Tuesday, October 13, 2009

Consolidation above the 442.00 midpoint of a pattern projecting to 492.52 strongly suggests the Gold Bugs Index has the wattage to eventually reach the target.

A Hidden Pivot at 100.73 looks like a potentially fat pitch for those of you who have waited patiently to get short. We'll look to buy some December out-of-the-money puts if and when the target is closely approached, so stay tuned for a possible intraday update. Meanwhile, a cheap way to play the rally would be to buy Dec 101-Nov 101 call spreads for 0.65 or better. If you fill, please let me know in the chat room or via e-mail so that I can establish a tracking position for your further guidance.

No change. An unhurried target at 1074.50 still looms -- both as a minimum upside objective, but also as a potential rally cooler. Because last week's high at 1062.70 exceeded the March 2008 peak, albeit by a mere 2.70 points, however, any pullback from 1074.50 should be regarded as a buying opportunity because it will be following a major impulse leg. If you're keen on catching the implied 18-point ride north, and doing so with some camouflage, you may need to make your move before the sun rises on New York, since that's the only time "camo" seems to be turning up. _______ UPDATE (9:45 a.m.):  Gold was getting dinged by the night shift, hitting a so-far low at 1052.20 that lay two ticks beneath a Hidden Pivot target. Just a bit lower, touching 1052.00, would leave bulls in mild disarray overnight.

Last week's 65-point rally was aggressively impulsive, having exceeded two "external" peaks on the daily chart, one of them the recovery high from the March 9 low. Bears can dream about a collapse from these levels, but any selloff that holds above 1012 is properly regarded as a bullish correction. If you've got your fingers crossed anyway, hoping for a major trend failure, the logical place would be at the ABC midpoint shown (hypothetically) in the chart. More immediately, night owls can try bottom-fishing at 1069.00 with a 1068.25 stop-loss. That's a midpoint support associated with a 'D' target at 1065.50.  ______ UPDATE (10:34 a.m.): Bottom-fishing 1069.00 the first time it was hit worked out perfectly, since the futures rallied four points after dipping no lower than 1068.50.  Since we risked a theoretical 0.75 on the initial stop-loss, we needed only a 2.25-point rally to provide a rationale for exiting the trade or taking a partial profit.

The inflation/deflation discussion in the Rick’s Picks forum has attracted some interesting comments -- none moreso than this one from our Lake Tahoe friend, retired Merrill fund manager and investment maverick Rich Cash: When we show donors the long-term Econocast Consumer Price Index Forecast to measure against investment performance, they see more than a doubling of CPI over the coming decade after a few minor decreasing negative CPI blips last year. Most people call this inflation. It is institutional inefficiency. It is the cost of government administrations, bureaucrats, congresses, courts and wars on everything, the tyranny of fiat red tape, Barack Obama’s one month in office Nobel Peace Price nomination and award notwithstanding. He wants to share it with everyone. Maybe he could share it with Martin Armstrong, Dr Franz Pick, Col E.C. Harwood or Vern Myers, American political prisoners whose property was seized while they were held in jail indefinitely without due Constitutional process, some eventually plea-bargaining to get out as do 98.5% of people incarcerated by government. Harwood, Pick and Myers died while Martin Armstrong is held Fort Dix Prison Camp until 2012 smuggling economic truth out. 99% Conviction Rate USA Courts have a 99% conviction rate. The USA has the highest percentage of people in prison in the world.  Ten percent of the working age population are in jail, plus half the people work for or depend on an unproductive government. People who consume but do not produce drive up the costs for everyone else. Various commissions defined CPI down to reduce government COLA payments: Cost of Living Adjustments are as unrealistic as government savings bonds and TIPS: Treasury Inflation Protected Securities. Real inflation which affects asset prices, is a credit condition. Anyone can look at John William’s Shadowstats Chart of M-3 since 2008, read David Rosenberg’s Gluskin