Tuesday, November 24, 2009

Both gold and silver have rallied moderately this evening after failing to reach 'd' corrective targets, so the short-term outlook is bullish. I've provided a roundabout entry strategy in Silver that night owls can use, and you can see what it looks like graphically by clicking on the chart inset.

A downside Hidden Pivot at 74.36 given here earlier is still usable as a minimum objective, although DXY doesn't seem to be in any hurry to get there. Friday's somewhat lackluster rally spike was impulsive on the intraday charts -- with a little camouflage to boot -- but the enthusiasm detumesced so quickly as to render the pattern moot.  Ordinarily I'd say the interventionist are simply hanging out, waiting for the right opportunity to squeeze the buck higher. But the fact that there has been no intervention suggest the U.S. has not been able to garner the support it needs, at least not yet, to make a rally stick.

I drew a trendline a while back that showed a fearsome chasm opening up on the weekly chart, but it's probably safe to draw a steeper line that will afford bulls an additional cushion if buyers should go derelict between now and year's end. From a Hidden Pivot perspective, the outlook is heartening for the near term -- tradable, even, by night owls, since a spear up to 18.675 has created a nice, but not too, impulse leg on the lowly five-minute chart.  Points A and B are, respectively, 18.535 amd 18.675, but I'd suggest letting the first 'X' entry get stopped out before attempting entry.

Yesterday's nasty little short squeeze recouped last Thursday's air pocket, bracketing the intervening day (i.e., Friday) as an altogether gratuitous, and hardly atypical, swoon. The rally was "camouflaged," strictly speaking, because it vaulted a bunch of prior peaks without getting past the important one at 1112.25 recorded last Monday. That number was three ticks shy of a 1113.00 Hidden Pivot target we'd been using for too long, and it rounds out a picture that explains in graphical form how a market with zero bullish buying interest can keep going higher, and higher and....higher.  I've got an 1138.00 rally target we can use if this tedium should continue, but I won't show you how I derived it because I don't want to encourage bad habits in my students.

The futures turned up tentatively after make a run at an 1155.00 downside target that was missed by $2.70. This is bullish as far as it goes, but it would take a print Monday night at 1168.90  to suggest that buyers are not terribly intimidated by the 1174.90 resistance pivot we've been using for so long. I've hung out a headline target at 1337.00 if it should get shredded, but I am not expecting this, at least not so soon after the lower pivot was achieved.  Keep in mind as well that the futures could feint to 1185.50 without affecting the odds of a serious correction.

Having waited patiently since May for Comex Gold to reach an important target at 1174.90, we are naturally interested in what comes next, since the December contract peaked yesterday at exactly 1174.00.  We say “peaked,” and while this is technically correct because a $16 selloff has ensued so far, that’s hardly enough pain to have sent gold bulls into fits of panic or despair. In fact, the selloff looks and feels like little more than a minor flutter in a bull market that presumably has much farther to go.  Even so, we shall treatyesterday’s high as a potentially important top for the time being because that is our custom. Specifically, whenever a stock or commodity reaches an important “Hidden Pivot” target, we assume that’s the end of the line unless the target itself is subsequently exceeded on a closing basis or decisively intraday.    Although Rick’s Picks subscribers tend to anticipate these targets with a lot of speculative fervor, and to reward each other with verbal high-fives when they are hit exactly, the exactness is a kind of parlor trick that distracts from the targets’ true usefulness. Granted, it’s nice to have a place to get perhaps briefly short in gold without having to risk more than pocket change. In that regard, the 1174.90 pivot was a magic number for scalpers and day traders. But the target’s main purpose was twofold: 1) keeping us steadfastly bullish since mid-May, when gold refreshed a buy signal from five months earlier by hitting a technical tripwire at 946; and 2) allowing long-term bulls to manage the risk of their positions as the target drew nearer.   Riding Out Setbacks  Keeping 1174.90 well in mind since last spring, steadfastly bullish we remained, even though December Gold got thrown for painful losses, each lasting for at least two