Thursday, January 12, 2012

Natural gas quotes have been in a death spiral for so long that it's probably time to start paying attention.  I've sketched out a detailed 'camouflage' scenario in the chart accompanying today's tout, including a specific screen alert that could help you get long. Check it out if you want to see what low-hanging fruit looks like.

A worst-case target of 2.305 first appeared here around Thanksgiving, but we should be prepared nonetheless for a bullish turn from somewhere above it, since the death rattle could be ferocious -- and potentially very profitable to trade.  I would suggest setting a screen alert at 2.832, since that's where the 10-minute chart would turn impulsively bullish for the first time in ages.  A B-C pullback from somewhere just above it could provide a low-risk 'camo' opportunity to grab a tiger by the tail.  If the sketched -out trade fills, let me know in the chat room and I'll establish a tracking position for your further guidance. _______ UPDATE (January 16): The futures were barely able to muster a dead-cat bounce on that last effort.  Even so, the 2.305 will remain a good place to try bottom-fishing aggressively with our habitual penny-ante stop-loss.  _______ FURTHER UPDATE (January 23): The futures have taken a hysterical, short-squeezey, Wait-Until-Dark lunge this morning that is too insane for us to seek camouflage. The fact that it has come from more than a  penny below my 2.305 target is not exactly bullish, but we'll give the move the benefit of the serious doubt nonetheless as the possible liftoff from a bear-market low. Supplies of natural gas are said to be in multiyear excess, but that could change more quickly than most "experts" imagine simply because heating oil is getting too expensive for the American middle class.

The 31.030 rally target given here yesterday continues to serve as a minimum objective for the near term, but a close above it would augur more upside over the near term to as high as 32.145.  The effort so far this week has created a bullish impulse leg on the daily chart by surpassing an 'internal' peak at 29.740 recorded last Wednesday and an external at 30.210 from December 21, implying that any pullback that doesn't breach 29.210 to the downside would be setting up another rally leg. More immediately, night owls can use the pattern shown to try to get long. The entry signal has already been tripped at 29.930 on the '15', so you'll need to drill down to the '5' to get aboard belatedly.

As detailed in today's commentary, gold's modest rally yesterday was more encouraging than it may have looked, surpassing no fewer than three prior peaks on the intraday charts.  The key to the intermediate term, however, is the rally's ability to vault past yet another peak at 1681.70 before buyers take a serious breather.  All key price points are shown in the chart, the same one I've used in my commentary.  Night owls looking for a way to get long risking relatively little will need to drill down to the 10-minute chart, where at this very moment a very nice camo pattern has tripped an entry signal at 1644.50 (A=1641.50 at 6:40 p.m. EST, B=1645.20).

The noodling around of the past few days has pushed our minor rally target slightly higher, to 1301.75, predicated on a healthy push past its sibling midpoint at 1290.50.  That's 1.00 point above the high achieved in the closing minutes of yesterday's session, but until buyers put it behind them, we won't leap to conclusions.  For night owls looking to get long, a decent 'camo' pattern developing early Wednesday evening looked promising.  Want to learn how we use Hidden Pivots and “camouflage” to reduce entry risk to relatively small change? Click here

Comex Gold finished the day with a modest gain of $12, but not before busting through some daunting supply on the intraday charts.  Notice in the 240-minute bar chart below how the top of Wednesday’s rally exceeded three prior peaks.  According to our proprietary Hidden Pivot Method of technical analysis, bulls need only have punched through two such peaks to signal their readiness for a follow-through rally of as much as $30 over the next few days. In this case, however, they went one peak better, taking out the small “external” high recorded during mid-December’s steep selloff. That peak may not look very imposing, but its location along the wall of an Acapulco cliff dive implies that it took some extra oomph to get past it yesterday. The fact that buyers succeeded, if only by a couple of dollars, bodes well for the short-term, and traders should therefore view minor pullbacks of perhaps $4 to $6 as buying opportunities.  In the days ahead, Rick’s Picks will be monitoring price action closely intraday to identify “camouflage” entry spots that in theory can help lower the risk of initiating a trade.  If you’d like to follow along in real time, and to gain access to a 24/7 chat room that draws traders from all over, click here for a free trial to our service. Gold’s performance yesterday was impressive for another reason that had little to do with the charts. Although strength in the U.S. dollar undoubtedly weighed heavily on bullion prices, as did the weakness in stocks, gold quotes soldiered higher. Lest we become emotionally involved if the rally continues, I’ll suggest using the 1681.70 peak shown in the chart as a benchmark for turning very bullish.  More specifically, if the ground between current levels and that external peak is traversed