Monday, July 18, 2011

Like physical gold, GORO has recoiled sharply from the brink to spit fire once again. Although a 19.20 downside target given here earlier will remain valid in theory until such time as 28.70  (aka point 'C') has been exceeded, the stock as a practical matter is out of trouble. Furthermore, today's gap-up rally has created a robust impulse leg on the 180-minute chart that all but guarantees buoyant prices for the near- to intermediate-term. The rally as of this moment is within easy distance of racking up yet another daunting "external" peak before the day is over, which if accomplished would further buttress bulls.

Price action on Sunday nights is so heavily manipulated and predatory that you can usually bet it will be reversed by Monday's opening bell. Be that as it may,  the trends appear felicitous as of around 8:30 pm EDT. August Gold is up 6.70, correcting off a 1599.20 (all-time!!) high, and the E-Mini S&Ps are down 6.50 points -- seemingly attuned, even if only momentarily, to the realities of a lame economy rather than to the wantonly haphazard flow of OPM.

The Gold Bugs Index is nicely on track for a test of April's all-time high near 609 -- a move of nearly seven percent from these levels.  Notice how each of the last two thrusts on the 240-minute chart have been impulsive -- exactly what we should expect of a rally gearing to punch through an old top. The rally is impulsive on the weekly chart as well, further corroborating a picture of power percolating below the surface. Most immediately, a print at 570.37 would trip a conventional entry signal tied to a 604.70 target and a 581.81 Hidden Pivot midpoint resistance.

Friday's price action tediously marked time, further solidifying the bold impulse leg begun three weeks ago from nearly 60 points lower.  Entry into this pattern at 1319.75 has already been tripped, so any opportunities to get long signaled now on the very lesser charts are fair game. FYI, on the three-minute chart even in retrospect, such opportunities were difficult to find. This implies we may need to drill still lower, to perhaps a one-minute time frame, to find the opportunity we're looking for. Because the week-ending short-squeeze came in the final hour of the session, bears are likely to be on the hook when trading resumes Sunday evening. Although DaBoyz who dominate on Sundays habitually try to maneuver index futures lower, they may have difficulty doing so this week.  Accordingly, if the futures pull back no farther than 2-3 points, shorts had better take cover ahead of Monday morning's opening and bulls should trade more boldly than usual. _______ UPDATE (8:45 p.m. EDT):  The futures have been down as much as 10 points so far tonight, implying DaSleazeballs are having difficulty maneuvering stocks low enough to exhaust sellers as they do nearly every Sunday.  If DaBoyz should briefly lose control, keep the 1280.50 target in mind that was flagged here a while back, since it's still valid.  So is the midpoint at 1304.25, which explains why the futures have been dancing around that number for the last four days.

Although futures failed by an inch to penetrate the 39.450 external peak of May 11, they did get past three other "externals" before starting a likely b-c correction. Study the accompanying chart if you're looking for a low-stress way to get long when the pattern triggers a conventional entry signal on the daily chart.  Entry would of course come at the 'x' of a lesser chart, as shown hypothetically. ______ UPDATE (11:07 a.m. ETD): A Hidden Pivot target at 42.475 is now crystal-clear on the 180-minute chart.  The midpoint is 40.180, so a pullback ot that number should be viewed as a gift by any bull who missed a chance to get in.  Coordinates for the target are as follows: A=34.810 ((July 12) and B=39.395 (July 14).

Palladium prices are about to blast off, says our friend Vronsky in an article just out at Gold-Eagle.com. The prospect of enormous growth globally in auto production, coupled with the exhaustion of Russian supplies and a growing demand for palladium ETFs, could squeeze quotes to as high as $2300 an ounce over the next 12 to 15 months, he writes. Click here to read the full article.

As gold ascends higher and higher into thin air, it continues to test every crag, jib, flake, crevice and runout on the rock face, much to the consternation of traders, investors and speculators. At these unaccustomed heights, it is perhaps only the long-term bull who acquired physical gold a decade ago who has the reserves of patience and calm needed to take corrective swoons and trendless tedium in stride. From a technical standpoint, we find that pullbacks both major and minor have gone to absolute extremes in order to prey on our individual and collective fears and doubts. For instance, when Gold and Silver futures prices plummeted from their May 2 highs, the seeming kamikaze dive brought them to within mere ticks of an extreme “danger zone” we’d identified using Hidden Pivot analysis. Then, just as suddenly, quotes rocketed skyward, recouping nearly half of the losses in just a few short days. And last week, a selloff that took two days to exhaust the nervous Nellies tested bulls yet again, with August Gold reversing sharply from within less than a single point of a 1576.90 Hidden Pivot support.  However, even knowing where, exactly, to expect the turn offered no easy path to profits, since gold’s trampoline bounce came in the dead of night, starting at around 3:25 a.m. Eastern. Of course, it is increasingly bullish expectations that have made bullion’s evasive moves more and more challenging.  Were it otherwise, anyone could get rich simply by betting on the favorite.  And talk about favorites! What could be more inevitable and obvious than gold’s continued rise?  Amidst a paper-money blowout the likes of which the world has never before witnessed, and the looming revelation that hundreds of trillions of dollars of global debt can never be repaid in hard cash, we can

Today's commentary describes how Friday's fright-mask dive took gold down to within a few ticks of a short-term Hidden Pivot support before the trend reversed sharply. This revived a 1597.80 rally target that's getting a little stale, although it remains theoretically viable.  So that we don't get lost in the trees, let's dispense with the little stuff and assume August Gold is on its way to at least 1652.00 if and when it moves decisively above 1600. Since there are no look-to-the-left peaks, or peaks "along the wall" that we can use to signal the creation of new impulse legs, we'll have to make do with whatever pops up most immediately on the three- and five-minute charts.   Even then, usable camouflage entry signals are best inferred, not from the bars of an extended uptrend (see chart), but from spiky or sideways corrective phases.