Postcards From Pandora, Murmurs From Midas

By Jeffrey Cooper  JUN 06, 2012 9:30 AM

This week's rebound may not be the start of a brand new rally.


I’m empty, I’m aching, and I don’t know why.
-- "America" (Simon and Garfunkel)

Debt is the gift that keeps on giving -- until the prosperous become more indebted to their prosperity and decide that the free market must be abandoned in order to save it.

To “Q” or not to “Q,” that is not the question.

Beware the Trojan Hoax of an orderly default and an odorous Exile from Main Strasse.

No Virginia, Europe is not entering a depression, 'entering' being the choice word.

The truths you hold most dear can be seen in the charts that are told to lie to you.

Once the market was a discounting mechanism; now it’s a pragmatist's pinball game at Beelzebub’s Barbeque.

Obama-Wan Kanobi and Ben Skywalker have beaten those too astute to buy into the Liquidity Lullaby over the head with Hank’s bazooka.

Once it was a weapon, now a bazooka is just stale bubble gum on the headboard.

With massive amounts of money running against your "rational" shorts, you feelin' lucky, punk?

The Fed and the ECB:

“Let us be lovers, we’ll marry our fortunes together."

“Michigan seems like a dream to me now. All gone to look for America.”

You like dots?

Connect this one.

From 3/6/2009 to 6/9/2012 is three years, three months, and three days.

So June 9 will be three years, three months, and three days from 666 and 3/6/2009.

Really? That's quite the vibration.

June 9 will be 1191 calendar days from the March 6, 2009 bottom.

That means that in June, the 1200 level "should be" authoritative support when a 1 point per 1 day angle comes in.

There is a natural time-price harmonic around 1200 in June.                                                                                   

What if that angle is broken rather than kissed… around the time of the Greek elections mid-month?

Since the market was spared from a collapse the last two Mondays, it is interesting that if the Gann panic count projection (49 to 55 days) is taken from the May 1 pivot high, it gives a potential cascade window from June 19 to June 24. This is near July 1, which is 90 degrees from this year’s April 2 high. Markets often play out in these 90-degree decrements in time and in price. July 1 is also the two-year anniversary of the major higher low on July 1, 2010.

July 1 is also the beginning of the third quarter. If the Quarterly Swing Chart on the S&P 500 (^GSPC) does not turn down in June on trade below the first quarter’s low, it could easily do so in early July on trade below whatever June’s low is. The sharp angle of attack to the downside in May suggests that a turn down in the quarterlies is forthcoming.

In addition, my gnome high in the Appalachians pinged me to say that June 24 is the first of the "deadly Uranus/Pluto squares."

Funny, he doesn’t look astro.

Obviously this time frame ties to the Summer Solstice which is opposite the prophetic Mayan Winter Solstice 12/21/12 date.

Is the word cosmic in danger of losing its ‘S’?

Tuesday was only the second time since the May 1 pivot high that the S&P closed above a prior day’s high. The first time it did so on May 21, it led to a choppy six-day rally attempt with a rollover on the seventh day.

It would not surprise me to see the market chop around with an upside bias and maybe even rally strongly on Friday in front of the weekend.

I can’t help but wonder, if it does so, whether the smart money will "trade shorts with the shorts" prior to the close on Friday. In other words, will the smart money reshort as other shorts get squeezed if the market rallies strongly ahead of the weekend?

With the market getting saved the past two Mondays, would that set us up, perversely, unexpectedly, for a smash this coming Monday on some news with the charts masking the trap door?

The markets may try to rally hard on the heels of some kind of coordinated central bank announcement.

The precious metals are coiled to explode, presumably on some kind of twist like we did last summer.

It may not play out that way, but I’m playing the setup.

Silver (SLV) is coiled in what I call a Power Surge pattern. This is a third higher low. This is the picture in SLV from the May 16 low at 26.

Ninety degrees up is 32.This ties to the overhead 50 dma and the last breakdown pivot.

Note the N/R 7 day on Tuesday verging on a Rule of 4 Breakout -- a breakout over a 3 point trendline.

Since fast moves are oftentimes triggered "the fourth time through," and since volatility usually expands within a few days of an N/R 7 Day, SLV looks set for some fireworks.

I’m adding to my Proshares Ultra Silver (AGQ) position on any strength today.

An hourly chart of AGQ shows a triangle. A breakout over 42 suggests a move to its 50 dma near 47.

Gold (GLD) also carved out an N/R 7 Day on Tuesday. GLD is coiled with two inside days on the heels of last week's explosion and appears to be set to spring over its 50 dma.

From the recent 148.50 low, 90 degrees up gives 161.

180 degrees up is 173, near this year's high.

Is it possible that GLD is on a quick round trip back to this year’s highs? Will GLD mirror the action in Royal Gold (RGLD), which exploded off recent lows and is on a trajectory to attack this year’s highs?

Note how Royal Gold exploded  with authority above its 200 dma following a daily Plus One/Minus Two buy setup traced out on May 31.

Over the past month, gold had every opportunity to extend below 1500. It didn’t happen. What the market does not do can oftentimes be as important as what it does do.

At the same time, the gold mining stocks suffered a pernicious selloff this year. Many market participants expected that gold would buckle to play catch up with the mining stocks, but It didn’t happen that way.

Instead, the Gold Miners Index (GDX) bottomed according to our expectations as walked through in this space.


The first little breakout came on Tuesday but it’s a long way to go before one can say it’s anything more than a one- to three-day bounce.

The key 1292 level projected in yesterday’s report will probably be hit on the open.

In order to cobble together the semblance of an uptrend, 1311 must be regained. Remember, this is 270 degrees down from the 1422 high.

That said, the market is respecting the 360-degree decline to 1275 we had long thought probable, with a bounce after holding 1275 on a closing basis on Monday.

However, a  90-degree rally off Monday’s 1267 low gives 1303. A spike toward 1303 the first time up this week should be a good short setup as the market is likely to decline hard into at least the first week of July.

Form Reading Section

Twitter: @JeffCooperLive

Positions in AGQ, GDX

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