Friday, February 4, 2011

A Hidden Pivot resistance at 56.01 became support in mere hours, suggesting that the bulls who have been pushing the Gold Miners ETF higher have bigger fish to fry.  There are two peaks they'll need to take on to establish dominance: 58.24 (January 12), and 59.09 (January 4). Rally targets immediately above are somewhat murky, but the nearest where I would look for a reaction lies at 56.91. The highest target that can be coaxed from the hourly chart is 57.71.

Against my bullish forecast, the euro got whacked yesterday. There were no tradable implications, however, since the futures failed to generate any bullish impulse legs, even on the five-minute chart, after falling to a highlighted midpoint pivot at 1.3746. If the weakness persists, the nearest target below is 1.3550, a midpoint support that comes from the hourly chart (A=1.3820).

I've flagged some ambitious targets in Gold and Silver, but reaching them will require a minimum of backsliding Thursday night.  Please note as well that we have a live position in the Mini-Dow that will require close tending -- even in the wee hours, assuming the position survives.

With yesterday's close above a Hidden Pivot midpoint resistance at 28.585, bulls showed themselves ready to accelerate to 29.645, the midpoint's 'D' sibling. That would leave buyers somewhat shy of a key external peak at 29.845, but if it's exceeded today, that would feed plenty of bullish energy into Monday's opening.

I promised no less than 1360.30 yesterday, so the gold gods owe us a few bucks in addition to the nice $31 rally that occurred off yesterday's low, 1325.30. It was impulsive as all get-out, but we'll still need to see how well buyers handle the 1360.30 resistance before we effuse any further.  An easy push past it would be encouraging, but from a Hidden Pivot standpoint it will take at least 1368.80 to refresh the bullish impulse. The look-to-the-left peak that makes that price significant is shown in the accompanying chart. My gut feeling is that the futures can and will do even better, pushing above a more formidable peak at 1380.60 made a day earlier.  If that happens as early as today, shorts had better dive for cover. ______ UPDATE (12:49 p.m. EST):  Buyers generated a whoopee-cushion thrust to 1361.00, exceeding our target by 0.70.  Although that's sufficient to reaffirm the health of the bull trend begun a week ago from 1310, the futures quite clearly lack the gusto at the moment to overwhelm the bad guys.

The recent Resource Investment Conference in Vancouver may well have set a new attendance record for that venue. So many company booths filled the display area that they overflowed onto the confines of the massive Vancouver Convention Centre West. I was asked to speak in place of Kitco’s Jon Nadler, who was unavoidably absent from the conference. My topic was entitled The Precious Metal’s BIG Money Train is Leaving the Station...Are You Ready?  The thrust of my talk was not whether a major new leg up is imminent, or even a mania phase like the dot-com bubble of the late 1990s. The more immediate concern is that anyone who intends to ride what many of us have long believed will become the Mother of All Bull Markets had better establish and hold onto a core, non-trading position, and sooner rather than later. These holdings should be kept in the portfolio until the owner makes a subjective decision that the precious metals bull is either over or on its last legs.  Trying to play top-caller, going 100% into cash before a “reaction,” then attempting to get “all-in” again before prices blast off, is a sure-fire way to get knocked off the precious metals bull, landing on one’s back, and most likely staying there for the duration. Granted, there is nothing wrong with trading some holdings into market strength and then looking to buy back on a reaction.  Doing so is part art and part science – and, yes, it’s not always possible to get back in at a lower price. However, the greatest traders out there - the iconic Jesse Livermore, the late great Sir John Templeton, legendary goldmeister Jim Sinclair and his father, Bert Seligman – all sought to lower their cost basis by carefully selling certain rallies and buying

The little egg-sucker has been such a killing bore lately that it barely deserves an update. That said, I should note that the high of yesterday's rally, if you could call it that, slightly exceeded a target analogous to one that worked perfectly in the Mini-Dow. (In theory, we got short exactly at the intraday high, 12034). Higher prices likely impend for both vehicles, but you could try impeding this one with a short offer at 1312.25, stop 1313.25.  The relevant pattern -- a cross-eyed temptress -- is shown in the chart.