With the G-20 meeting in Pittsburgh just two weeks off, we didn’t expect gold’s widely anticipated push past $1000 to be a piece of cake. Indeed, Bernanke & Friends are probably throwing everything they’ve got at gold right now to suppress its price. And for all we know, Uncle Sam has loaned every ingot (supposedly) in Fort Knox to carry-traders at J.P. Morgan and Goldman Sachs. The ability of these well-connected bullion bankers to borrow more or less unlimited quantities of physical gold is for them even better than a license to print money, since money itself is most surely not what it used to be. The feather » Read the full article
The futures look like they are still on track for a predicted surge to 1053.00, although the bullish argument would weaken if they haven’t accomplished this by Friday. Although the September contract failed to push past some key, late-August highs near 1038.00, most of the action took place close to those highs and well above the meatiest part of the supply zone beneath them. Night owls can try bottom-fishing at 1029.75, a midpoint pivot, using a stop-loss no wider than 1.00 point. If the trade works, consider taking partial profits or implementing a trailing stop as early as 1033.00. _______ UPDATE (1 a.m.): The pullback went no lower than 1030.75, missing our bid by a full point. Signs now point to a minimum 1040.00, or 1044.00 if any higher. Either can be shorted by scalpers using a very tight stop-loss, but you’ll be on your own thereafter.
The futures blew past a 2.9048 midpoint resistance so easily that we should infer that the 3.0695 Hidden Pivot target with which it is associated is very likely to be achieved. A pullback to the midpoint should be viewed as a buying opportunity, but I’d wait for the turn higher, assuming it comes, so that you can board on a “camouflaged” signal.
Our offbeat “strangle” in Goldman is starting to work, since the September 170 call we bought for 2.00 traded as high as 3.40 yesterday. Its purpose was to slightly leverage the upside, thereby lowering the effective cost of four Jan 130 – Oct 130 put spreads that we also hold (for 3.40 apiece). Today only, offer the call to close for 5.60. If the order fills, it will reduce our cost basis on the spreads to 2.50. _______UPDATE (10:50 a.m.): With Goldman up more than $4 so far this morning, bucking a lackluster stock market, we easily sold the call for 5.60. Do nothing further for now.
The short-term picture would turn mildly menacing if December Gold were to print down to 981.40 today. There were no promising handholds for nightowls as of 7:10 p.m., but I’d suggest looking on the 5-minute chart if you are seeking camouflage to get long with a penny-ante stop-loss.
We don’t pay much attention to this vehicle other than at key turning points, but the short-term pattern shown looks like a lay-up for traders who see futures contracts as no more than bouncing dots on a chart, waiting to be exploited. There are actually two trade possibilities here: 1) a ‘camouflage’ short as USM slips below the 132^13 midpoint; 2) and a very tightly stopped long from within a tick or two of the 131^17 target. Good luck! Please report any fills in the chat room so that I can establish a tracking position for your further guidance. ______ UPDATE (3:17 p.m. ET): The short was tricky to initiate, but once aboard, your reward came quickly with a drop to a so-far low at 131^26. As noted above, the short should be covered and reversed near 131^17. ______ UPDATE (April 6, 3:57 p.m.): The low of Friday’s violent price swings was 131^21 — not quite close enough to have gotten you long easily. Although this could prove to be an important low for the short- to intermediate term, under the circumstances I’ll assume no subscribers were filled. _______ UPDATE (April 11, 1:03 a.m.): Next important stop on the way higher: 135^17.
My minimum downside expectation is still 76.05, a Hidden Pivot that you can interpolate for trading purposes in whatever way you choose. If the support is breached, look for the weakness to continue down to at least 75.57.