July 2011

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.

If you're troubled whenever the price of gold swoons or fails to rise for weeks at a time, read Ambrose Evans-Pritchard's latest dispatch, Return of the Gold Standard as World Order Unravels.  Regardless of whether gold returns officially to the status of money, demand for it as a hedge against the central banks' depradations is growing around the world and unlikely to diminish any time soon. Click here for the full article.

Since bottoming on June 4, Google has generated the kind of impulse leg that could keep it buoyant for the rest of the summer.  The rally exceeded no fewer than five "external" peaks on the daily chart without pausing for breath, a feat that will allow the stock to take its sweet old time consolidating the move in the days ahead. Let's try to leg on a bullish butterfly spread by buying a call if and when Google falls to a Hidden Pivot support at 518.82. The target can be found on the 15-minute chart, where A=550.68 on July 7.  Buy one September 600 call, using a stop-loss at 518. 20.  Pay no more than the midpoint of the spread, since it is extremely wide. _______ UPDATE (9:16 p.m. EDT):  Astounding! We thought that a $595 quote that flashed on our screen was an error. Evidently not. Earnings released after the close were so impressive that the stock is currently in the throes of a murderous short-squeeze to $600 -- up nearly $70 over the day session close.  So much for the call options we might have bought for around $6; they'll be trading for at least $25 come morning.

While gold teeters on the edge of a potentially worse-than-minor pullback, September Silver has already crossed the threshold and nearly reached the 'd' target of an abcd correction. It lies at exactly 38.000, just 18 cents beneath the so-far low of the selloff from yesterday's high at 39.395.  A penny could make a difference here, since there's an external low at 38.010 that would be exceeded if the target is reached. That would create a bearish impulse leg of minor degree but still sufficient to warrant our attention and concern.

It wouldn't take much to turn the short-term picture bearish for Gold.  Check out the chart that accompanies today's August Gold tout, since it shows precisely what it would take to put bulls on the run.

The futures look a little toppy, so we shouldn't let a still-unachieved target at 1597.80 distract us if there's a hint of an impending swoon.  The hint would come by way of the creation of a minor, bearish impulse leg, or perhaps the breach of a midpoint support on the lesser charts. The accompanying chart shows exactly what I mean, since August Gold's correction from yesterday's high has stalled within a single tick of a minor midpoint support at 1584.40.  Were it to give way, a leg down to at least 1577.70 would be a likely result, crashing no fewer than one "internal" low and two "externals. That would most surely turn the short-term picture bearish, putting bulls on the defensive when the new week begins.