June 2011

Shifting to the October contract, there are two patterns -- one big, the other bigger -- that on the weekly chart yield targets at 29.31 and 29.49 respectively.  Although these Hidden Pivots are likely to exert a magnetic pull on the futures, drawing them at least to that level, they are just as likely to show some stopping power that could initiate a serious correction.  Thereafter, an even bigger-picture target at 33.600 would be our minimum expectation for the bull market begun in May of 2010 from around 14 cents a pound.

On rare occasions, Rick’s Picks will offer a 30-to-1 horse to subscribers who want to take a flyer. This time, it is Kodak that is the object of our greed. The stock has been trading erratically on the prospect of a favorable settlement of a patent case brought against Apple and Research in Motion. Winning the lawsuit would be a big score for Kodak, since licensing fees worth as much as a billion dollars are at stake.  Not bad for a company that almost went out of business because it failed to foresee the digital revolution in photography. Because the Rochester, NY firm still holds 11,000 patents, more than a thousand of them in digital imaging, its very survival hinges on aggressive licensing of intellectual property. Although we have no strong feelings right now about EK shares, a longtime reader of ours who sometimes sends us hot tips thinks “EK to win” looks like a good bet. The tipster, Phil C., affirmed his enthusiasm yesterday in an e-mail that we duly conveyed to subscribers in the chat room. (Don’t subscribe? Click here for a free trial.) The breathless subject header read as follows: “Two-Minute Warning, Crunch Time. Ninth Inning”. As for the message itself, it was bursting with hopefulness, although understandably lacking in guarantees: “Whichever sport you choose, this is the crucial time to take maximum advantage of the opportunity in EK. Either a settlement gets announced at any moment, or the ITC rules after Thursday's close in the US. I believe the chart says the stock is going higher. The catalyst of the decision/settlement only determines how fast and to what level the stock rises? As indicated previously, $5 is the short term minimum target. I now believe that in the intermediate term $6 is possible with an eventual

The k-A segment – bane of the Hidden Pivot novice but ultimately of little concern in most trading or forecasting – gets a workout in this session, since we stumbled on several instances in which the “window calculation” was not only useful but necessary. There is also a segment delving into the failure of gold and silver to generate bullish impulse legs on the lesser charts since the correction began from early May’s highs.

This YouTube video of an actual Australian TV interview will make you laugh, but it also explains lucidly why Europe's debt crisis can only end in disaster.  Click here to access the video, the link to which was contributed by Rick's Picks forum regular John Jay.

A dour forecast for September Crude (tradable by-my-numbers, by the way) lends weight to a bearish bias in bullion.  The implied fall in oil amounts to about 6 percent, and although this capitulation move may not happen today, the target itself at 85.98 is quite compelling.

A downside target at 85.98 is equivalent to the one at 85.07 given here earlier for the July contract.  Whether you plan on shorting the next leg down, or getting long at the projected low, I'd suggest using the 15-minute chart of less for camouflage. Bottom-fishing will be the easier and less risky of the two trades, since shorting such a mature downtrend is always tricky. However, since the bull play would require a stop-loss of at least 21 cents, camouflage is suggested for leveraging the low.  If and when 85.98 is approached within 40 cents, you should start looking for the abc upturn on the lesser charts. Most immediately, the futures look bound for a Hidden Pivot at 87.00 if they take out its sibling midpoint at 89.96. ____ UPDATE: The futures have reversed from a so-far low at 90.17.  The target remains valid in theory, but we'll move on nonetheless.

I've provided some big-picture numbers for Gold that go with a bearish outlook for the near term.  In Silver, however, I'll offer some lesser benchmarks so that you'll be alert to any subtly bullish signs that may emerge overnight.  The most promising 'external' peak for buyers to use for camouflage lies at 33.885 (see inset). Because it is not an especially distinctive peak, a rally that exceeds it by a tick or two (or perhaps three), and then pulls back would offer an excellent buying opportunity on any follow-through c-d leg. ______ UPDATE (11:47 a.m. EDT): A pullback from above 33.885 (from 34.135, actually) tripped a losing trade around 5:30 a.m. with entry signaled on the 15m chart at 34.045. The move did not quite make it to the 34.170 midpoint pivot, so the trade would have been stopped out for a small loss. Since then, it has been 'dueling' impulse legs, hinting of turgid action in the hours ahead.

As prominently noted in today's commentary, August Gold will face jeopardy down to as low as 1446.90 if the 1053.10 Hidden Pivot midpoint of the pattern shown gives way. As of late Monday night, the support had been exceeded by more than $12, suggesting the move may already be under way.  Alternatively, it would take a poke above 1526.50, and soon, to turn the intraday charts bullish.

How very exciting yesterday was, what with the futures extending by yet one more session the soporific sine wave they've been tracing out for the last two weeks.  The entirety of yesterday's rally exceeded few prior peak of importance, even on the five-minute chart, and so little was accomplished toward the task of eating up supply.  Night owls can nonetheless try to leverage a pullback from just above the 1281.75 peak shown to 'camouflage' their way aboard a low-risk long. An ostensible Hidden Pivot target lies at 1298.50 -- the result, on the 15-minute chart, of A=1252.25 on June 16.  More imaginatively (i.e., on the 240-minute chart, where A=1285.25 on April 18 and B=1367.50 on May 2) a rally could go all the way to 1367.50 without hitting any important Hidden Pivots. _______ UPDATE (11:40 a.m EDT): Based on the 'camo' pattern shown in the chart, the futures tripped an entry signal at 1281.00 near the opening. They've decisively exceeded the 1284.00 midpoint of the pattern and should be presumed bound for a minimum 1289.75, the 'D' target.