June 2011

The futures have nearly a point of upside before reaching the 125^22 target of a relatively minor rally pattern. A more significant, bullish pattern projects to a slightly higher target at 126^00, and we should expect the two Hidden Pivots together to show some considerable stopping power. This implies a top of at least intermediate-term importance is near.  However, if the futures should blow past the higher target without a sign of fear or deference, it would hint of a torrent of defensive money poised to jump back into Treasurys.

Silver and Gold are going their separate ways Sunday night, although my bearish outlook for the former implies that it is Gold that is likely to do the catching up -- to the downside.  If so, look for July Silver to fall a further 83  cents over the near term to the 33.310 Hidden Pivot support shown in the chart. This implies that a rally to the midpoint, 35.040, could turn out to be a bull trap, even if it creates a bullish impulse leg on the hourly chart.

A so-far three-day downtrend has paused to play toe-sies with the 1502.50 midpoint of a corrective pattern projecting to exactly 1478.70. A counterthrust Sunday night exceeding 1511.50 would give bulls a small edge, but otherwise you should use 1478.70 as a minimum downside objective for the near term. That number can be bottom-fished with a stop-loss as tight as four ticks.  Interested in learning how we identify "Hidden Pivot" reversal points?  Ask experienced traders yourself by visiting the 24/7 Rick's Picks chat room. Click here for a free seven-day pass.

Tonight's action is tedious and tiresome even for a Sunday night, having failed to do much more than tie Friday's low.  As is the case nearly every Sunday night, DaBoyz are attempting to dry up selling so that they can run the index futures higher ahead of Monday morning's opening. The September contract is ostensibly working on a bullish impulse leg begun from Thursday's 1252.25 low, but it is not bullish enough that we should look for any special opportunities. Night owls should use the 10-minute chart for camouflage nonetheless if boredom sets in.  Potentially most useful for getting long would be the 1267.50 peak recorded Friday at 2:50 p.m. EDT. ______ UPDATE (10:42 a.m. EDT):  The pattern implied above (30m, A=1257.50, B=1269.50, C=1261.75) did indeed work, playing out to within a single tick of its 1273.75 target.

The September Ten-Year Note is closing on a potentially important pair of Hidden Pivot targets, with bearish implications for many vehicles that we trade and monitor. Check out today's TYU tout and  the chart that accompanies it for an eye-opening view.

You don’t need to be a chartist to see that the stocks will need to test the key low made in mid-March before anything serious happens. For the Dow Industrials, that would imply a fall of 378 points from these levels to 11556, or about three percent. What then?  Although a bounce seems likely,  we wouldn’t expect it to last for more than a few days, if that long.  Moreover, because the support is so obvious, we should expect the Indoos to dive toward it in the days ahead rather than approach it gingerly.  After all, why would traders buy the blue chip average as it is falling if they “know” it’s going to fall at least to the support?  We might expect such buying and for a bullish turn to come from somewhere above 11556 if the market had a reason to rally. In fact, The Great Recession seems to be edging toward another flirtation with Depression – one predicated on further, intractable weakness in the real estate sector, along with whatever psychological fatigue is about to hit as a result of QE2’s epic failure to stimulate much of anything. With respect to the stock market, we would ordinarily employ the Hidden Pivot Method to forecast price action for this summer. (You can learn to do this yourself, and to do it impressively well, by clicking here).  In this case, however, our target of 11506 only gets us halfway to the next logical low.  Once again, you needn’t be a swami to see that the Industrial Average will fall to 11000 if the mid-March low gives way.  The only question is, how quickly will it happen?  Our hunch is, very quickly, especially given the prospect of a budget battle on Capitol Hill. Although until recently we had viewed the

There they go again! While we can view this rally with skepticism, in the end we must judge it solely by how many prior peaks it surpasses on the daily chart without taking a breather. As you can see, a mere thrust of 1.23 points would get DXY past no fewer than one 'internal' and two 'external' peaks, signaling that the uptrend has gotten beyond the booster stage. We should know soon enough...

Today's tout for July Silver includes a chart that is intended to stretch the imagination of the precious-metals crowd. If you're not squeamish about pondering a worst-case scenario, I'd suggest taking  look.

No down-leg since the futures topped on May 2 has created a bearish impulse leg of daily-chart degree, since no more than one prior low was surpassed in each instance. Although that is not bullish per se, it does suggest that sellers lack the guts to push the correction beyond the 31.205 midpoint support of the pattern shown, assuming the futures don't turn from nearer these levels.  Scary as a fall to 31.205 might seem, such a washout would represent a potentially excellent buying opportunity.  However, we shouldn't fail to notice that the 'd' target associated with that number lies at 22.945 (!). If such a spectacular fall is coming, however, it would imply a deflationary "black swan" this summer the details of which are presently difficult to imagine.