Monday, April 15, 2013

June Gold crushed a 1487.90 Hiden Pivot target on Friday, exceeding it by $12.  This all but guarantees lower prices, but we don't have much to work with in calculating the next tradable low.  I've settled on a pattern that is pure 'sausage' on the weekly chart, with a point B low that failed miserably to exceed any prior lows of significance. The pattern looks just as bad on the daily chart that I've provided here, but, as I mentioned in today's commentary, the 1414.50 target is good enough for government work.  In practice, this means we can use it as a minimum downside target, but also as a place to attempt bottom-fishing with camouflage.  _______ UPDATE (April 15, 12:11 a.m. EDT):  The futures have gotten sacked tonight, with a so-far low of 1422.20.  I am still recommending tightly stopped bottom-fishing near 1414.50, but if this Hidden Pivot gives way it would portend more slippage to 1371.70.  For information concerning the provenance of this target, check my post at 16:09 in the chat room. _______ UPDATE (8:26 a.m.): The Sunday night massacre has exceeded my worst-case Hidden Pivot target, with the June Comex contract hitting a so-far low of 1385.00. Switching to conventional technical analysis, there are now two numbers we should keep in mind as possible bear-market lows: 1) 1341, representing a 50% retracement of the rally from 2008's watershed low of 732; and 1188, a 0.618 retracement

We attempted without success to short a longstanding rally target at 1494.25 last Thursday, when the target was approached within 1.25 points. A 90-minute 'impromptu' trading session online produced no opportunities that looked enticing.  Even in retrospect, we can see in the accompanying chart that the 'duel' between bulls and bears makes shorting a difficult proposition at the moment. Nevertheless, short-term action slightly favors bears, and that's why I'm suggesting that you look for your 'camo' entry signal on a downtrending impulse leg similar to the one drawn.  Please report any fills in the chat room, since I will establish tracking guidance if at least two traders get aboard and survive to the point p of the entry pattern.

Someone inquired in the chat room whether Friday's low at 13.75 was close enough to our longstanding bear market target at 13.15 to consider it fulfilled. Unfortunately, the answer is "no".  The good news is that 13.15 could produce a bottom that survives for a while. In any case, we'll want to bottom-fish down there aggressively, presumably via camouflage so that we don't miss an important turn from somewhere above 13.15.  You should note as well that if I were to use the higher point 'A' available to me on this chart, it would imply a bottom at 12.49. We should be ready to exploit both of these numbers. _______ UPDATE (April 15, 9:25 a.m. EDT):  With the markets set to open following the Sunday Night Bullion Massacre, it would appear that GDXJ is already trading below the 13.15 target. Accordingly, I'll recommend bottom-fishing only via camouflage, presumably near the 12.49 worst-case target. ________ UPDATE (10:36 a.m, EDT):  In the chat room, I've just recommended buying 400 shares for around 12.57, stop 12.45.  If the HP support at this level gets obliterated, a 9.57 target would be in play.  I am unfortunately unable to transmit this advice via E-Mail Notifications, possibly because I am in Crested Butte and my bandwidth is being limited by a niggardly ISP. _______ UPDATE (10:48): Lower stop to 12.41. Just realized there's a minor D at 12.43. [Stopped out for a trading loss of about $60.]

[The Sunday night massacre has exceeded my worst-case Hidden Pivot target, with the June Comex contract hitting a so-far low of 1385.00. Switching to conventional technical analysis, there are now two numbers we should keep in mind as possible bear-market lows: 1) 1341, representing a 50% retracement of the rally from 2008's watershed low of 732; and 1188, a 0.618 retracement. RA] Gold fell hard on Friday, pushed to its worst loss in more than a year. The Comex June contract settled at $1501, down $63, after having traded as low as $1476 intraday. Adding insult to injury, Goldman Sachs – aka the Bad Guys – had seen it coming and told investors to get short two days earlier.  We’d seen it coming ourselves, having projected a decline to at least $1487.90 when the futures were trading $80 higher.  A headline here a week ago noted that Gold Has Trashed a Key Support.  As indeed it had. Our plan was to bottom-fish near the target with a very tight stop-loss, and although gold took a promising bounce from $1491 that lasted four hours, our implied long position from there didn’t survive the second wave of selling. Goldman is still bearish on gold -- and so are we, because of the ease with which sellers demolished our “Hidden Pivot” support at $1488. Because of this, we are now projecting further downside to at least $1414.50. That would represent a 7% fall from these levels and a 28% correction from the $1933 all-time high recorded in September of 2011. The target is not of the highest quality according to the proprietary technical system we use, but, as we told subscribers, it is “good enough for government work.”  What that means in practice is that it can serve as a reliable minimum downside

Last week, the E-Mini S&Ps and Diamonds came within a hair of important rally targets. However, we should treat a still-outstanding target at 14969.26 (see inset) in this vehicle as the most important of them all -- implying that the Fat Lady has yet to sing. We already hold a bearish position in the Diamonds, but a last-gasp thrust in the Dow could give us a second opportunity to get short in the E-Mini S&Ps.  We might also conisder doubling down in the Diamonds, so stay tuned.