Wednesday, January 9, 2013

My expectation over the near-term is for a rally to exactly 1494.50, but four consecutive days of unregenerate slop (see inset) have left me with little appetite for trading this vehicle.  Prospects for getting aboard via camouflage will be limited, since any thrust that is not impulsive on the 30-minute chart or higher will not likely be worth buying.  By then, of course, every Tom, Dick and Harry will be in on it.   You can learn to do this stuff yourself, and it’s easier than you might think. Click here for information about the upcoming Hidden Pivot Webinar.

Yesterday's rally left me unpersuaded that bulls mean business, although my skepticism would be allayed slightly if they can muster a push today above the look-to-the-left peak at 1667.40 shown in the chart (inset).  Camouflageurs looking to get long should be ready with a buy-stop, since a pullback from just above the peak could set up a slingshot C-D leg into open territory. The bigger picture, referencing the 240m chart, is bearish, with a 1606.40 target that was noted here earlier.  Its midpoint sibling lies at 1650.90, and so that's where the battle between bulls and bears is likely to take place if buyers cede ground over the next day or two. _______ UPDATE (7:40 p.m.): Bulls quit at 1666.00, just shy of the threshold where a rally might have become interesting. The tired price action left my outlook unchanged.

The U.S. dollar showed its first sign of life in nearly a month last week when it rallied above some distinctive price peaks on the daily chart. The trend bears watching, since any significant upside progress from here would put pressure on gold and silver quotes. How likely is this to occur? The chart below leaves the matter unsettled, at least for now. Traditional chartists will see a bearish head-and-shoulders formation in the making. If it pans out in textbook fashion, that would of course be bullish for precious metals.  We think this is the least likely of several scenarios for two reasons: 1) head-and-shoulders patterns are everywhere we want to find them, too popular for their own good; and, 2) this particular one looks too fetching to do what we expect it to do. More likely, in our opinion, is a prolonged slog higher for the dollar over the next 6-8 weeks, with a modest upward slope that hugs the dotted red trendline.  This would be congruent with a forecast we aired a couple of months ago calling for range-trading in gold from around $1480 to $1800 between now and early 2014. Most Bullish for USD Which brings us to the scenario most bullish for the dollar, and therefore least bullish for precious metals. According to our Hidden Pivot Method of analysis, sustainable rallies nearly always begin with an upthrust exceeding two prior peaks, an “internal” and an “external.”   In the chart above, these peaks are labeled, respectively, #1 and #2.  However, more than merely exceeding both highs, the rally would have to do so without pulling back significantly after the first high is surpassed. Another way of saying it is that if bulls can get past peak #1, they must top #2 as well without pausing for breath.