June 2012

Silver's setback yesterday was not as painful as Gold's, and bulls will remain in command as long as there is not further slippage to beneath the 29.130 'external' low that I've highlighted on the hourly chart (see inset).  That would be bearishly impulsive, but even if it were to occur we could look forward to bottom-fishing at the 'p' midpoint of the hypothetical retracement pattern shown.  Alternatively, if bulls take this vehicle higher straightaway, there are numerous external-peak handholds to leverage on the hourly chart for purposes of getting long. _______ UPDATE (June 7, 7:11 p.m. EDT): Nothing to see here, folks.  Silver was building a distributive flag when we went to press, and a trader would probably need to be on the one-minute chart to extract something of value from current price action.

Bulls got sandbagged yesterday on the way to our 1653.30 target, but they'll be back. We should ratchet up our wariness just a tad, though, since the peak of yesterday's bull trap fell just shy of the external peak at 1649.30 that I've highlighted in the chart. It is not this structural resistance alone that constrained buyers, but also the ton of supply deposited in a sideways scuddle that stretched from mid-March to early May. Traders who use camouflage will have to make do with the ersatz 'external' peaks generated off yesterday's low, since all of them are technically 'internal' in relation to the rally since.  As of around 7 p.m. EDT, the five-minute chart was promising a modest opportunity via two peaks, respectively at 1624.40 and 1625.70, that could yield an impulsive pattern without the unwanted enticement of a breakout. _______ UPDATE (11:36 a.m. EDT):  With this morning's fright-mask selling -- induced, it would seem, by a global dive back into risk on news of Chinese easing -- August Gold has retraced half its recent gains. The initial rally was moderately impulsive, having surpassed two internalish-external peaks (although no true externals).  However, the immediate picture is of 'dueling' impulse legs -- a duel in which bears would seem to hold at least a small edge, since the impulse leg they created on December 29 took out a key low at 1537.00.  My expectation is for a sloppy, choppy market in the weeks ahead, with a worst-case possibility of a test of last July's 1491.00 low.

Call me persnickety, but I want to see yesterday's short-squeeze hysteria go the extra mile before I wax enthusiastic over the rally, which appears to have been driven, perversely, by Spain's near-death experience. Since we know that nothing has actually changed and that Europe's crisis will end not with a solution but with smoldering wreckage, we can safely assume that celebration on Wall Street and the world's other bourses will be short-lived.  Its singular goal is to distribute stock to the rubes, but we'll nonetheless take from it according to our needs. The 480-minute chart shown needs a print at 1340.00 for starters, but until then I'd suggest scalping off the lesser charts from the long side.  Click here for a free trial subscription to Rick's Picks, including access to the 24/7 chat room.

From our friend Rich Cash, here's a list of ostensibly attractive companies, the moreso because some of them are trading well off their highs. Where appropriate, I've included Hidden Pivots where we might expect a bullish turn. In some cases, the targets have been exceeded, suggesting more weakness is coming: Cummins, Inc (CMI):  89.87 (D) McKesson Corp (MCK): 88.41 (upside target; a correction is likely) Fastenal Co. (FAST): 39.19 CVS Caremark Corp (CVS) Tiffany & Co. (TIF): 51.56 McDonald's Corp (MCD): 83.60 Target Corp (TGT) Barrick Gold (ABX): 43.44 (upside target; a correction is likely) AFLAC Inc (AFL): 38.46 (just hit, exactly) CME Group Inc (CME)

Silver Wheaton's rally since mid-May is of less than, er, sterling pedigree, since the most visually obvious ABCD piece of it has a point B high that is pure sausage.  The good news is that Tuesday's thrust created a legitimate and very robust impulse leg, along with an uptrend that has room for a little more immediate upside, since the target of our 'bad' pattern, 27.69, lies six cents above the so-far high.  From a trading standpoint, the rally will be difficult to enter at the moment, since it has been developing for three weeks.  My suggestion to camouflageurs and Pivoteers is to buy the low of an abcd retracement from 27.69, although it is impossible to say whether it will turn from p, or perhaps d. _______ UPDATE (June 7, 9:55 a.m. EDT): SLW blew past the target before pulling back, leaving bulls well in command. Traders looking to stake out a long at theses levels should reference May 4's 29.13 peak for camouflage. _______ UPDATE (June 7, 7:16 p.m. EDT): The stock looks feistier than most gold stocks at the moment, having pulled back just enough to be considered re-energized for a C-D leg to complete the bullish cycle begun last Wednesday from 25.12.  To get off the launching pad, the stock would need an 86-cent booster rally from a low above the point 'A' shown in the (new) chart.  If and when that trigger is hit, camouflageurs will have their cue to attempt getting long. _______ UPDATE (June 12, 9 p.m. EDT): Based on the pattern shown in the chart, the stock has tripped a 'buy' signal at 27.32.  If I hear from at least two traders in the chat room on got on board following my instructions, I'll establish a tracking position for your further guidance.

A tradable pattern in Gold that I sketched here yesterday is playing out as hypothesized, although it was close to getting stopped out.  If this happens, there could be an even better opportunity following the creation of a second C low.  Night owls looking for a way to get on board should check out Wednesday tout for August Gold.

July Silver has gone bullishly impulsive in much the same way that Gold has on the intraday charts. The pattern shown projects to 29.465, a Hidden Pivot target that appears likely to be reached now that the futures have shredded its sibling midpoint at 28.710.  In the meantime, because the three peaks I've highlighted (see inset) are potentially usable for a camouflage entry, night owls should monitor this chart for the b-c pullback that would set up the opportunity.

There is short-term upside potential to 1653.30, the midpoint pivot of the rally pattern begun last Friday from 1545.50.  In the meantime, a promising camouflage pattern mentioned here yesterday is playing out as hypothesized with a point B high that has surpassed a prior peak at 1629.70 without getting past the more obvious one at 1632.00 (see inset).  Entry would have come at 1629.10, presumably via a pattern of lesser degree.  If the position survives the night and I hear from at least two traders who got long using the tactic advised, I'll establish a tracking position for your further guidance.  I will also do so if anyone gets aboard following the creation a second point 'C'  (i.e., one lower than 1625.50, which is close to being breached).

Tonight's most recent stab on the lesser charts has created a bullish impulse leg and also exceeded a minor 'D' target. This means short-term traders should position from the long side, even as we suspend our disbelief concerning the ostensible reason for the rally:  Spain's worsening plight and the stimulus this supposedly will coax forth.  Night owls have one more peak to work with at 1296.50 (see inset) to leverage the next 'camo' abc pattern.