December 2009

Just when you thought the global-warming mandarins couldn't embarrass honest scientists any more than they have, along comes a new scandal. Turns out the mandarins' temperature-measuring devices in all too many instances sat  next to the exhaust fans of air conditioning units, were surrounded by asphalt parking lots and roads, sat on blistering-hot rooftops, or near sidewalks and buildings that absorb and radiate heat.  Click here  for this sad, sad story and an album of incriminating photos.

A Hidden Pivot at 428.50 is my minimum downside target for the near-term, and you could bottom-fish there aggressively with a tight stop-loss if the Gold Bugs Index takes the implied dive. If the support is exceeded by more than a point, though, expect the weakness to continue to at least 416.43 (which can also be bottom-fished). Alternatively, it would be very bullish if HUI aborts the downtrend and prints above 471.74 today or tomorrow.

Our old friend Goldman is poised to turn menacing (toward bears, that is) on the hourly chart with just a small push, and although the stock is unlikely to assume a position of leadership, a fleeting show of braggadocio would likely boost the broad averages with a force that has been missing since GS shares topped in mid-October.  Anything above 167.80 today -- Goldman settled at 166.47 on Wednesday -- would likely set these forces in motion.

It is the boldness with which DXY traverses the space shown in the accompanying chart by which we should judge the mettle of this rally, assuming the dollar achieves the modest heights indicated.  Penetration of both peaks with no intervening B-C pause would be strong evidence that the bull is about to rampage and that the current, somewhat subdued short-squeeze has bigger things in mind. Thus far, though, the rally, such as it is, suggests that carry-trading shorts are not exactly panicked, at least not yet.

The futures were bound for a Hidden Pivot rally target at 1102.75 early Wednesday evening, having exceeded its midpoint sibling at 1098.25 by a decisive 1.00 point. A minor rally top at that price would hold no particular opportunities for us thereupon, nor does the implied 4.50-point thrust from current levels deserve more than passing attention from those unwilling to cast themselves into the fray of illiquidity, nefarious intentions and general sordidness that characterize night trading.  It would be at exactly 1112.50 that bulls will be signaling their return to limited power, since that would exceed the subtle look-to-the-left peak labeled in the accompanying chart.

Gold futures continued along their tortuous path lower yesterday, far from invincible, but nonetheless defiant. The nearest Hidden Pivot support of significance is 1103.50, but lesser patterns promised relatively low-risk bottom-fishing opportunities above it.  My suggestion is that you use 'p' midpoints to do so -- most aggressively when the patterns that have produced them evince the gentle arc of the one shown in the chart.  Best possibility as of 9:30 p.m. EST would come on a swoon down to 1122.00.  Bulls can get excited if a rally exceeds 1154.50 0vernight or Thursday morning, since that would create a  quite bullish impulse leg on the hourly chart. _______ UPDATE (9:44 a.m. EST):  Using the 1122.00 pivot flagged above would have caught the best trading opportunity of the day, since the futures bounced $11.50 from a 1121.80 low.  The bottom occurred at around 6:20 a.m.  If you caught the ride, treat yourself to a Havana -- or your parrots to some of that fancy Cuban bird seed.

As the disastrous health-care bill winds its way through a morally and ethically bankrupt Congress, the process has come more and more to resemble Mr. Obama’s campaign itself.  Who would have thought that a rookie Senator with the left-most voting record in Congress and the middle name “Hussein” would eventually triumph over Hillary’s well-oiled, seemingly invincible political machine?  Well, he did, and in the end, most voters seemed not to have cared that Barack Obama’s Rolodex was filled with the names of campus radicals (including that of Bill Ayers, the unapologetic bomber) ; that his spiritual mentor for 20 years was the fire-breathing, America-hating pastor Jeremiah Wright; and that his only political experience prior to the campaign had been carrying water for Chicago’s most corrupt power brokers.   In similar fashion, a trillion-dollar health care bill that no one in Congress has read and which perhaps half the voters revile is, against all odds, about to become law.  It was barely a week ago that Sen. Joe Lieberman reportedly stood ready to oppose the health bill’s crucial “public option” with every supposedly principled fiber in his body.  Now we read that compromises are being made, that objections are being dealt with, and that even the sticky issue of abortion coverage will somehow be smoothed over so that the camel of socialized medicine can get its nose into the tent.  Medicare ‘Kicker’  This is “The Worst Bill Ever,” according to a lengthy and passionate editorial in the Wall Street Journal a few weeks ago. “Epic new spending and taxes, pricier insurance, rationed care, dishonest accounting: The Pelosi health bill has it all,”  the Journal’s editors declaimed. It may “well be the worst piece of post-New Deal legislation ever introduced.”  And that was before the compromisers began to work their magic – most recently,

We lingered on gold’s one-minute chart, and although there were some microscopic camouflage opportunities to consider, none measured up to our expectations. Even so, this gave us a chance to delve into the psychology of gold’s price action that morning, and to ponder the factors that might cause us to either accept or reject a potential trade. Bottom line, our expectations for small abcd patterns must be aligned with the bigger picture to bring us to a trade. On days when the action is mostly sideways, there is not necessarily a reason to trade, even if it is possible to book tiny profits again and again.

An E-Mini run-up to 1138 would likely bring finality to the bear rally begun in March, but it's hard to imagine this occurring with market bellwether Goldman looking so punk. The stock, currently trading for  162, looks like it will fall to at least 153 before it finds traction.  If so, expect it to place a severe drag on the broad averages.