September 2010

Gold has bounced off three Hidden Pivots in three trading sessions, and this morning we will watch the reaction to the employment report.  A print of 1259.2 or higher will signal continued bullishness.  Yesterday we noted a new intraday pattern that was close to being confirmed whose midpoint was at 1255.6.  Gold obliged by activating the pattern and rallying to within four ticks of that pivot.  Now comes the non-farm payrolls report (at 8:30 a.m. EDT), frequently used as an excuse by anti-gold forces to sell aggressively.  Today’s attached graphic is chock full of information, including "D" targets at 1267.2 and 1291.9, both of whose sibling midpoints have performed well (to say the least).  But there is one additional Hidden Pivot to consider: the “D” target at 1258.7, visible on the daily chart and associated with A=1192.5.  This target would be decisively surpassed by a print of 1259.2 or higher, which would signal more upside to come.  Should NFP be met with selling, unfortunately Hidden Pivot analysis has nothing to say about where to bottom-fish: the patterns are all bullish.  Don’t you hate when that happens?  (Posted by Doug McLagan)

To repeat:  The bullish impulse leg created by Thursday's high is likely to influence price action for a while to come -- perhaps 5-7 days or longer -- and the implications would grow still more bullish if the futures are able to push above 1098.50 without pulling back to create a b-c correction on the daily chart.  Even if they were to do so, they could retrace all the way down to 1057.25 without damaging the bullish case one bit.  Please note that any booster-stage rally of 13.25 points from within the range 1057.25-1068.50 should be considered a downpayment on a thrust to as high as 1121.50.

[Alan Geik, whose razor-edged essays on our sordid political culture have gained him a loyal following at Seeking Alpha and other popular web sites, has been a lifelong student of frauds and scams, and so writing about this Era of Bailouts comes naturally to him.  In the essay below (which contains some great links that we would encourage you to follow, including a video punch line at the end), he explains not only why the global financial crisis is not going away any time soon, but why it is likely to get much worse before it gets better.  To bolster his conclusions, Alan draws a bead on some of the bigger-than-life buffoons and greedy political hacks who have helped to amuse and entertain us even as they have unwittingly contributed to the collapse of the global economy. An egregious example of the breed is Fed. Governor Mishkin, who in 2006, with amazingly bad timing and lack of prescience, presented a paper entitled “Iceland’s Financial Stability.”  There are also some piquant notes on the recent misdoings of a world-class buffoon who needs no introduction, Sen. Christopher Dodd. Enjoy! RA] Beginning with this somewhat worn animated video, Worst Slide Story, will hopefully lend a light, amused tone to my few observations about the iCorrosion of the Empire. Also, a bit of light comedy might lessen the appearance that this is just another frustrated Financial Collapse to Come rant. I have written several articles outlining the two major Wall Street conceived scams of the 1980s; the Latin American Debt Crisis and the S&L bailout. Back then lobbyists gave Congress hooks on which to support massive Wall Street loans to Latin American dictators (“we need to help third world economic development”) and also, to their own S&L campaign contributors (“we need to support small

The rally in copper since early last week has spent more than twelve hours bumping up against the midpoint of a pattern which is a thing of beauty.  The pivot, at 3.4848, was surpassed by exactly one eighth of a cent on the first try and has repelled three very close approaches since then.  We don't know whether the prohibition against "sloppy seconds" applies to shorting this midpoint, which is a tantalizing possibility as we write.  An alternative would be to look on an intraday chart such as the 10-minute for a camouflaged entry on the long side.  The series of slightly lower highs could easily give rise to such an opportunity, and a ride up to the sibling "D" target at 3.6135 would be lucrative.  Note that in the attached graphic the prices are denominated in cents per pound.  (Posted by Doug McLagan)

I'd outlined a possible trade for night owls in the E-Mini S&Ps, but the futures have turned  coy around 1:15 a.m., apparently lacking the moxie to reverse the weakness engineered earlier by DaBoyz. The suggested trade is still valid after making the necessary adjustments, but it's possible the next short-squeeze will have to wait until after the opening.

Whether and when December Silver surpasses the important prior high of 19.55 will tell us a lot about its imminent price action.  Despite making a new rally high on Wednesday, the futures failed by two cents to surpass the important prior high of 19.55, visible on the daily and weekly charts.  The December contract is hovering just below the first of four crucial prior peaks, and it is not out of the question for all of them to be surpassed quickly, given the energy with which silver trades at times.  There will be a battle, of course, but we should not be dogmatic about who will win this one.  The four levels to watch on the December chart are 19.55, 19.915, 20.80, and 22.055.  And while camouflage is a trading technique that is used primarily on short-term intraday charts, silver traders and investors should take camouflage principles into consideration in analyzing the longer-term silver charts if and when these levels are broken.  A first instance would be a meaningful pullback from the 19.655 midpoint pivot described yesterday, should it occur.   (Posted by Doug McLagan)

By pushing above a prior peak at 1080.25 that I'd noted here yesterday, the futures created a robustly bullish impulse leg of daily-chart degree that is likely to have positive implications beyond the Labor Day holiday. The outlook would grow still more bullish if the rally were to exceed a third peak at 1098.50 either today or tomorrow.  Alternatively, sellers would have to push this vehicle down to 1013.25(!), exceeding a low from July 6, to negate the bullishness of yesterday's move.  The best "camouflaged" entry opportunity I can foresee at the moment (i.e., around 12:53 a.m. EDT Thursday) would trigger at 1079.25, based on the pattern shown in the chart, and the odds would be best if this occurs overnight. The midpoint resistance lies at 1081.00, and longs from just below it could breathe a sigh of relief if it's exceeded, since that would imply an easy ride to the 'D' target at 1084.75.  _______ UPDATE 1:13 a.m.):  Just to be annoying, the little scuzball has made a lower point 'C', changing the entry trigger to 1078.25 and the midpoint resistance to 1080.00. You'll be on your own if this little cat-and-mouse game continues into the night. _______ Further UPDATE (9:39 a.m. EDT):  Entry at the new trigger point would have produced a low-stress trade, since the futures went on to achieve 1084.75. As a practical matter, however, the trade would have been less than ideal because the point 'C' low of the pattern was formed from multiple bars, not the single one that I (much) prefer.

On Wednesday, gold bounced off of a Hidden Pivot that had been touted several times, and in the process traced out a new pattern, not yet confirmed, whose "D" target is near the all-time high.  The Wednesday high was four ticks below our 1257.0 "D" target (mentioned yesterday and in earlier touts), and a quick decline of more than twelve dollars followed.  So long as this 1244.1 low is not revisited, a print of 1249.9 would confirm a new, smaller pattern with a midpoint at 1255.6 and "D" target at 1267.2.  Traders should continue to bear in mind Friday's non-farm payrolls announcement, an event which has at times been preceded or immediately followed by heavy selling of gold futures.  (Posted by Doug McLagan)

Silver traders and investors should check out today's tout for the Comex December contract, since it reiterates a potentially important target that you may have missed when it was last mentioned two weeks ago.