April 2010

Thanks to a strong push Sunday night, our 18.575 target has been achieved with a penny to spare .  The closest structural impediment above it is January's 18.900 peak, but once the May contract has exceeded that number, it would become an evens-odd bet to deliver 20.215.  That would be the first time Silver has been above $20 in more than two years.

It's late Sunday night, and although the futures have reached the 1168.50 target as promised, they have yet to take out the look-to-the-left-peak at 1171.80 that I'd also noted as important.  However, given the hit the dollar is taking at the moment, a push above 1171.80 by June Gold would appear to be imminent. If and when it happens, we should use 1187.10 as our minimum objective for the near term.

The Dollar Index is getting slaughtered in off-hours trading Sunday night, suggesting larger bearish forces are at work than the down-pattern visible on the hourly chart.  If the selling goes impulsive on the daily chart by exceeding 79.51 to the downside, we might infer that the bear cycle begun exactly a year ago from 86.87 has resumed.  If so, the relevant midpoint support at 75.89 would be in play as a minimum downside projection.

We hold two May 55 puts with a cost basis that has been reduced by partial-profit taking to 1.20. Since I have no tolerance for absorbing even a slight loss on option trades, especially put options, I'll suggest tethering the two that we own to a 1.28 stop-loss.  That's a tick beneath last Thursday's low, so you can infer that we are using a structural support to tell us when to bail out.  I've included a Tradestation chart of the May 55 put option.  The option exchanges' new symbols are so crazy-looking that I haven't bothered yet to find out how they arrived at TBJ1005622P55 to designate  TGT May 55 puts. _______ UPDATE (Apr 13, 3:39 p.m. EST):  We exited the remainder of our position on the stop-loss for a small theoretical gain.

We'll put aside 1196.50 as a place to attempt getting short, since buyers are eating through the Hidden Pivot tonight like some insatiable strain of larva.  I like another Hidden Pivot at 1202.50 better anyway, since it is just above too-obvious resistance at 1200 rather than just below it. A three-tick stop-loss would be appropriate, and it implies that you could start taking partial profits on a pullback to 1200.25. The relevant coordinates are shown in the accompanying chart, and you'll want to notice the sibling resemblance between k-A and B-C that makes the target enticing. If it is rudely brushed aside nonetheless, we'll be looking at more upside to at least 1212.25 (also shortable, stop 1213.25).

“Sell in May, and go away?”  Any trader who plans to employ that time-honored strategy should take good look at the chart below before dumping his or her portfolio on schedule  in a few weeks. Notice that investors who exited the stock market right on time last year, at the end of April, would have missed a 12% rally that saw the Dow rise from 8168 to 9172 by Halloween, the traditional time to jump back in.  The adage that tells us to “Sell in May…” is based on the fact that, historically speaking, stocks in markets around the world have made their best gains during the period November through April; moreover, those gains would have been reduced substantially by holding from mid-spring to mid-autumn. While that is certainly true based on our own experience, some statisticians have demonstrated that the effect is negligible if, when considering the performance of stocks since 1982, you strip out the two crucial years 1987 and 1998. Whether you believe the statistics or not, memories of last summer’s powerful rally should still be fresh enough to dampen the ardor of sellers who think summer doldrums and seasonality are likely to turn the months ahead into a snooze. Summer or not, we are living in interesting times, and there is nothing to suggest that hot weather is going to slow the pace of interesting news of the kind Wall Street seems to thrive on these days. Blowoff In Progress So what are the odds that stocks will show the same kind of anomalous strength this summer and fall that they showed last year?  It’s hard to say exactly, but our gut feeling is that, far from being ready to collapse, U.S. stocks  are in a blowoff phase that is likely to steepen over the next

Click here   for the latest "Special Alert" from my good buddy Garrett Jones.  His bearishness at the moment stems not only from his fine technical work, but from the old adage, "Sell in May, and go away."

A newly active pattern on crude oil's daily chart adds to the resistance just above its recent high but projects to 91.93 if that resistance can be overcome.  The new midpoint pivot is at 88.15, not far below the "D" target of 88.71 from a larger daily pattern described in the April 5 tout.  Traders attempting to short any of these levels should choose their own entry points and should use stops at least ten cents above each pivot.  A print above 88.80 would clear the resistance zone and give high odds that the 91.93 target will be reached.  (Posted by Doug McLagan)  _______ UPDATE (01:30 p.m. EST):  The futures dropped through the "C" point shown in the chart, cancelling the 88.15 and 91.93 targets.  The 88.71 target remains in effect.

A mostly bearish Euro chart would turn highly bullish with a rally above 1.3593.  On March 25, the Euro bounced from just above the midpoint of a strong weekly pattern which had been touted the night before.  That remains the low of the downtrend which began at the major high above 1.51 last November.  Since then, a daily pattern emerged whose midpoint was breached yesterday.  If its sibling "D" target of 1.3040 is reached, the "D" target of the weekly pattern at 1.2683 will be in play as well.  But if the Euro rallies above 1.3593, the daily pattern will be cancelled and the chart will feature a double-bottom and a midpoint reversal based on the larger weekly pattern.  This would be a bullish picture overall.  Bears can look for pivots to short, but we think this might be a propitious moment to get long the Euro, using Hidden Pivot methodology including camouflage should it be available.  (Posted by Doug McLagan)  _______ UPDATE (April 12, 01:10 a.m. EST):  The Euro has rallied well above 1.3593 on Sunday night's Greece bailout news, cancelling the daily pattern with "A" at 1.3819 and "D" at 1.3040, and turning the general picture bullish.  Traders who got long on Friday are doing well.