December Gold is advancing on a rally target that is still $22 distant, so night owls might want to take a look at Wednesday’s tout, since it provides visual suggestions for getting long belatedly via camouflage.
From the monthly archives:
The futures were stymied yesterday trying to reach a somewhat ambitious rally target at 1746.80 (see inset). The 1725.40 midpoint has yet to be touched, but if and when the futures push above it, the implied $21 follow-through would become an odds-on bet. _______ UPDATE (Moments later): The futures have popped $4, to $1726, in a blink. Camouflageurs should look for a point ‘B’ high that falls between 1734.10 and 1738.50 to leverage a low-risk entry, although there are some lower “external” peaks to work with as of this moment, 7:28 p.m. EST. _______ FURTHER UPDATE (10:18 a.m. EST): We initiated a four-contact long position around 8:35 a.m. EST, using a 1735.70 entry trigger. The bullish ABC pattern was ‘camo’ perfection, with three single-bar coordinates and a point ‘B’ high that fell in the middle of the topping range I’d given. Half the position was exited at its ‘p’ midpoint, 1741.80, leaving us with two contracts and a paper-profit-adjusted cost basis of 1729.60. We’ll plan on taking profits on an additional 25% of the position if and when the ‘camo’ pattern’s ‘D’ target at 1754.00 is reached. Use a 1729.50 fixed stop for now. Note: Using camouflage on the 5-minute chart, it would have been possible to get in as low as 1715.00, with an 8:05 a.m. entry and a 1726.70 minor-D target. _______ POSITION CHANGE (2:21 P.M. EST): The December contract has gone dead, so I’ll recommend rolling into the February (GCG12) contract at a current price of around 1751.00. Use a 1758.00 target to exit the third of four contracts initially bought. The two contracts we are long have an effective cost basis of 1733.00 after imputing to them the paper profit on the two contracts already exited. If we cash out the third, it will leave us with a single contract whose cost basis would be 1708.00. For now, tie the 1758.00 offer to a stop-loss, one-cancels-other, at 1733.30, basis the February.
Because securities markets sometimes do crazy things for stretches of days, weeks or even months, Rick’s Picks seldom attempts to reconcile seemingly contradictory forecasts for trading vehicles that are related, such as crude oil and gold (more on these two in a moment). Nor do we seek to explain the ups and downs of stocks, bonds and commodities by connecting their frequently nutty behavior to events in the even nuttier world. That futile task we leave to The New York Times, The Wall Street Journal and their ilk, since they are in the business of selling news as something that matters greatly, particularly to investors. It is with the foregoing in mind that we came to contemplate a seeming fork in the road for crude oil and gold. On the charts, the former looks like it’s about to blast off, while the latter seems bent on screwing the pooch for the remainder of 2011. We said as much in the headline that topped yesterday’s commentary: Doomed Rally in Stocks Could Cap Gold’s Surge. Doomed may have been too strong a word – we did write a column for a Hearst paper for a few years, remember – but bulls could hardly have been encouraged by the egg the broad averages laid yesterday after having rallied nearly 300 points the day before. » Read the full article
Two bearish patterns that have been weighing on this vehicle are so clear that lower prices seem likely. My worst case target is 2.305, well beneath the so-far multiyear low at 3.470 that was recorded a week ago and 35% below current levels. It is the ‘D’ Hidden Pivot target of the pattern shown, and with a sibling midpoint at 3.790, a rally to that number should be viewed as a shorting opportunity, provided “camouflage” is used. If a dead-cat bounce should exceed the midpoint, however, the next would be at 4.422, my maximum upside projection for any bear rally and a potential back-up-the-truck number for shorts. Note: I will switch to coverage of the January contract henceforth, but please use 2.210 as its bear-market target. That number is equivalent to the March target at 2.305 and has 3.783 as a midpoint sibling.
Because the camouflage technique has proven so effective in minimizing entry risk, I have much favored it over conventional trades — i.e., “old-style” against-the-trend Rick’s Picks recommendations using micro-tight stops. However, because we’ve got “house money” to play with as a result of yesterday’s felicitous trade in December Gold, I am recommending that you risk some of it on a promising play in December Silver (see tout). If you know how to “camo” your way aboard, however, by all means do so and let me know in the chat room whether you’ve been filled so that I can provide tracking guidance.