April 2010

The futures looked poised for a 25-cent pop, based on a Hidden Pivot target at 18.370.  First, however, they'll need to get past the target's midpoint sibling at 18.210, which lies just beneath yesterday's spike top. My gut feeling is that once the pivot is out of the way, the move through the spike top, which lies at 18.235, will be a piece of cake. A rally that makes a point 'B' high between those two numbers would provide an excellent opportunity to board via camouflage. _______ UPDATE (1:00 p.m. EDT):   This one worked very nicely, since Silver did indeed pop -- for a hefty 25.5 cent gain! -- after pushing past the midpoint resistance noted above. The high so far today is 18.380, a penny above our rally target. 

We'll use a Hidden Pivot at 1180.90 as our minimum upside projection for the moment. Since the pattern that produced that target is far from intuitive, I've reproduced a chart alongside to show the provenance of  'D'.  You can short this number with a stop-loss as tight as six ticks, but boarding for the ride north will be trickier, requiring a nuanced approach (i.e., camouflage) on the 3-minute chart. _______ UPDATE (11:15 a.m. EDT):  An 1162.70 pivot noted in "Today's Action"  worked beautifully as a place to go bottom-fishing, since it caught the low of a $10 bounce within 50 cents.

We’ve featured both bullish and bearish headlines here in recent weeks, so it’s time to clarify the outlook lest readers become confused. In brief, we are looking for an approximately 1400-point rally in the Dow Industrials this summer, but we’re prepared to turn bearish if a change in stock market’s technical condition warrants it (see chart below).  So far, we’re giving the bulls the benefit of the doubt based on a purely mechanical reading of the charts. But we also believe that Europe’s financial crisis is starting to spin out of control, much as America’s banking crisis did when Lehman Brothers went under. In Europe there is fear now, and even rioting in Greece, because no bailout measure tried so far has put deep anxieties to rest. Panic seems unavoidable at some point, and it could come in a day, a week, or a month, but probably sooner rather than later. Regarding our bullish call on the stock market, let us say up front that it goes sharply against our instincts and every shred of logic that we possess. Permabears do not come easily to the notion that stocks could rally so powerfully amidst a patently fraudulent economic recovery – a recovery that has touched almost no one we know and which, even at a very low level, cannot conceivably be sustained. Even so, putting our opinions and instincts aside, we’ve learned to simply trust the charts whenever there are doubts. Goldman Resists Tide This we have done, at least for the moment. As the week began, our technical runes told us it might not be a bad time to venture out on the limb with an especially bullish prediction. Thus, the headline “So Bullish on Stocks That We Feel Guilty”.  The commentary went on to explain why we were

After a tumultuous day in the currency markets, the US Dollar is close to a shortable "D" target.  Many of the non-US currencies look oversold and ready to bounce, and if they go back to test their lows and find support, the June US Dollar futures might reach a "D" target of 82.93 which would be a promising short.  Stops should be two or three cents above 83.00.  A cautious approach would be to wait for the futures to surpass 82.75 before entering orders.  That is the Tuesday high and the high for the rally that began around Thanksgiving of last year.  Traders should not have orders working at 2:15pm EDT when the Fed makes its policy announcement. (Posted by Doug McLagan) _______ UPDATE (01:15 p.m. EDT):  The futures rallied to within six cents of the target and then pulled back, though not dramatically.  We think the risk of attempting to trade this pivot is now very high, especially with the imminent Fed announcement.  So we will cancel the trade and watch what develops.

The Dow sliced through a midpoint support at 11012 yesterday with no discernible pause even on the 15-minute chart. This implies further slippage to 10914, the support's 'D' sibling.  Shorts should be considered on a bounce to 11012, but if you decide to jump in, use the lesser charts for locating a minor-rally Hidden Pivot or a downtrending 'X'.  If trading the futures, you can bottom-fish at 10858, stop 10851. ______ UPDATE:  A gap up to 11039 on the opening bar didn't give us much opportunity to get in trouble.  Subsequent action was pretty wild, suggesting that traders don't know quite what to make of Europe's troubles.  But price movement was up nonetheless -- business as usual, perhaps, with an irresistable  tide of OPM driving stocks higher no matter what the news or its implications.

Greece's problems were not even mentioned tonight during news anchor Brian Williams' summary of the headlines at the beginning of his broadcast. Perhaps stock market junkies are the only ones who care?  A report on Greece was included in the 30-minute news wrap-up,  however, and it was properly nuanced to illuminate the most scary details.

Goldman did not get clobbered yesterday by the selling that brought the broad averages down. Instead, it bottomed just 85 cents below a key Hidden Pivot support at 151.00 that I'd identified earlier. It will of course take more than that to turn the stock market around, but we shouldn't dismiss the psychological importance of this stock's resisting the bearish tide -- especially when the company itself was getting clobbered by an inquisition on Capitol Hill as stocks were dropping.  Some subscribers evidently made hay with the forecast, although it took guts to ignore what was going on elsewhere in the market.  Looking just ahead, the stock will need to hit 157.96 to further distance itself from jeopardy. The trend was down at the close, and GS appeared to be holding on by a thread.

A print down at 1170.75 today would turn the daily chart quite bearish. Coincidentally, yesterday's downdraft pointed to a minimum 1170.25. The midpoint sibling of that Hidden Pivot, 1182.50, has already been violated decisively, so we should expect the selling to continue into Wednesday, at least.

June Gold came through for us with flying colors yesterday, achieving every item on our technical wish list.  I did not stipulate that the futures had to close above the look-to-the-left peak at 1171.80, only that they exceed that number -- as indeed they did.  While this is no guarantee of significantly higher prices over the near term, it does give bulls a little more breathing room, since it would now take a print below 1132.00 to even faintly darken the outlook, and  below 1102.40 (aka "The Trouble Zone") to turn the picture outright bearish. If buyers are to seize the advantage in the days ahead, we should see price action that roughly conforms to what I've drawn on the chart.