March 2011

Moments ago, the E-Mini S&Ps made a marginal new high for tonight at 1284.75. The rally still looks impotent from an impulse-leg perspective, but if DaBoyz pop the futures above 1287.50 on Monday morning's opening bar, be wary of a bull trap.  The absence of more horrific news from Japan is bullish, of course, but not quite as bullish as the news from Libya is bearish.

We hold 400 shares from 50.40, but it will take a push today above last Monday's 52.79 peak before we can breathe a sigh of relief.  For now, raise the stop-loss to 50.27, but plan on re-entering the position at 49.68 if the stop gets tagged.

Like Gold, Silver needs only a moderate rally to turn robustly impulsive on the 480-minute chart.  The high so far Sunday night has been 35.975 -- 53 cents shy of the closest important peak.  Evidence that buyers are up to the task can be found in last Thursday's bullish reversal from above the 33.610 midpoint support shown in the chart.  That downtrend could have continued to as low as 32.140 (aka 'D'), but in this case sellers turned tail three cents above the midpoint, opening a path that went on to exceed an internal peak at 35.080.  If the May contract does break out strongly here, you can use 38.605 as a minimum upside objective for the near term..

Gold is at an important threshold from a Hidden Pivot standpoint -- but also because the Dollar looks ripe for a bullish turn that could subdue bullion for a while.  On the bullish side, notice in the chart how a rally of just $10 would breach two "external" peaks, presumably setting the stage for either an immediate breakout to new all-time highs, or at least a consolidation for a breakout later.  However, an excellent camouflage buying opportunity could follow a pullback from within the narrrow range separating peaks #1 and #2.  If the futures simply fall from here, however, we could look to bottom-fish at the 1403.30 midpoint support shown in the chart.

The rally so far tonight equates to about 80 Dow points, but it is gutless in Hidden Pivot terms, having exceeded no prior peaks on the hourly chart.  Even so, there looks to be sufficient power to get the futures to at least 1296.75, a Hidden Pivot,  if and when its 'D' sibling at 1283.75 gets shredded (A=1261.50 on 3/17; B=1287.50, and C=1270.75). Camouflage for the ride up will be most easily found on charts of 15-minute degree or less, but there will not likely be much edge in shorting 1296.75, since it lies within the thick of several closely spaced peaks recorded a week ago on the way down.

Two Hidden Pivot targets of different degree lie not far below -- the first at 75.27, the second at 75.18. This implies that a bullish reversal is likely from either of those numbers, or perhaps from somewhere in-between.  The possible reasons for a strengthening of the dollar are too complex to trouble over, but the charts are persuasive enough by themselves to leave little doubt about what's coming. Traders of gold and silver in particular should factor this into any scenario that would have bullion blasting off from these levels, since a bullish correction in the greenback could conceivably restrain precious metals for a while.

There was nothing brewing in the news Sunday night to augur yet another flight to "safety," but if traders are nonetheless about to plow still more of their mostly cost-free money into T-bonds, they'll telegraph it by popping above 122^22, the midpoint resistance of the bullish pattern shown in the chart. This Hidden Pivot will remain valid as long s the point 'C' of the pattern, 122^22, is not breached to the downside. Alternatively, if the pullback begun from last Wednesday's highs continues, night owls could try bottom-fishing at 120^19, three ticks below a midpoint support (shown) whose correction 'd' sibling lies at 119^14.  I am not suggesting that you bid at the midpoint itself because it lies just a single tick beneath the structural support of a prior low.  ______ UPDATE: We did nothing, since the futures traded no lower than 120^25.

“Go long oil, short stocks!” is what we advised subscribers to do on Friday, with Col. Qaddafy declaring a cease-fire and Japan laboring heroically to contain the menace of contamination from damaged spent-fuel rods. Sketchy news concerning a Libyan truce had caused crude-oil quotes to recede somewhat from their frenzied peaks, but we could think of no convincing reason why Kadhafy would actually stand down.  On the contrary, we assumed that he was stalling in order to consolidate gains on the ground before the “international coalition,” whoever they might be, enforced a no-fly zone.  This they did over the weekend -- with France, of all countries, spearheading the attack from the air. It’s hard to imagine what the “coalition” has in mind -- other, perhaps, than cutting the rebels a little slack. But a little slack is as much as they’re likely to get, since it seems doubtful the allies will commit the ground troops needed to shut down Qaddafy’s offensive. In admonishing subscribers to “Buy crude!” we asserted that the “international coalition” may have made the mistake of boxing in a ruthless and paranoid dictator.  Notice that we did not call him a ruthless, paranoid and unpredictable dictator.  For not even the U.S. State Department, never mind the military brass, could expect Col, Qaddafi to simply roll over, running up the white flag and effectively ceding control of Libya’s oil fields to such worthies as France, the U.S. and whoever else signed on to the weekend air sorties. Far more likely, in our estimation, is that Qaddafi would sabotage Libya’s oil capacity before he’d turn it over to the West. What’s to stop him?  We surely don’t envision French troops on the ground, hanging tough with the rebels. And that is why we asserted on Friday that anyone who

We’re long a single March 57 put for a 0.12 credit, having missed a golden opportunity to exit it for 3.25 the other day.  No matter.  I'll suggest selling it on the opening and simultaneously buying four April 53 puts (which closed yesterday @ 1.03).  _______ UPDATE (11:52 a.m. EDT):  We sold the March 57 put @ 2.02 and bought four April 53 puts @ 0.84.  Imputing the 1.90 paper profit on the sale to the price of the Aprils gives us a cost basis of 0.37 for them.  Do nothing further for now.