Monday, August 6, 2012

The gold price has spent two months within a $111 range and is positioned for a major impulse one way or the other.  The large bearish pattern shown on the attached chart must be taken seriously so long as the active December contract remains below 1646.40, which is the 'C' point of the pattern and the top of the aforementioned $111 range.  But a more recent bullish pattern is notable for having impulsed above a significant external prior high, as shown by the dotted line to the left of the green 'B' point on the chart.  We usually look for camouflage on lower timeframes, but this pattern is a classic example of it.  The pattern is active and is unfolding according to plan thus far. If the futures reach the bullish 'D' target of 1652.80, the large bearish pattern will be cancelled and the probability will increase that the correction from last year's all-time high has run its course.  Traders choosing to short the bullish midpoint at 1619.60 should place stops no lower than 1620.30.  (Posted by Doug “harry” McLagan) _______ UPDATE (12:55 p.m.):  The futures approached the midpoint of 1619.60 to within twelve ticks, and the chart now features three exposed prior highs ranging from 1618.40 to 1618.90.  The pivot is not "hidden" at this point and a tightly-stopped short sale would be very risky. _______ FURTHER UPDATE (2:05 p.m., August 7):  Risk-takers would have been rewarded for shorting the midpoint pivot after all, as the futures reversed at 1620.00 and declined more than five dollars before heading back up to 1621.30.

Index futures opened with little excitement Sunday night, to put it mildly.  Absent any titillating news, expect the week to begin with further consolidation of last week's rally in shares -- and more sloppy action in bullion.

The Dollar Index opened weak Sunday night, presumably for all of the usual wrong reasons, including perceptions that Europe's central bank is ready to do "whatever it takes" to keep the region from slipping into an economic depression.  Because the 82.56 midpoint support of the pattern shown has been decisively exceeded, we should infer that the weakness will continue to its 'D' sibling, 81.61.

Friday's wilding spree achieved 30 of the 40 points I'd projected, leaving an as-yet-unfulfilled rally target at 1404.00. The schizophrenic rampage has turned suspiciously quiet Sunday night, with index futures trading a hair from their most recent settlement price. Under the circumstances, I'll leave it to the discretion of night owls and camouflageurs to find an entry hook amidst the flux of ho-hum and hi-ho.

Greg Hunter: Hello. I’m Greg Hunter. Thank you for joining us today on USAWatchdog.com. The guest -- a bit of a contrarian -- is Rick Ackerman. He hails from the website Rick’s Picks. He’s a professional trader. Rick Ackerman, thank you for joining us here on USAWatchdog.com. Rick Ackerman: Thanks for inviting me, Greg. Greg: Rick, you’re a bit of a contrarian, as I was saying. You think the dollar could get pretty strong right in here. Tell us about your trades and why you think that way. Rick: I like to think of myself as being on the respectable edge of the lunatic fringe. As far as the dollar is concerned, I’ve been pretty bullish for a while, with a Dollar Index target in the mid 90s. We’re down in the low 80s now, so my projection allows for quite a rally. But I’m not fundamentally bullish on the dollar -- it is ultimately garbage, since every dollar is backed by debt, not metal. For now, though, the world’s hot money is clamoring for the supposed safety of the dollar. It certainly seems safer than European paper at this point. So the dollar is enjoying its status as the trader’s currency of choice. Greg: It looks like it’s going to be some sort of, other people probably feel the same way. But where do you go if you have a meltdown? You’re saying they’re going to run into the dollar. Rick: Exactly. The thinking is that if the financial system is hit with a real crisis, the euro is going to collapse before the dollar does. Although I tend to agree with that, I think that the time differential between the two collapses could be very short. Once the euro goes down, all who sought safety in dollars are