July 25th, 2014
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February Gold’s ‘Technicals’ Are Firming

by Rick Ackerman on December 8, 2011 4:08 am GMT · 18 comments

Comex Gold has taken some wicked turns in recent days, none more promising than Tuesday’s 1705.70 low. We were looking to buy near there ourselves using a technically derived bid at 1702.60.  However, when the futures trampolined from a low that lay $3 above our bid, we came up empty-handed.  Even so, from a technical standpoint the price action was encouraging, since we regard any trend up or down that fails to reach its “Hidden Pivot” target as the last gasp of that trend.  In this case, under the rules of our proprietary forecasting and trading method, 1702.60 became the calculated ‘p’ midpoint support of the ABC pattern shown. Although we expected a very precise hit because the pattern itself was so clear and compelling, the fact that bears were unable to push the futures down to the target suggests they are tiring.

But not quite down for the count. Before we assume this to be true, we require that the current rally create a bullish “impulse leg” on the hourly chart and continue to its ‘D’ target.  That means the futures will need to hit 1754.80 today, nearly $8 above yesterday’s high, to give bears reason to be nervous. As traders, however, we’ll be looking to jump on the February contract Wednesday night or Thursday on any rally that pokes above 1751.30, since that would generate a fresh “impulse leg” for February Gold on the hourly chart.  Under this scenario, the ideal trade entry would come following a pullback from a tick or two above 1751.30.  Any higher would make the breakout too obvious to too many, creating a traffic jam for bulls. The specific technique we use to leverage very subtle breakouts is called “camouflage.”  If you’d like to know more about this method, which can help reduce the risk and stress of trading, click here for information about the upcoming Hidden Pivot Webinar.

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{ 18 comments }

Cam Fitzgerald December 8, 2011 at 8:13 am

A resolution to Europe’s debt problems would very clearly drive gold prices higher. Significantly higher even as inflation expectations would be ramped up in anticipation of the monetization of the debts of Europe’s at-risk Sovereigns, their shaky banks and the many member institutions.

If only the intentional wishes of “Global Investors” could be met by that group.

Who, you say?……..and does Europe really care about outside investors let alone respond to their concerns?

And since when do the partners answer primarily to outsider demands anyway and are we all really being realistic in our expectations considering all the conflicting messages from the policy makers of Europe these past few days?

I am very worried tonight.

Worried that the weaker states within the union have presumed (based on recent news) that there will be an acceptable solution to their many debt worries based on investor expectations around the world…..and that the prospect of solutions means they can play hard-ball with the core countries at the last possible moment (to get a better deal).

Investor optimism is sinking the possibility of a real deal.

The market, of course, is waiting for a clear signal that Merkel and Sarkozy can engineer a recovery on a fiscal/political union for the EZ on a revised or amended agreement and thus free up the ECB to act decisively on behalf of all the primary members and their weakened banking sector.

But this hope is now been killed by expectations alone.

We all just assume an agreement will allow the ECB to monetize the debts of distressed nations such Greece, Portugal, Spain (and now Italy too, much as the Fed has done in the US) and therefore bring an end to the solvency issues that are currently sinking the Union as rising interest obligations smother growth.

We are assuming there will be a quick solution since failure is clearly not an option. The global economy is breathless awaiting a European agreement and yet Germany still stands apart.

I worry we have gotten ahead of ourselves….that too much pressure has been imposed on Germany, on France, on Angela Merkel and Sarkosy and their governing parties. We have not allowed time itself to play a role here.

The problem is that there is still only the mere suggestion of an impending crisis. But there is not an actual crisis yet. Can you all see that? Most seem to believe that the market has already fully discounted the risk of a European break-up. I think they are wrong.

There is plenty of downside ahead if meetings do not pan-out as expected.

I would now advise caution. The shock and awe solution is no longer on the table at this late stage and my bets on Europe are “off” as cold water is being thrown on the whole process.

Bad news could see a seriously negative outcome come next Monday and it looks to me now that bad news is indeed coming. The threatened credit-downgrades themselves suggest that this play has several more acts to follow before the curtain finally falls and the fat lady sings.

As I now see it, there is no longer enough time left to orchestrate a satisfactory Euro-recovery package that will truly satisfy investors (unless a secret deal has already been cut….and that is not very likely given the extreme focus of the media on the major players these past few days).

I certainly cannot advise anyone else what to do. I no longer have faith that a good outcome awaits in the very near term. There is much work yet to be done and time has run out. The Euro, as usual, is a work in progress. It cannot be rushed.

Not even by the big ratings agencies.

Threats of credit downgrades do not matter within the next thirty days at the outside and in fact this additional defined time period suggests that the Europe’s leadership has simply gained more breathing room to hash out solutions before the big show begins.

