March 2010

Is Gold's correction from the record highs of early December about to run out of steam? Rick sees some encouraging signs, which he discussed recently with Al Korelin.  Click here for the interview at Kitco.     

Gold mildly disappointed on Friday, hesitating for six long hours before taking on a relatively minor resistance peak on the hourly chart.  While the futures could have pushed past four such peaks by day's end, they instead made gratuitous noise by flagellating beneath the remaining three the entire day. Buyers will have another chance to show their stuff today, and the most bullish outcome we might look for would be an unpaused thrust past the three numbered peaks shown in the chart.  Please note in any case that bulls are in no imminent danger, since it would take a  collapse to 1078.00 to turn the hourly chart bearish.

Gold's performance on Friday was somewhat disappointing, but Silver looks strong enough to drag it higher. The dollar's strength or weakness holds the key, so check out today's DXY tout for some useful benchmarks.

We never imagined we’d find ourselves rooting for Carl Icahn, the sleazy corporate raider, but then, we had not foreseen his taking on the even more unctuous and loathsome Donald Trump. The two have squared off in bankruptcy court in Camden, New Jersey, with Icahn seeking to wrest control of Trump Entertainment Resort, Inc., owner of three bankrupt Atlantic City casinos. If Icahn wins, he wants rights to the Trump name -- but not for the reason you might think.  Mainly, he’s trying to avoid the $20 million expense of changing the signs on Trump’s casino-hotels. For his part, Trump insists that his name alone is worth billions and that Icahn should not have rights to it if he takes control of Trump Entertainment. “Everyone wants the [Trump] brand, including Carl,” Trump said recently in an interview. “It’s the hottest brand in the country.” How hot is that? Trump claims his brand was recently appraised at $3 billion. We don’t know how the appraiser came up with that number, since Trump’s name is mud in New Jersey and on its way to becoming mud in Florida and elsewhere as deflation crushes real estate leverageurs like bugs. Trump’s New Jersey casinos have been in bankruptcy three times, including during relatively good times in Atlantic City, and he’s screwed so many partners and shareholders over the years that he’d be foolish to travel without a bodyguard. Loudmouth ‘Alchemy’ Moreover, Trump’s self-proclaimed business acumen is arguably non-existent; it is only his world-class mouth that has worked alchemy on leaden deals that would have ruined less gifted promoters. As SPY magazine documented in a famous cover story years ago, the only time Trump succeeded was when he partnered with businessmen such as the Pritzkers who knew what they were doing. Otherwise, as the SPY

DXY could come down to 80.01, or perhaps to 79.88, and still be considered a bullish bet. That would fully correct the move off February 19's top and leave the dollar recharged for a minor bull cycle to as high as 81.79.  More bullish still would be a rally touching 80.82 without a dip first to either of the Hidden Pivots identified above.

Silver looks well capable of dragging gold higher over the near term, since it did what gold failed to do on Friday, impaling several resistance peaks on the hourly chart without trepidation.  Most immediately, the rally points to at least 16.695, subject to a test of support at 16.390, a midpoint resistance that is now support. Once the May futures have closed above 16.695, they'd become an even-odds bet to reach 16.985 with 4-6 days.

We hold seven April 42 puts for an average 1.05 and a March 44 put for 0.23. Buy 100 shares on the opening as an offset, since the short-term forecast is bullish.  That will still leave us slightly short, since the puts have a delta value of about 18 apiece, but the backspread effect will make us net long quickly if the cubes rally, since the puts will shed deltas.  Conversely, we would get short in a hurry if QQQ falls, since the puts will accrete deltas. ________ UPDATE (9:35 a.m. EST):  We bought a round lot for 44.95 on a gap-up opening. The cubes have since traded as high as 45.13.

My bias remains bullish, although it is clear that the futures are not capable of making any upside headway whatsoever without the crucial boost provided by short-covering.  A thrust today touching 1113.00 would draw bears in once again, but DaBoyz left that drama for another day when they called it quits on Friday. They had already succeeded in creating a bullish impulse leg on the hourly chart the night before on thin volume, and this should set the stage for a further push today to at least 1107.50.  That's a midpoint resistance, and if it's brushed aside we could expect a finishing stroke to at least 1118.50.