Tuesday, May 5, 2009

Using Goldman has kept us on the right side of the market for some time, so I've taken pains in today's touts to show why the stock -- and therefore the broad averages -- is almost certainly headed higher. There are three targets in the $140s, and if the highest of them is reached it would imply a rally of about 11 percent from yesterday's settlement price of 134.16.

There are three rally targets worth considering right now, all of them between ___ and ___. The lowermost, _____, should be used as minimum objective for now; however, if it's surpassed we should infer that the second, a Hidden Pivot at ____ broached here earlier, is likely to be achieved. And if that number

The _____ target kept us properly bullish through thick and thin, but our focus should now shift higher, to a minimum _____, now that the first number has been turned into suet. This target is a fresh one and unadvertised, so by all means short it with a stop-loss as tight as three ticks if it's hit today. The target is shown in the accompanying chart, and

Gold did what we asked of it yesterday, but can it keep the streak going for a second day? We should expect no less if it's about to take off, so let's use a Hidden Pivot resistance at _____ as our minimum upside objective. That would complete the pattern shown in the accompanying chart,

The sharp rally in gold and silver was over in less than ten minutes yesterday, giving way to a "flag" correction that was lazily continuing to unfurl almost half a day later.  This is a modestly encouraging sign, since we'd gotten used to seeing bullion's rallies evaporate like gushers of steam from a geyser. The Comex June Gold contract exceeded every minor benchmark we'd set for it, so our bias will be bullish for a change as Monday's night session evolves. We say "bullish for a change" because we've been making bulls prove their case every step of the way lately. Rallies have shown little follow-through, and we'd rather not be tricked into buying on a false signal. There is still a bearish target at $845 outstanding, but it would become history on just one more strong upthrust.   The top of yesterday's $20 surge hit 908.30, but there was further upside potential over the next 18 hours to as high as 919.80. That's a Hidden Pivot target, and its breach would hint that still more strength is coming.  But it would take more than that - specifically, a print at 935.90 (basis the June Comex)  -- to turn the daily chart bullish for the first time since mid-February.  July Silver looks just as encouraging and need only rally to 13.750 to turn its daily chart bullish. That would represent a move of about five percent above yesterday's settlement price of 13.050.  Fear Will Return Technical analysis aside, it's hard not to be impressed with the way gold and silver have held up under the pressure of a hysterically complacent stock market's nearly nine-week-old bear rally. The rally should be viewed as an inversion of reality and therefore a negative for bullion, which tends to move higher when fear is waxing. Much