It is still coming though. Crisis first. Deals later.

Uncertainty meanwhile is just too high and I now anticipate the Euro will fall in the near term as a result with the dollar rising (possibly sharply) and gold to be left an orphan this coming week.

Commodities will therefore likely decline in the absence of an agreement on European fiscal unity as uncertainty over global growth prospects diminish. A failed Europe means China and much of Asia will suffer most exactly when they are already slowing and GDP there is already in decline.

This cannot work to enable the hopes or prospects of resurgent growth in the global economy nor does it help the other major ailing economies of the West such as the US, Canada, England and Australia. I could be wrong but the logic now dictates shorting for Monday. Only an eleventh hour breakthrough can save the day and I cannot see it happening anymore.

So I am out. Sorry. But the vibe is all wrong.

Mark Uzick December 8, 2011 at 1:38 pm

Your conflicted thinking shows why short term predictions are futile; taking credit for correct short term predictions amounts to taking credit for random luck.

Also: You’re competing against politically connected speculators with the money to pay for legal inside information. Over time, they will take all the money away from small speculators, just as a professional poker player will separate the amateur player from his money; the amateur’s occasional victories only serve to keep him coming back for more exploitation.

Staking a long term prediction by dollar cost averaging into it is much less risky and will be very profitable if you’re right. It can sometimes even turn out profitable if your long term predictions are wrong; at worst your loss will be moderate.

Cam Fitzgerald December 8, 2011 at 5:28 pm

Oh, sorry Mark. Here is the short version just for you. I was just offering why I think Gold will decline on the basis that the expectations of the global investment community for Europe are now too high. That mood appears to be hampering the efforts of the key countries while weakening their hand in negotiations at a critical moment. It is actually France and Germany who look to be backed into a corner as a deal is put to the membership, not the less solvent countries. That is all I was trying to express in the long-winded post above. Worry that a fiscal union may not materialize quite as soon as some believe and that this will reflect negatively on commodities for the next while.

Mark Uzick December 8, 2011 at 6:20 pm

I understood your long comment and considered it very plausible, but it’s still guess-work on your part – guess-work that you’ll use to go into a competition with powerful insiders. You may or may not win this time, but either way they will eventually take your money.

Cam Fitzgerald December 8, 2011 at 7:31 pm

Well, if it was a guess then it was a very good one. The dollar is up sharply this morning, Euro off by .54% so far today and both gold and silver taking a rest on a big fade. Oil, the Dow and S&P500 look headed for 2% declines if not already there and yields are again rising on Italian and Spanish debt. More to come tomorrow. My prayer though is that the members of the EU will do the right thing this weekend. We simply cannot afford a failure now. I endorse a stronger hand for Germany and France during the coming discussions. The smaller member nations need to feel more trust but selfish domestic goals cannot be tolerated or acquiesced too. The meeting of minds needs to be mutual for the support of everyone. All for one and one for all; the union must come before the individual politicians and states now and that is where strength will be found. Just that simple.

Mark Uzick December 9, 2011 at 3:36 am

Forestalling the day of reckoning for corrupt political, corporate and banking interests only guarantees that the final liquidation of state sponsored financial mis-allocations will be all the more catastrophic; yet you want to treat a sick and credit addicted economy with more credit that’s stolen from the capital of savers – like treating a crystal meth addict with ever increasing doses of crystal meth.

How do you expect that will turn out?

Cam Fitzgerald December 9, 2011 at 6:24 am

You mean like stopping to assist the victims of a serious car accident Mark? Where I live we offer CPR, warm blankets and care. We call 911 and organize emergency services.

Maybe your good idea is that we just take all their crap (like the luggage, car tools and wallets) since they are down and injured anyway. Then let them perish. Screw rescues. We need free stuff and these are easy pickings……..

Right Mark?……just like I figured.

Mark Uzick December 9, 2011 at 8:17 am

False analogy:

Bailing out crooks at the expense of innocent, hard working people is nothing at all like helping accident victims; it only empowers the crooks to continue abusing their fiduciary responsibility; rewarding themselves with huge bonuses and vote buying at taxpayer expense, expecting to be bailed out again when it blows up in their faces.

If you really cared about people you’d want to get the plutocratic parasites off their backs so that they could live free and productive lives.
Calls for public sacrifice are always code-words for dependence upon and enslavement by the state and its plutocratic cronies.

The only legitimate charity is that which is voluntarily given to the deserving needy.

Divergent Opinion December 8, 2011 at 3:55 pm

As I have repeatedly stated the few times I have visited this site, gold pricing is solely a product of 2 things–actual liquidity, and perceived liquidity.

