June 2010

Another choppy trading day is expected on U.S. markets on Wednesday, in the wake of poor performance in Asia and Europe. U.S. stock index futures indicate a slight decline at the open. On Tuesday, markets came back slightly toward the end of the day, after Federal Reserve Chairman Ben Bernanke said not to expect a double-dip recession. The S&P 500 twice bounced off the key support level of 1040. But buyers stayed in, lifting all the sectors except tech, which floundered due to comments about poor demand from semiconductor analysts. _____________________________________________________ Dow Jones Industrials (.DJI): up 1.26% or 123.49 points to 9,939.38. S&P 500(.INX): up 1.10% or 11.53 points to 1062.0 Nasdaq(.IXIC): down 0.15% or 3.33 points to 2170.57 _____________________________________________________ Sentiment is poor on all world markets, with concerns about the European debt crisis keeping investors away from equities. Japan's Nikkei 225 Index dropped 0.98%, while South Korea and Australia were flat. In Europe, the CAC 40 opened flat; the DAX did the same while London's opening was also lackluster. In the U.S., a poll by CNBC showed that 40% of investors still don't like the looks of the stock markets. It is notable that gold hit a new high of $1,254 an ounce on Tuesday, while oil remained at around $71 per barrel, down from its recent 18-month high of $87. Many technical analysts think that the support level for the S&P 500 at 1040 will give way, allowing a drop to about 1030. It is notable that the index is only two points away from having the 20-day cross the 200-day moving average. That's a downward-moving signal. Some think that the S&P will hold at 1030, and then come back higher to hit resistance just above 1100. But there is an equally important school of bears, who point

Shortly before 2 a.m.,the futures had tripped an entry signal at 1057.50, implying they're bound for its sibling midpoint at 1062.50, or perhaps to 1072.50 if any higher. I'll suggest passing this one up, since latecomers are being given far too much time to get long.  The trade might have been a go intraday using a "time stop" designed to take you out of the position if the move from the 'X' entry price to the 'p' midpoint did not materialize in, say, two or three minutes.

Using information disseminated in the chat room, we took a casual swing at Hecla yesterday that was based on a minor impulse leg and a strong tout from our friend Phil Calderone. I will formalize the effort to get long in this stock if an exceptional opportunity arises, but at this moment I do not share Phil's sense of urgency. A print at 5.62 would change that, but we can let it happen first before we act. For those eager to imbibe more risk, the stock is working on a bullish impulse leg on the hourly chart that bids fair to deliver 5.47. (A=5.10, on June 7; B=5.39, C=5.18)  The entry signal was tripped ay 5.25, but the stock would need to push above the 5.33 midpoint to become a more enticing bet. Entry at that point would presumably be via camouflage, but you may need to hunker down on the 3-minute chart to find it.

I've had a look at Goldman's chart, since the stock has elicited some comments recently in the chat room, and the news is bound to cheer quite a few of you.  It would appear that there are a couple of robust down-patterns in progress, one of which could see GS get savaged badly enough to push the stock below $100.

Longer-term charts suggest Goldman will grope its way down to at least 115.61 this summer, but it's too early to tell whether a lesser but even nastier pattern in gestation at this moment will wreak the maximum damage of which it is capable -- i.e., a pounding down to 94.19.  It's shown in the accompanying chart, and the uncertainty yet remaining concerns whether there is a pop yet to come that will invalidate the existing point 'C'.

The first place where bulls would become resurgent today is at 18.515, one consequential tick above a small peak among several left on the hourly chart by last week's steep descent. The rally would become unstoppable, however, on a print at 18.815, a tick above a more important peak recorded two weeks earlier. That would also surpass a midpoint resistance at 18.795 that is associated with a 'D' target at 20.175.  Please note that a correction down to as low as 17.750 would not diminish the bullishness of this week's rally one bit.

The Diamonds cry out to be kicked in the nuts, since they bounced yesterday from such a stupidly obvious place, a nickel beneath the key low at 97.75 recorded on May 25. Keep in mind that this is NOT a double bottom in Hidden Pivot terms, since the 5-cent overshoot created a proper, bearish impulse leg.  We'll let things play out a bit before we attempt again to get short. The chart shows where a telling midpoint could conceivably form, providing us with an objective rationale -- and a plan --  for action.

It wasn't supposed to be a struggle yesterday to reach a Hidden Pivot at 1261.80 -- which, as you will surely know, the futures never did. What we saw instead was a garden variety bull-trap that got sprung overnight.  Now, because the rally died at 1254.50, we'll need to ratchet down our expectations a tad and ask that bulls demonstrate their case one impulse leg at a time.  For starters, we may be able to get a read on this vehicle as early as Tuesday night, since the dainty pattern shown in the chart ought go no lower than the 'p' midpoint -- and certainly no lower than 'D' --  if bulls are to remain in command. The no-sweat scenario would be for the futures to simply pump once or twice today or perhaps tomorrow to reach 1261.80.

[Over the last three years, the Federal Reserve has conjured up trillions of dollars of funny money in an attempt to breathe some inflation back into the economy. The attempt has clearly failed. Now, it would appear, Britain has become the first country to throw in the towel on fiscal and monetary black magic. In effect, the country has decided to let deflation take its course, allowing the chips to fall where they may. In the essay below, "Cameroni," a frequent contributor to the Rick’s Picks forum, takes a close look at the decision and what it will mean not only for Britain, but the world. He concludes with a list that spells out what to expect, and the kind of pain we will experience as the world’s financial system comes very slowly back into balance in the years ahead. If his predictions are borne out, the standard of living is about to fall sharply for billions of people around the world RA] David Cameron's new Government in Britain announced Tuesday that it will introduce austerity measures to begin paying down the estimated one trillion (U.S. value) in debts held by the British Government. Lets let that sink in for a moment, for it is a stunning announcement. Now repeat it:  Britain will introduce austerity measures in order to eliminate the deficit and begin paying down the national debt. And that being said, we have just received the signal to an end to global stimulus measures -- one that puts a nail in the coffin of the debate on whether or not Britain would “print” her way out of the debt crisis. That would have virtually guaranteed an eventual hyperinflation that would have spread to all Western nations, destroying the U.S. dollar as the world’s reserve currency in the process and