Gold bulls appear to have survived a mild wave of selling and are now bidding fair, literally, to push the rally a further $7 overnight to its 1795.70 target. If that Hidden Pivot gives way easily, however, it would bode well for a pop above the psychological important barrier at $1800.
From the monthly archives:
August 2011
Is the dollar consolidating for a big rally? A few people who posted in the forum today seem to think so, as do a number of gurus whom I respect. I’ll wait for further evidence myself, but on the weekly chart (see inset), the greenback only appears to be consolidating because it has been flirting with the seemingly major and presumptively impregnable bottom carved out in 2008. Granted, 70 is the Maginot Line for central banks intent on keeping the financial system from unraveling with the dollar’s collapse. Still, we shouldn’t assume that just because 70 is visually prepossessing on the charts, and psychologically crucial in the minds of so many financiers, that it cannot be broken. Whatever the case, our best bet for correctly predicting the next big move is to closely monitor the ABC downtrend highlighted in the chart. We should pay particular attention to the 72.42 midpoint support shown, since, if it is exceeded to the downside, facilitating a test of the 2008 lows, that would be a strong sign that the long-term downtrend has further to go. Want to learn how to do Hidden Pivot Analysis yourself, and to kiss your guru good-bye? Click here for information about the upcoming webinar in October.
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Gold is unlikely to come roaring back right away, since the steepness of the correction’s first leg will have left a lot of bulls with serious indigestion. In any event, we’ll need to see this bounce go a bit further, and then head south to form a c-d follow-through leg, before we can be confident about the intermediate-term trend. As always, the most bullish sign we could see is the failure of that c-d leg to reach its ‘d’ target — or even more bullishly, to reverse without even having reached its c-d midpoint. More immediately, we’ll need to monitor impulse legs on the lesser charts to get a timely sense of the short-term picture. The focus for now will therefore be on the technically perfect a-b-c pattern shown in the chart. It projects to 1795.70, but there is a danger of a stall because the 1776.20 midpoint resistance is proving troublesome.
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Warren Buffett Rolls the Dice
by Rick Ackerman on August 26, 2011 3:19 am GMT · 55 comments
Placing one’s chips on the “Don’t Pass” line when Warren Buffett holds the dice may seem ill-advised, but we’re not so sure about that $5 billion bet he just made on Bank of America. The news media inferred with all its might that it was a vote of confidence — not only in B of A, but in the U.S. banking system. Yeah, well, maybe. But it would be just like Buffett to make the kind of deal that will return all of his capital come hell or high water while allowing him to reap a windfall if the bank should rise from the grave. In the meantime, the six percent dividend he’ll be collecting each year is a lot better than most hedge funds have been doing lately. Buffett could also become the bank’s biggest shareholder if he is able to exercise warrants to purchase 700 million shares of common stock for $7.14 a share over the next ten years. Had he been able to do so yesterday, it would have been quite a score – worth about $357 million in instant profits — since mere news of the deal caused B of A to gap up to $8.80 a share on the NYSE opening. The stock had settled the night before at $6.99 after trading as low as $6.01 earlier in the week. The hysterical price leap was undoubtedly due to short covering, since it’s hard to imagine anyone but bears caught in a deadly squeeze paying a 47% premium for the stock just because Buffett had signed on. » Read the full article