And actual liquidity (massive CREDIT infusions by all banks to anybody that asked) ENDED in late 2007; while perceived liquidity continued, up to the present.

Right now, the majority of humans are still perceiving that this continuity of further perceived liquidity by world central bankers (whether europe, china, usa, doesn’t matter, it is et al, I write of), will balance (or at least assuage long enough), the mountainous world debt, a near quadrillion electronic usa dollar i.o.u.’s (dwarfing the actual existing usa dollar fiats, by an approx. ratio of 300-1).

So, the current “common wisdom”, is that this perceived hyper mascarade, or inflation charade, or whatever you want to call, can cynically continue on forever, ad nauseum, with rotating different currencies, each devaluing in synchronicity, with enough rationalizing central banker palaver, to get even more believers, to believe in this magically perceived inflating fairytale, as the “new normal”.

Yet I strongly suggest otherwise. For even redwood trees stop their growing, at some point. And I opine that time is right now.

Because, even routine traditional technical study of the s&p500, shows that there is HUGE technical upside resistance—resistance not just in weekly, but also in multi-month and multi-year charts—that it would require SOME INCREDIBLE FORCE, defying A SLEW of MAJOR tech indicators, for the spx to be able to breakout upward, from this 1260’s area it’s in. Plus, time is also running out, technically, AND the weekly rally has now FAILED 4 times in the same area–high 1260’s.

Therefore, IMO, the spx is only few days away, from a MAJOR % breakdown (i.e. a “crash”)—what some technicians call “the point of recognition”: point which, FINALLY, the majority of humans (ALL at the SAME time), cannot continue to evade REALITY any longer; and finally RECOGNIZE, that there is NO solution to the HUGE gap, between perceived liquidity and actual liquidity, in comparative ratio to actual MASSIVE world debt.

This is the point where even the regular person on the street, finally recognizes what has been obvious to me for years: that the world central bankers are NOTHING, a total JOKE, in comparison to the SIZE of the world debt.

And the shortterm and longterm technical spx charts indicate, that this “moment of recognition”, is nearly here.

So obviously, price of gold being solely a product of liquidity, it will also crash along with spx, and hit a minimum of low $1500’s (with a spike down into even $1300’s, as a very real possibility).

RA, I have come now for the 4th time to your site, because each and every time, over last few months, you have made a shortterm call about gold/silver that I disagreed with, and I was proven right each and every time, on the prior 3. For example, las time was a few weeks ago, where you gave free trading info., stating that SLW would go up to $40.50 easily (it was a $36.50 at the time), and I disagreed strongly on this, and told you so, for I consider silver and SLW’s chart to be very weak, and MY target for SLW shortterm was $30 area, which it hit, only 1 or 2 weeks later.

As a matter of fact, I mention SLW, because I will make you a prediction, about SLW in particular ($33.5 at present), that SLW will drop to $20.00 a share in a flash, along with the spx crash. So SLW represents, IMO, an even larger percentage opportunity as a short, than the spx does, during the soon forthcoming crash.

Anyway, enough. I shall return to comment after the overall crash to ALL markets, except cash.

For I am betting on the IMMOVABLE (spx-tech) object, and I know most of you here are betting on the UNSTOPPABLE (cb hyper fiat) force. Yet, I have always seen your “unstoppable force” central bankers, as only a perceived ILLUSION, and NOT an actual force.

At any rate, all shall soon see, one way or another, what plays out. But the spx tells me, the emperors have no clothes.

You have been warned again.

gary leibowitz December 8, 2011 at 4:16 pm

Have to strongly disagree on the short term equity moves. The huge move up was one of the stongest recorded. It broke above the 1154 SPX line. That should have chased all the shorts away. We are now having a nice sideways consolidation. With seasonality, good economic numbers, and a possible resolution to the EU crisis, we should hit another surge before it is all over. This market seems to be on a tight spring right now ready to unwind. SPX 1340 – 1360 as the logical top. In fact we should know either Friday or Monday how this plays out. The EU decision, or lack of, will tell us how much juice this rally has.

Divergent Opinion December 8, 2011 at 4:34 pm

leibowitz, all you say is very reasonable.

However, markets are about to enter an UNreasonable phase.

You perceive everything as manageable, because that is the illusion that central bankers want you to have.

Yet things are NOT manageable, and you will soon see.

Hedge your bets. Spx has supreme resistance at this area—weekly, monthly, yearly, from a huge SLEW of technical indicators.

The odds of a cliff dive from this area, and very soon, is of HIGH probability.

News is nothing. NOTHING. News are always suited to market tech activity, NOT the other way around.

