March 2011

After yesterday's sharp selloff, the gold chart is rife with potential bearish targets.  Gold impulsed down yesterday on all intraday timeframes, but due to certain vagaries of Hidden Pivot methodology, it did not do so on the daily chart.  Those nuances make a print at 1351.3 or lower necessary to confirm an impulse wave of daily magnitude, as things stand.  Amusingly, the lowest target that we can find on the chart would accomplish that with one tick to spare, as pictured on the attached chart.  As the attachment further shows, we have our choice of "A" points, so it is difficult to specify levels to bottom-fish.  Pivoteers should examine the 30-minute, hourly, and 120-minute charts in particular and use their intuitive vision (and prudent order-setting protocols) in the bottom-fishing endeavor.  Martin Armstrong might not join us in so doing even if he could, but we'll manage long positions nimbly in case his temporary bearishness pans out.  If he were a pivoteer, he'd be looking for camouflage to get him safely into a short position for the ride, and we should consider doing likewise if the opportunity presents itself.  (Posted by Doug McLagan)

Reports of a possible rupture in Fukushima's reactor containment vessel have spooked the markets tonight, driving index futures sharply lower.  This type of failure was one that the nuclear expert linked under "This Just In" (see below) said was so unlikely that there was little to fear.  The condition of the vessel itself is unknown at this time, but radiation readings in the vicinity of the plant have reportedly risen to levels considered dangerous to the surrounding population.

The flight to, er, quality continues, with bulls threatening to take this pup about to as high as 121^24 today. The futures were playing toe-sies with the 120^24 midpont resistance as we went to press, but the finishing stroke should be considered underway once the futures achieve some distance (i.e., 6-7 ticks) from it.  Any camouflage entry attempts should reference the midpoint. _______ UPDATE (1:28 a.m. EDT):  A hysterical flight to "quality" has caused the futures to blow past our target and to get within a single tick of the next: 122^13.  It can be found on the 30-minute chart using the following coordinates:  A=118^15 (3/9); B=121^04 (3/11); and C=119^24 (3/14).

There are two corrective abc patterns in progress on the lesser charts (see inset), but sellers don't seem to be having much success pushing the futures down to them. Their respective 'd' targets lie at 35.55 and 35.33, but I would risk no more than three ticks attempting to bottom-fish either.  Of the two, I would expect the higher to yield slightly better odds. The reason I am not enthused is due to the elongated flatness of the corrective patterns.  If you would prefer to board via camouflage, it looks as though there will be plenty of cover on charts of five-minute degree or less.

Sunday's opening bar head-fake fell $3 shy of my target, but the subsequent pullback has been shallow and suggests consolidation. The 1436.20 target will remain viable nonetheless if the pullback does not exceed 1418.20 to the downside, but the futures will first have to dispatch its midpoint sibling at 1427.20. If settlement is above 1436.20, the next stop would be 1445.30.  Night owls looking for a place to board should look for camouflage opportunities on the five-minute chart -- and, as always, the subtler the better.

We're bidding at 50.40 for 400 shares, but NEM might not be so obliging. I'm not going to suggest chasing the stock, but it looks like it's setting up for a push to 53.28 by way of the pattern shown.  The move will become an odds-on shot if and when the stock exceeds the 52.48 midpoint resistance associated with the target.  To get long, I'd suggest dropping down to the one-minute chart to find a camouflaged entry trigger.  The look-to-the-left peak at 52.48 could serve perfectly for that purpose (see inset). _______ UPDATE (8:02 a.m. EDT):  The overnight low so far has been 49.50, so I'll assume 400 shares bought.  Please let me know in the chat room what prices you paid, since the stock traded down on an air pocket.  There are two more targets below -- at 48.38, where I'll suggest buying an additional 400 shares; and at 47.76, my maximum downside target. Both targets can be found on the 120-minute chart.

If the Mother of All Bear Rallies is about to shrug off a World of Trouble and head the "wrong" way -- i.e., up -- it will telegraph the move by popping today above 1313.00. Such a thrust would be strongly impulsive on the hourly chart (see inset), indicative of a bull trend that would likely carry into week's end if there's no news horrific enough to give buyers pause. Please note  as well that a pullback from just above 1300.00 has the potential to set up a camouflage buying opportunity on the lesser charts.  _______ UPDATE (11:22 p.m. EDT):  Driven by fears of a reactor leak in Fukushima's containment vessel, index futures have turned sharply lower tonight.  The E-Mini S&Ps have trade as low as 1272.00, but they'll need to fall to 1266.00 to max-out downside 'd' targets on the 120-minute chart. (A=1325.75, B=1283.00, and C=1308.75).  I suggest using camouflage to short any overnight rally that hits 1287.25, the c-d midpoint.

Click here to access an article that explains in persuasive detail why a reactor meltdown in Japan is unlikely to produce a disaster on the order of Chernobyl.

[With debt spinning wildly out of control and the States threatening to revolt against the tyranny of Washington, we asked some frequent contributors to the Rick’s Picks forum how they thought the nation would look five years from now.  In the essay below, John Skerencac finds these times too volatile to predict, other than to say that some very dramatic changes are surely coming. On the positive side, he sees a nascent revival of America’s manufacturing sector and a trend toward fiscal austerity. But if we fail, he says, there’s always the “Mad Max” option. RA] Rick was nice enough to ask me to write a short essay stating my view of what the world will look like five years from now. Perhaps with enough of us engaging in an intelligent exchange of ideas, we might help each other make better decisions about where to allocate our resources. First, in my opinion, Congress will continue to ignore the ever growing budget deficit until outside forces compel them to take action. Scenarios for this include: Enough States stand up to D.C. and make it obvious that the votes are there to bring down the Federal government via Constitutional Convention or 10th Amendment nullification. The Federal Reserve's three-card monte game of buying Treasuries somehow comes undone, causing an interest rate spike that creates havoc in the economy. The world finally repudiates the Dollar as a reserve currency, leaving us no choice but to make draconian cuts. Feel free to add your own tipping point, but with the February budget deficit at $223 billion, I feel we are very close to a train wreck. I feel that when push comes to shove, and the D.C. gang feels threatened by the States revolting over the mess they have created for us, they will turn