August 2010

I benchmarked a couple of Hidden Pivot resistance points earlier, but they should be put out of mind for now, since the futures spent all of last week failing to knock off a manifestly more important resistance peak at 1129.50 recorded on June  20. Late Sunday night they created a bullish impulse leg on the 5-minute chart, with an implied 'C' entry at 1118.25.and an 1116.25 stop-loss. This seems too risky to jump on, although there was potential for lesser patterns to develop on the same chart with commensurately lower risk of as little as three ticks. (In the accompanying chart, I've illustrated one way this could play out.)

Recent rallies have been encouraging -- though not stellar, since buyers still seem to be having trouble vaulting "external" peaks with each new intraday thrust.  The most important such challenge on the hourly chart lies at 18.820, and so we'll make that the number to beat today, or at latest tomorrow.  If the effort fails, it's a long way to the trendline we've been using on the hourly chart to project swing lows. It comes in around 17.370 today.

If the rally cycle begun in late July is destined for the record books, the futures should not have to consolidate for more than a day before leaping a key peak at 1222.10 recorded on July 14. If that happens today there would be little doubt that bulls are intent on a test this summer of all-time highs near 1270.00.  A two-day effort would somewhat dim prospects of this although it wouldn't kill them.

Wheat futures are collapsing -- exactly as our colleague Ross Clark at Institutional Advisors had predicted they would in a timely dispatch sent out Friday -- but not much else is moving Sunday night.  I've identified a bull trade in the Diamonds that would be especially enticing if it plays out in the opening minutes of Monday's session.

If Friday's action amplifies the existing trend, we should expect to see the Dow frozen in a 10-point range all day long. Most targets and trend-change parameters given here earlier remain unchanged in any event.

It's been a while since we looked in on this stock, which appears headed for 164.05, an important Hidden Pivot off the daily chart. Traders should look to do their buying using camouflage on a small abc reversal uptrend from near 152.80, the midpoint of the relevant C-D leg.

My short-term outlook is neutral, as in Gold, but if Silver were to plunge gratuitously it would become a tightly stopped buying opportunity at 18.075, a Hidden Pivot. The midpoint sibling of that number is 18.280, and the same analysis applies -- i.e., a bounce from the midpoint or higher that "goes impulsive" on the hourly chart would be a very bullish harbinger for next week. ______ UPDATE (3:00 p.m. EDT): Today's modest rally is technically meaningless, since the futures still need to take on two daunting peaks to generate a fresh impulse leg on the hourly chart. The peaks lie, respectively, at 18.700 (August 4) and 18.820 (June 30).

I have no bias at the moment, either bullish or bearish, but if the futures should dive for no apparent reason to 1186.30, you can buy there with a stop-loss as tight as four ticks. That's a Hidden Pivot support off the hourly chart (A=1205.50), and its sibling midpoint lies at 1193.50. If that number is hit or closely approached and the futures reverse to create a bullish impulse leg on the hourly chart, it would be a very encouraging sign for next week. _____ UPDATE (12:37 p.m. EDT):  Exactly the encouraging sign we wanted to see occurred when the futures rallied to create a bullish impulse leg on the hourly chart without having quite reached the 1193.50 midpoint support. The actual low was 1194.50.  _______FURTHER UPDATE (2:52 p.m.):  Gold went on to slightly exceed the 1212.50 target we'd been using as a minimum upside objective. The actual high so far today has been 1213.30.)

No change:  An all-too-familiar rally target at 1136.50 remains our minimum upside expectation, but the futures will need to surpass mid-May’s 1142.75 peak to hint of still more upside to come.  There’s a second pattern that projects to 1141.25, but that too would fall just a tad shy.  Either of these Hidden Pivots can be shorted with a one-point stop-loss, but I wouldn’t suggest initiating the trade if the target is hit in the final 60 minutes of the session. Please note that you’ll be on your own if it fills.