Thursday, August 9, 2012

Gold rebounded from a Wednesday morning selloff and continues to grind higher toward a series of hidden pivot targets.  The first of these is the midpoint pivot of the pattern shown in the attached chart, at 1622.30.  This elegant pattern impulsed above an important prior high made last Thursday.  A short sale of the midpoint would be a risky bet on a false breakout above the more recent high of 1621.30.  The next price objective comes from the same pattern, its 'D' target at 1638.70.  This level has a lot of company in the way of prior highs and is also regarded as a risky short-sale.  The same goes for our next target, 1646.90, covered in yesterday's tout.  And finally we have a somewhat hidden pivot at 1652.80, which was discussed in Monday's tout.  In the event of an accurate reversal at the 1622.30 midpoint, a camouflaged buying opportunity might arise after the pullback.  (Posted by Doug “harry” McLagan)

Yesterday's projection caught the intraday low, 1390.50, precisely-to-the-tick. However, I'm not following through with tracking guidance because even though I'd suggested getting long down there, no one confirmed having done the trade in the chat room. Early Thursday morning, the rally was close to the 1403.25 target shown, but if it's exceeded the 1406.25 'D' Hidden Pivot of the even larger pattern shown will be in play. These numbers are tradable only by the very nimble, and so I'll leave it to camouflage-equipped night owls to find a way aboard if the opportunity should arise.

Index futures were creeping higher early Thursday morning toward targets that were too close to provide any significant opportunities.  Nonetheless, night owls can try to leverage either of two Hidden Pivots that I've flagged in the e-Mini S&Ps.

Anyone betting that the global financial system will continue to muddle along indefinitely deserves to reap the whirlwind that’s coming.  As the rest of us well know, the international banking system is being kept afloat solely by political lies, stupidity, corruption, greed and, most of all, egregiously misplaced confidence. It would seem to be only a matter of time before the rotted timbers of this belief system give way.  But what will be the catalyst?  The possibility or even likelihood that the financial system will be toppled by some event no one was expecting was the novel theme of Nassim Taleb’s widely read 2004 book, Fooled by Randomness.  In the New York Times, Taleb noted the following:  What we call here a Black Swan (and capitalize it) is an event with the following three attributes. First, it is an outlier, as it lies outside the realm of regular expectations, because nothing in the past can convincingly point to its possibility. Second, it carries an extreme impact. Third, in spite of its outlier status, human nature makes us concoct explanations for its occurrence after the fact, making it explainable and predictable. In the seven years since Taleb’s book rose to the top of the bestseller list, any number of factors could have caused the banking system to implode but did not. Thus has the passage of time strengthened his thesis by challenging still-widespread expectations of a collapse “any day now.”  The possibility has not been negated, of course, but it seems increasingly unlikely that any of the well-known dreadnoughts that have been bearing down on us, including the Mayan calendar’s prophecy of the end of days, will terminate economic life as we know it. For in fact, the financial system has survived the de facto bankruptcy of Europe; a U.S. budget