Btw, Ackerman, did you read today that that other Ackermann, of Deutsche Bank Pres. fame, was sent a functioning letter BOMB today, and he is not dead right now, only because his mailroom routinely scans mail with x-rays? Interesting. I predict there will be copycat incidents, with usa bank presidents.

Wow. Even I am amazed. After I made that call that gold will fall about half hour ago, at $1749, gold has DIVED in amatter of minutes, and is now at 1718. atten down the hatches. Looks like my predicted big spx fall just started—I called it at 1262 spx, now already down to 1252, in a matter of minutes.

Carol December 8, 2011 at 4:49 pm

DO >>”This is the point where even the regular person on the street, finally recognizes what has been obvious to me for years: that the world central bankers are NOTHING, a total JOKE, in comparison to the SIZE of the world debt.”

Agreed on the latter as I too have know this for many many years but how on earth can you “know” that the “regular person on the street” is FINALLY going to wise up? I think the idiots on the street never learn unless it is reported on the news or in their propaganda papers so I really doubt this realization you are expecting EVER happens but I guess time will tell.

DO >>”and I know most of you here are betting on the UNSTOPPABLE (cb hyper fiat) force”

I disagree with that statement as most here are deflationist. Yes there are a handful of inflationist and even some of the hyper style but I think you got this forum mixed up with another blog/group/forum.

gary leibowitz December 8, 2011 at 4:08 pm

No one really wants an immediate solution to their debt problem. To do so would plunge everyone into a deep depression. It’s a balancing act. The psychology has to change before real reform takes place. It will not be a quick solution.

As for our own problems, where have we done any better? Just because the economy seems to be finding some traction doesn’t mean our debt is any less dire. The domestic emphasis is to cut or restructure taxes. Can you guess which economic class wins all the time?
It sure looks like the same 2 sided political battle. No psychological change there. Class warefare is going to become more prominent, and as a result more people will take sides, with larger demonstrations. This all presupposes that jobs and wages don’t come back. Rick and his wife posted an article a while back claiming the media isn’t listening to the 99 percenters. I saw it very differently. The Murdoch media totally dismissed them while the more independent and liberal organizations were reporting very early on.

Lets get our own house in order before we criticize the EU. Germany is in a very precarious situation. Their mentality is to clean house, while the other nations wants a slow step approach. I will assume more modest steps will be implemented along with timelines for further austerity measures.

Divergent Opinion December 8, 2011 at 4:17 pm

Even I am amazed. Gold just dropped approx. $25 straight down, only 5 minutes after I posted my ‘gold is going down, along with the spx’ comment above.

Looks like gold wants to lead the spx down, this time. interesting, I expected it to trail. Silver will fall faster than both, however.

Robert December 8, 2011 at 5:53 pm

“Even I am amazed. Gold just dropped approx. $25 straight down, only 5 minutes after I posted my ‘gold is going down, along with the spx’ comment above. ”

What? did you just start watching the Gold ticker this morning?

I’ve seen these kinds of moves 50 times in the past 5 years.

DO- bring on 25 dollar silver and 1300 gold. I savor the opportunity such prices represent.

Tech-trac December 8, 2011 at 5:46 pm

Can GOLD decline to $1300 on a SPIKW?
It certtainly can even if one ignores technical considerations. Early in this new year AU reached parity with its commodity value around $1200. Currently AU is trading @ a 30%+premium to its store-of-value component. The only commodity index that I have monitored for over 40 years is Moody’s Spot Commodity Index. The Index, constructed from a basket of 21/23 commodities,ex AU,with a base value of #100 in 1930, is currently trading @ #6166. Do the math. Can AU collapse as it did in Jan to its commodity value minus safe=harbor considerations? Yes, it has done so in the past. Can it become even more overvalued? Yes it can. In 1980 that index reached #1500 while AU peaked @ $850. So in a bubble AU can attain a premium far in excess of today’s. What a muddle!

Mark Uzick December 8, 2011 at 6:43 pm

In a deflationary depression the purchasing power of money increases.

Since gold and silver are the only real money, their elevated relative purchasing power is consistent with a credit collapse, even while the central banks collude to sweep away the last vestiges of the delusion of fiat money’s value.

Whether there’s fiat price inflation or fiat price deflation is irrelevant; there will be real-money price deflation.

C.C. December 8, 2011 at 7:15 pm

“You have been warned again.”

And we will likely be warned again & again – just like we were in the Fall of 2008, the early Spring of 2009, September of 2010, September of 2011, and again – now, by the hordes calling for a $DX 90 handle from here to eternity.

In the mean time, the Trend of hard currency continues its steady climb up the wall-of-worry warts. Despite proud (and fragile) feelings to the contrary, The U.S. and the Eurozone (in the new world of precious metals importance) are no longer the center of the Universe.

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