March 2011

My 11877 downside target missed Friday's low by 14 points, so we did nothing officially.  The fact that the subsequent rally went on to create a bullish impulse leg of hourly chart degree is a modest positive ahead of Monday's opening. This is notwithstanding the fact that the initial move Sunday night has been down.

Silver has given up all of the gains achieved on Sunday's opening bar and then some, but like Gold, the overall picture for the short term retains a bullish look. Another bullish factor to consider is that Friday's low failed by a tick to breach an important structural low at 34.030 recorded on March 3.   Most immediately, although the pullback does not look opportune for bottom-fishing because it lacks a clear point 'A', the one I've flagged in the chart could determine how things played out.

Gold has sold off since Sunday night's initial head-fake, but the thrust was impulsive, implying that bulls hold an edge at the moment. This portends a push to 1436.20 over the very near term, although the futures would first need to overcome that Hidden Pivot's sibling midpoint, 1427.20, to telegraph the implied finishing stroke.

The futures have rebounded a bit after being down 14 points, roughly equivalent to 100 Dow points.  This is still within a range that has produced solid rallies on Mondays, but look out below if DaBoyz maneuver the broad averages so that they open in positive territory.  From a Hidden Pivot standpoint, my bias is negative, since Friday's low somewhat exceeded a 1286.50 pivot that maxed-out all possible 'd' targets on the hourly chart.  Shortly after midnight EDT, dithering price action was forming a pennant, but as implied above, I'd be wary if it is used to pop the March contract into green territory on or shortly before the opening bell.

With news from Japan potentially dire but stable, trading in U.S. Index futures is subdued Sunday night.  The Nikkei has sold down hard, but U.S. martkets are saying, essentially, that this is still Japan's problems, not ours.  Only time will tell.

Late Sunday night, Tokyo stocks were getting savaged even as Reuters reported there was little evidence of short-term “funding shortages” in Japan’s financial system. The Nikkei Average initially dropped nearly 500 points, to 9756, when trading began, but it remained to be seen how U.S. stock would react. As of around 11:30 p.m., S&P Index futures had been down as much as 14 points, equivalent to about 100 Dow points. However, such moderate selling is usually a sign that institutional buyers are bullish and merely trying to shake loose some bargains ahead of Monday’s opening. Whatever the case, Monday is not likely to be a yawner, even though Wall Street has managed to shrug off a few other epic disasters ever since this seemingly unstoppable Mother of All Bear Rallies began exactly two years ago. On Friday, a day before earthquake/tsunami news from Japan went “nuclear,” shares of American multinationals that could conceivably benefit from the rebuilding of Japan actually rose, callous as that might seem. But we should have grown accustomed by now to seeing things the way investors see them, with dollar signs coloring even the most horrific spectacles. Still, and most unfortunately, it’s possible this disaster will turn out to be worse than all others of recent memory combined. A “CollapseNet”(?)  e-mail bulletin we received from a Belgian  subscriber Saturday evening put things in the starkest possible terms, conjuring up a radioactive cloud that the Jet Stream would eventually disperse to all seven continents. The alert advised anyone living on the U.S. West Coast to secure potassium iodide pills as a precaution against moderate exposure to radioactivity. Although the warning seemed a bit extreme, we nonetheless inquired about the substance at the local Walgreen’s.  The product supposedly is available over-the-counter, but this store had none of it,

Although bullion quotes are likely to weaken if the broad averages fall anew on Friday, May Silver was bravely approaching a threshold Thursday night with the potential to trigger a low-risk opportunity for bulls.  If you trade the night session, check out my tout, which includes a chart to guide you.

A moderate rally Thursday night from the day's lows was taking some of the sting out of the selloff. As of around 9:10 p.m., the bad guys appeared intent on preventing the futures from popping above a small peak at 35.470 made on the way down. If they fail, night owls should not be shy about using this impulsive breakout to leverage a bull trade that would carry little theoretical risk.  _______  UPDATE (1:45 a.m. EST):  A poke a penny above 35.470 created a potential 'B' and an impulse leg, but the subsequent pullback wasted the pattern by pulling back to exceed 'C'.  Also negated for the same reason was a bigger pattern (15m) with an 'A' low at 34.770.  Silver seems to be resting, not quite ready to fly.  In any event, it would now take a thrust to 35.775 to re-energized the 15-minute chart, since that's where the first 'unspent' external peak lies.

Gold is likely to be dragged down by the broad averages if they continue to fall, but in any event, yesterday's selling in bullion was less intimidating than it may have seemed if price action on the hourly chart is considered. Notice in the chart (inset) how bears reversed course just shy of a secondary low at 1400.10 recorded a couple of weeks ago.  Lacking in guts, perhaps?  That's my take, but the first confirmation would come if the abc rally underway at this moment completes to its 'D' target, 1424.80 -- or better yet, exceeds it.  As we went to press, the rally still lay a couple of points shy of the 1417.60 midpoint, a resistance you'll want to watch in order to estimate how much energy buyers might bring to Friday's session.