Thursday, August 30, 2012

The gold market made a lower low on Wednesday and after a bounce is now targeting 1648.20.  Wednesday's decline was sharp, and it narrowly surpassed an external prior far to the left on the chart.  On Wednesday evening the market came close to the new pattern's midpoint of 1656.40, leaving traders with the decision whether to go in for "sloppy seconds", which is not our policy but which has been known to work.  The pattern's 'D' target of 1648.20 would put gold in the "window" of a large bullish pattern originating at 1592.10.  We will recommend that traders risk $50 on this one, with a buy at 1648.40 and a stop at 1647.90.  If the 'C' point of 1664.60 is revisited beforehand, cancel the orders.  (Posted by Doug “harry” McLagan)  _______ UPDATE (10:33 a.m. EDT):  Shortly after the gold pit opened, the futures rallied above our 'C' point and cancelled the pattern.  After coming back down some, we have a new 'D' target of 1650.30.  That's close enough to the round number of 1650.00 to warrant a cautious approach to buying there.  We should also start to anticipate volatility in the hours before Bernanke's speech tomorrow.

Index futures were glowering with menace on the eve of The 'Nank's speech. Although it is inconceivable that he'll say anything meaningful, the markets are primed to react as though virtually anything he says will be world-shaking news.  We've never been keen on mixing it up with the contemptible idiots who move shares on these occasions, but there is nonetheless some actionable advice contained in the ES tout for those of you who'd rather not just watch.

It's early Thursday morning and the futures were playing toe-sies with the 1401.25 midpoint support of the pattern shown.  It's 'D' sibling at 1386.25 will be in play as a minimum downside objective if 'p' is exceeded by perhaps 1.00-1.50 points.  The 15 points of implied downside makes this one well worth shorting, but you'll need to figure your own way in, since the stock market is apt to be squirrelly as it awaits a supposedly important speech by Helicopter Ben on Friday ahead of the three-day weekend. The 'D' target can be bottom-fished via camouflage, but the pattern looks fetching enough that you could try it with a 1386.50 bid and a stop-loss as tight as 1385.50. _______ UPDATE (August 31. 12:40 a.m. EDT): Yesterday's mincing steps lower left my forecast and advice for Thursday (see above) unchanged.  It should be interesting to see whether the Hidden Pivot at 1386.25 stops whatever hysteria The 'Nank is able to incite in its tracks.