversed from three ticks below its HP midpoint.  There is mild weakness implied in this action, but it is probably merely corrective, since the 30-minute rally that followed exceeded an "internal" peak, creating a dueling effect.

Lacking the steadfast support of such sovereign buyers of gold as India and China, silver remains on the disabled list, unable again yesterday to push past a 17.970 peak from October 23 peak that December Gold shredded last week in mere minutes.  In fact, Silver's current rally, such as it  is, failed to pierce even a secondary peak at 17.800 recorded on October 26 that should have been a piece of cake.  If it continues to barrel higher, gold will eventually drag silver higher. However, I doubt this effect will be seen if December Gold hits 1034.50 and takes a rest, as seems likely. What silver bulls can hope for at the moment is that October's supply zone, which ranges from 17.210 to  19.175, gets eaten away over the next 2-3 weeks. Even better would be a gold blowout above 1034.50, since that would exert an irresistible pull on silver.

A waft-ing we will go! With little apparent resistance from sellers, the futures are doing Tuesday night what they were unable to do earlier in the day -- i.e., float effortlessly higher. I am still guaranteeing a minimum 1113.00 for now, although I stop short of making this Hidden Pivot a hula number, since I don't want to become a regular amongst the Times Square weirdos. I've included a chart that provides a visual hint to bears of why it will be futile to resist. I see no camouflage opportunities for night owls, even on the one-minute chart, so long entries will probably have to be seat-of-the-pants.

For executives temporarily living the good life on severance pay, the future looks grim. Many top earners, especially in the financial sector, lost jobs that will never return. Credit-swap specialist, anyone?  So what are former $200,000-a-year bank executives and erstwhile marketing honchos doing these days to get back in the ol’ rat race?  Mostly, they are hoping the economy will revive, but not setting their sights too high, according to an article in yesterday’s edition of the Wall Street Journal. Many executives who are currently unemployed evidently went into the downturn without having foreseen its severity. Rather than cut back on amenities, they continued to spend on frills, maintaining the lifestyles they’d enjoyed before they lost their jobs. It’s likely that few of them had imagined the recession would be as severe as it has been, or that it would last for years rather than months.  Even those who made relatively cautious assumptions about the economy figured they would be back on the job within six months. Instead, with severance funds depleted, there are no jobs in sight – at least, not at salaries comparable to what they were making before. To make ends meet, they are downsizing their living quarters or moving in with the folks and eliminating trips to Starbucks.  Reams of Resumes  They have also been sending out resumes by the ream, apparently to little avail. Amidst record long-term joblessness, according to the Journal, more than a third of those out of work have been looking for more than six months.  This is the worst statistic this category has produced since the government began tracking it in 1948.  It is predictable that a similar story will soon be told concerning the retail sector. How long can store owners hang on before they throw in the towel? The answer

I'll be in San Francisco next Saturday to speak on the topic "Using Street Smarts to Beat the Odds" .  Click here  if you'd like more information about this event, which is sponsored by the Technical Securities Analysts Association.  Here's the lineup: Jon Najarian - CNBC Fast Money contributor, co-founder Option & Trade Monster Tim Knight - Technical Analyst, developer of Barron’s top rated Prophet.net Dan Sheridan - Sheridan Options Mentoring Rick Ackerman - Hidden Pivot Point Trading Steve Smith - Minyanville Options Expert Richard Lehman  - “Far from Random”, Using Trends & Trend Channels Charles Cottle - The “Risk Doctor”, Options Trading Education

Silver is struggling hard to reach a modest target at 18.375, and it was hard not to notice that yesterday's thrust failed to get past a look-to-the-left peak at 17.800 recorded on October 26. This would seem to suggest the futures may need another 4-7 days of consolidation before they try and push past a supply zone formed in mid-October that ranges up to the 18.175 peak recorded on October 14.

Bears should prepare for more adversity to at least 1113.00.  That's a Hidden Pivot target lifted from the 30-minute chart (A=1012 on October 2), and it looks quite compelling to me. The logic and viability of this target was further enhanced by the pronounced stall on Friday precisely at the pattern's 1069.50 midpoint.