March 2009

Yesterday’s gratuitous spasms created a new point ‘C” for the uptrend begun last Wednesday, slightly lowering our bullish benchmark to 958.60  from 959.50. That’s a Hidden Pivot midpoint, and because the pattern that produced it is not a minor one, we should require a two-day close above it before we infer that the rally will complete to its 1001.10 target. Alternatively, if Gold gets hit today, we could look for a bounce from 913.40,  or from 904.10 if any lower. The second number looks like the better place to try bottom-fishing, which could be done with a stop loss as tight as 903.30.

The 822.50 target caught yesterday’s high within 1.25 points, but the nasty swoon that followed was not telegraphed by the chart I had used to project that target.  The erratic price action will somewhat alter my projections for the near-term but it will not dampen my bullishness, especially considering the miraculous recovery of Goldman shares at day’s end. My upside target for the near term is now 848.25, subject to midpoint resistance at 817.75.  That’s just a couple of points above Wednesday evening’s so far high, so night owls may have a chance to position themselves for a breakout.

Currency and metals traders take note:  The Dollar Index is stealing up on a Hidden Pivot resistance at 84.62 that should show precise, decisive stopping power. It is short-able with a tight stop-loss in any case, but if the stop is hit and the futures move above the target within 15 minutes of first touching it, that would indicate still higher prices to come over the next 3-5 days, at least. However, it would take nothing less than 86.55, however, to turn the hourly chart bullish.

For some time, we have held a nearly riskless bearish position, six June 23-25 puts spreads that we legged into for a debit of 0.08 apiece. That means that we can lose only $48 plus commisssion at most, but gain as much as $1152 if GDX is trading 23 or lower come June.  More immediately, though, this vehicle could create a robustly bullish impulse leg with a relatively modest thrust surpassing 38.88.  Let’s speculate on this by bidding 1.95 for two June 43 calls (GDXFQ) on the opening. If you are not filled right away, lower the bid to 1.80, day order. Check here before the opening and intraday, since I may alter the price. ______ UPDATE (10:31 a.m.) We bought the calls for 1.95, the low of the day so far, since they opened for 1.95. Do nothing further for now.

The correction from yesterday’s highs looked to be struggling against a buoyant tide at 2 a.m. The target of the downtrend was 790.50,  but we’d risk a few ticks bottom-fishing at its the midpoint sibling, 799.25, especially if that price were hit in the dead of night.    If the futures were to turn higher without having gotten down to the midpoint, the rally should be presumed bound for at least 822.50, and possibly to as high as 843.75 by Thursday. _______ UPDATE (4:14 a.m.): The futures have rallied six points after making a delicate low not far above the 799.25 midpoints flagged above.  I’ll suggest canceling bids there, since we should generally look to get on board on the first pass. The reversal from above the pivot is mildly bullish but would become much moreso  if the rally goes on to exceed 812.25. _______ FURTHER UPDATE:  The futures shot up 15 points on the opening on more Geithner doublespeak, peaking initially one tick beneath the 822.50 target given above.  They subsequently pulled back six points before making a marginal new high at 823.50.  Now, 843.75 is my minimum objective (and thence 855) , although as of 12:45 p.m. there evidently were still too many bulls on the bandwagon for the futures to leap anew.

A downside target at 918.60 loomed as of 1:30 a.m., but any fartherwould be telegraphing more downside over the near term to as low as 904.80.  Both targets will remain valid unless 932.50 is exceeded to the upside. That would breathe new life into April Gold, but  the rally would have to continue to at least 938.30 to put bulls in a position of further opportunity. Opportunity would mutate into something more tangible, however, if the futures can close for two consecutive days above 959.50, an important midpoint resistance.