December 2010

With some upward chop along the way to alleviate the tedium, February Gold is trading exactly where it was nine weeks ago in mid-October.  Yesterday, the futures never even got close to the modest benchmarks I'd flagged above and below the market. Since they remain valid as, respectively, bullish and bearish trigger points, I'll repeat the numbers for your guidance: 1412.50 or 1370.80.  In addition, a two-day close above a Hidden Pivot midpoint at 1401.90 would strongly imply a follow-through to at least 1442.10.  As before, if the futures fall, the first place we might try to bottom-fish other than via camouflage is 1370.80, the midpoint support of a corrective pattern.

During this week's tutorial session, I was joking, sort of, when I said it might take the rest of the week for this swamp-gas hoax to reach an extremely modest, 1257.25 rally target that even now seems as inevitable as the next sunrise. Anyone who got long on my say-so has been accruing profits at the rate of about 12 cents an hour, but your diligence should have produced sufficient gains by day's end to buy lunch. If you've stayed long for the whole, fabulous ride, risk some of your lucre to get short with a 1258.25 stop-loss.  Take the position home overnight only if it is at least 4.00 point in-the-black at the bell.

(Here's a man-bites dog story from Cam Fitzgerald, a frequent contributor to Rick's Picks  who lived for a while in Ethiopia. Cam paints a picture of an African nation that will be unfamiliar to many readers; for in fact, even though Ethiopia has only begun to emerge from poverty, its economic prospects are as bright as you will find anywhere on the African continent. To understand why, read Cam's first-hand report .  RA) This is a growth story. A few years ago, I spent some time living in Ethiopia. I was in the suburbs of Addis Ababa, getting to know one terrific family in particular: the mother, who was the real head of the household; the father, Abba, a shoemaker; and his four single daughters, all in their thirties. What could possibly go wrong? OK, I am already getting off track. This is supposed to be an article about Ethiopia’s boom and the inflation that has come in its wake. I call the daughters “my gals” when I talk about them with friends, and we keep in touch almost daily via e-mail.  One is a student, and the other three work: as a translator, a seamstress and a secretary. They all have good educations, speak English and are in every way typical of women you might meet anywhere in the world: the same hopes and dreams, the same troubles with men and the same daily worries about meeting the bills, making ends meet and trying to save. Well almost the same. You see, these women earn a grand total of 2900 Ethiopian birr in monthly income between them. That’s roughly $175 dollars for six people to share -- a fairly typical income in Ethiopia.  However, I never thought of the family as poor during the time I knew them. They own a home,

The day’s analysis took place with most of the vehicles tracked and traded by Rick’s Picks in limbo relative to bullish and bearish “trigger” thresholds I’d identified previously. We looked at the by-now astounding bear rally in the broad averages, finding a minor rally target that seemed all but certain to be achieved. Gold and Silver, while bullish, looked unpromising for trades that day, but we identified benchmarks in each that would raise our level of enthusiasm if achieved. Finally, in connection with a position we hold in Silver Wheaton, we delved into the art and science of trading options on the stock.

We own four January 111 puts for 0.97, but there is no point enduring more pain, considering that we were speculating without a price objective to begin with. Accordingly, I'll suggest that you exit the puts on a sell-stop if they trade for 0.47.  (Note: The so far low, achieved Wednesday, is 0.49.)   We'll try to get short again at another, presumably more opportune, time. _______ UPDATE: We exited the puts @ 0.47 off an intraday low of 0.46.   The trading loss was $205 plus commissions.

Over the very near-term, the futures are going to at least 1257.25, the Hidden Pivot target of the pattern shown.  It looks too obvious to short comfortably, but if you are hankering to get long, I'd suggest leveraging a camouflage entry opportunity on the three- or five-minute chart.

There will be no touts or commentary published this Friday (Christmas Eve) or next (New Year's Eve). In addition, the weekly tutorial session originally scheduled for December 29 has been pushed forward two days -- to Monday, December 27.  All those registered for the class will be notified via an e-mail that contains a link to the new class.

The herky-jerky uptrend has become too tiresome to forecast, although it should be noted that yesterday's head-fake, the fifth in as many days, failed to refresh the bull trend on the hourly chart. That would have taken an impulsive thrust above a small peak at 29.645 made December 14 on the way down, whereas the actual high occurred four cents lower, at 29.605.  Bottom-fishing could be attempted tonight at 29.180 if 29.460 hasn't been exceeded to the upside first. My worse-case downside projection for the near term is 28.195, based on the trendline shown in the chart (which we acknowledged earlier).

The hourly chart would begin to throw off sparks if the futures were to print 1412.40 today, since that would create a very robust impulse leg.  Alternatively, a close above a midpoint pivot at 1401.90 would shorten the odds of a follow-through to at least 1442.10, and a two-day close above it would make such a push likely.  The ABC pattern that projects to that number is shown in the accompanying chart.  If the futures fall, however, the first place we would try to bottom-fish, other than via camouflage, is 1370.80, the midpoint support of the bearish pattern shown in the chart.