Monday, August 13, 2012

On Sunday night the gold futures confirmed a new and elegant pattern whose midpoint and 'D' target make the 1632-1653 range a target-rich environment.  The new pivots are at 1632.40 ('P') and 1643.20 ('D'), and we refer you to the August 9 gold tout for the other three, lest we overcrowd this one with bolded green digits.  Both of these new levels are somewhat below important prior highs, as the attached split-screen chart shows, which means that shorting either of them would be an act of front-running, a trading tactic that can be worth the risk in the gold market.  In fact, looking at the five pivots under consideration, our two new ones are the only ones among the five which look like reasonable shorting candidates.  Many gold-market participants are watching the important prior high of 1646.40.  A breach of that level might bring in a good deal of bullish money that has been on the sidelines for a while.  (Posted by Doug “harry” McLagan)  _______ UPDATE (1:50 p.m.):  Our 'C' point was broken shortly after the COMEX pit opened this morning, cancelling the pattern and its targets.  A vigorous afternoon selloff has retraced most of the impulse wave but has not reached the key prior lows from 1608.10 down to 1605.90.

Index futures were suspiciously subdued early Monday morning, down just enough to give away the bullish plans of the predators doing the accumulating.  Gold futures, on the other hand, were up small, working (and I do mean working) on a modest bullish target furnished a while back in the touts section.

The 1409.00 target shown, introduced here a week ago, remains valid and is still a logical place to attempt shorting this sometimes sludgepot.  Camouflage is the preferred way to go as always, and I'd suggest using the 5-minute chart if and when the rally reaches 1407.50. Easier but somewhat clumsier would be to initiate the short at 1409.00 with a 1410.25 stop-loss (as originally suggested).  I haven't exactly drum-rolled this target, but it has been long enough in coming that we should assume word of it has gotten around. That's why I am suggesting a 'camo' entry strategy unless you're feeling lazy.  If the trade survives till the final bell and is acknowledged in the chat room, I'll establish a tracking position for your further guidance. _______ UPDATE: My 1409.00 target -- stupidly, tediously, incorrigibly slow in coming -- hit a near-dead-center bullseye, since the futures have dropped to a so-far low of 1402.00 after topping this morning at 1409.50.  Cover half at current levels (around 1404.00) and let it ride with a 1410.00 stop-loss.  If we get more of a pullback, you know the drill: Swing for the fences, since, although it is extremely unlikely, there's always the chance we've caught a major top.  The trick -- and fun of it it -- is being able to make money when we are wrong, as we have done on perhaps 9 out of 10 of these 'pick the Mother of All Bear Rally Tops' trades. You can learn how to do this stuff yourself — and more easily than you might imagine.  Click here for a free trial subscription.