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COMMENTARY for Wednesday
TODAY'S ACTION for Wednesday
Rick's Picks for Wednesday
I’ve drum-rolled the 1140.10 target in today’s commentary, although it is old-hat for paid subscribers. The pattern that yields that price is sufficiently well-formed to suggest that it will be hard for the futures to avoid making a tradable turn from somewhere close to the pivot. (Also keep in mind the yesterday’s low was close enough to a lesser support at 1155.00 to warrant our close attention.) In any event, a camouflage long-entry is preferred over putting up a bid at, say, 1140.30 and tying it to a tight stop-loss of perhaps $1-$2. In practice, this will mean buy-stopping a point ‘X’ entry signal on one of the very lesser (i.e., 3-minute) charts.
The 126^07 Hidden Pivot flagged here yesterday caught the exact low, although the subsequent rally has not yet gone far enough for us to infer confidently that the correction is over. Officially we hold no position, but if you got on board on your own initiative, switch from a break-even fixed stop to a ten-tick trailing stop if and when 127^01 is exceeded to the upside. If you hold a multi-contract position, take profits on half at that price.
With 220 points of rally room remaining for the Dow, and at least 25 more points for this vehicle, we’ll chalk up yesterday’s dithering as a consolidation. In any event, it would take a rather large correction (i.e., 60 points) to knock the futures off-track from the 1136.50 target that I’ve projected. I’ve reproduced a chart as a reminder of the rally pattern’s comeliness, but also to call attention to the sort of pattern that demands the use of a one-off ‘A’ (i.e., one with a point ‘B’ that has failed by a country mile to surpass some obvious high that has preceded it).
A trendline we’ve looked at before will continue to have consequences. On the weekly chart, it comes in now at 17.325, so we’ll use that number as a correction target for the near term. A breach by a few cents would not necessarily be fatal, but if one occurs we’ll want to monitor the lesser charts closely for signs that could corroborate a serious breakdown. FYI, a Hidden Pivot at 16.830 is equivalent to the one at 1140.10 in August Gold. ______ UPDATE (10:33 a.m. EDT): Silver fell to exactly 17.325 this morning, demonstrating yet again that it, and nearly all markets these days, are being driven by purely technical considerations and traded by machines. The bounce so far has been to 17.545 — substantial, although hardly sufficient to lift Silver from the danger zone.
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Take any dozen good reasons for being bearish right now and they still don’t equal the bullishness of the chart shown. The undeniably compelling rally objective is 13085, a 4.8% move from current levels, and one can only surmise that the dusting the 12158 midpoint received on the last pullback (12/28) all but clinched a finishing stroke to the higher number. Moreover, it implies that bears shouldn’t get their hopes too high even if, in the next few days, the Dow plummets 324 points to retest the midpoint support. As of now, that would signal not weakness, but a screaming opportunity to get long. Hard to believe, really, but that’s what the charts say.
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Looking for a Turn in Gold from $1140
by Rick Ackerman on July 28, 2010 2:27 am GMT · 7 comments
Has Gold’s price action been getting you down lately? Take heart, since relief could come as early as today or tomorrow in the form of a Hidden Pivot support at exactly $1140.10. For the last two weeks, that’s been our downside target for the correction begun five weeks ago from around $1266, although it didn’t begin to emerge with clarity until the August Comex contract plunged from $1208 right after the July 4th holiday weekend. (You can get a week’s worth of free forecasts and access to the 24/7 chat room by clicking here.) At yesterday’s lows, the correction so far had knocked 8% off the price of gold relative to the all-time high recorded on June 21. Even though we’d been expecting this weakness, we told subscribers at the outset that we didn’t foresee anything more serious developing.
Although we avoid chiseling such predictions in stone, we’ve advised cautious bottom-fishing near $1140, using a tight stop-loss of $2 or less. Our confidence is high that there will be a tradable bounce from the target, although a decisive breach would be the equivalent of the groundhog seeing his shadow – i.e., six more weeks (or so) of winter. Please note that we’ve identified a secondary target at 1155.00 that may have been fulfilled by yesterday’s 1156.90 low. However, our gut feeling is that this Hidden Pivot support will fail, sending the August contract down to the more important one at 1140.10.
T-Bonds Turning?
Speaking of targets, a T-Bond forecast (and trading recommendation) disseminated to subscribers on Sunday night caught yesterday’s low in the September futures to the exact tick. We’d been quite bullish on the bond futures but told subscribers not to buy any contracts until the “Seps” corrected down to 126^07. (Click here to see the actual recommendation.) We backed off the trade when the futures failed to hit 126^07 on the first pass yesterday morning, but the support itself appears to be holding. If so, a surge in the Bonds could portend the flight of capital from stocks over the near term. For that reason, we’ll reevaluate our 10757 target in the Dow – 220 point above current levels – if T-Bonds and shares diverge sharply today with the former going higher.
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