Thursday, November 12, 2009

Gold has been as high as 1122.20 so far tonight, suggesting we may not have to wait long for a highly-anticipated tussle with 1134.50, an important Hidden Pivot. Bulls will be on thin ice above it, though, since the alternative target at 1174.90 just about maxes out the daily chart.  A breather seems a foregone conclusion.

The Gold Bugs Index appears to be tracking a 488.79 projection made here a while back nicely, although there is a second, slightly higher, target at 489.04 that you can also use. Since a tradable pullback from either of those numbers seems highly likely, I would strongly suggest that long term bulls scale out some longs enroute to the target with the goal of replacing them at a lower price.

The dollar is sinking in night trading, with support in prospect most immediately at 74.910.  We'll use that Hidden Pivot midpoint as a minimum downside target for now, but if it gets shoved aside, look for more damage to as low as 74.440 over the near term. Alternatively, the futures would need to hit 75.515 today to turn the 30-minute chart bullish.

I hadn't assumed getting to 1113.00 would entail such drudgery, although we should expect the futures to rip out our eyeballs if we were to act on any doubts about their ability to do so by selling the little monster short.  In any event, I fear the target is too well advertised for us to short it aggressively.  If you try anything at all, though, a 1114.25 stop-loss will be needed initially.

The futures looked bound for a minimum 17.965 when the closing bell rang yesterday, but if that Hidden Pivot fails to slow them down discernibly we could expect more upside to at least 18.375 over the near term. Action near that last number's sibling midpoint at 17.250 tends to validate the pattern.

Let's see how the futures react with an important Hidden Pivot target at 1134.50 before we assume that the next, 1174.90, is a done deal.  And it will be, I should think, if the rally exceeds the lower number by more than 1.40 intraday or closes above it. Given the intensity of the rally, genuine camouflage is apt to be hard to find, but it bears noting that most of the impulse legs on the lesser charts yesterday did not try to be coy.

The literary critic George Steiner has argued that Germany was unable to produce any great novelists in the post-War period because the German language itself had lost its integrity and vitality in the service of Hitler’s and Goebbels’ nefarious goals.  Is it possible the English language is about to suffer a similar fate, vitiated by the lies our leaders tell to make the nation’s reckless economic policies somehow seem prudent?  Consider U.S. Treasury Secretary Geithner’s declaration concerning a “strong dollar” yesterday during a roundtable discussion in Tokyo for reporters: “I believe deeply that it’s very important for the U.S. and the economic health of the U.S. that we maintain a strong dollar,” said Geithner. "We bear special responsibility for trying to make sure that we are implementing policy in the U.S. that will sustain confidence not just among American investors and .. savers but investors around the world" that the U.S. will fix its budgetary problems as its economy improves. Come again?  Was the man perhaps speaking in code so that the reporters might read between the lines?  We don’t know what kind of story they may have filed, but unless the journalists decided collectively in advance to bend over backwards to be polite, they should have laughed Geithner out of the room. For his part, the Treasury secretary treated the press conference like an open mike night at some third-rate comedy club.  We doubt that he would have had the effrontery to make such ridiculous statements before, say, the National Press Club in Washington. D.C.  Or would he have?  Maybe we’re wrong about that, since not only did the Journal  fail to ask any of the right questions, it did nothing to suggest anyone other than Geithner was present in the room.  There were no quotes from Japanese officials, no