June 2013

To stretch the bearish imagination, ponder the 3.81 target in the weekly chart displayed alongside. A 5.88 target extrapolated from a lesser pattern begun in late March could break the fall, but that's probably a best-case scenario at this point.  Note the bounce from very near the pattern's midpoint in early March.  That tends to corroborate the pattern itself, and its 3.81 target would become still more compelling if a snapback rally to the midpoint fails to push above it.  The midpoint would be a short in any case if bulls ever get there.

The 1613.25 rally target proffered here yesterday came within a point of nailing the intraday high, but that wasn't good enough because I'd advised a 1.00-point stop-loss on the short. It may be a moot point by the time you read this, since the futures were glowering with bullish menace shortly after 2 a.m., having pulled back by a mere 9.00 points intraday.  The subsequent drift higher has created a bullish impulse leg on the 5-minute chart (see inset), but there didn't seem to be enough energy in it to give night owls much lift. All things considered, will be on the sidelines at Friday's opening bell.

The ease with which sellers obliterated a key 'Hidden Pivot' support at 1219.20 yesterday will of course have bearish implications going forward. How bearish?  The visual logic of the chart accompanying today's tout for August Gold is not going to cheer you.  Regardless, the target itself is both compelling and clear, and so we should pay heed. If you want to peek behind the subscriber wall, you'll need to click here for a free week's trial.

There's so much slapdash forecasting going on out there that I decided to take a look for myself.  Now that a clear-as-day Hidden Pivot support at 1219.20 has been obliterated in just 24 hours, we must shift to an even larger pattern in search of a suitably dismal endgame  The pattern shown (in a continuation chart for August Gold) projects an important low at exactly 1004.80, so I'll suggest using this number as a minimum downside objective for the time being.  A rally to the 1246.40 midpoint pivot should be viewed as a belated opportunity to get short, but I'd strongly recommend camouflage if you attempt it, since the midpoint pivot has evinced no precise confirmation so far.

[Since Wednesday night, when the commentary below first appeared, gold has broken down yet again, having traded as low as 1179 in after-hours action Thursday night.  The fact that a major 'Hidden Pivot' support at 1219.20 held for only a day is quite bearish going forward. Meanwhile, judging from the e-mail I received and comments posted in the forum, just about every person on earth has been expecting Comex August Gold to fall to at least 1150 for months, if not longer. If you haven't weighed in already, we invite you to post your own target in the forum, since someone is bound to be right. Earliest postmark with the correct call wins a trip to Six Flags Over Newark. RA] Gold has plummeted anew, diving $54 to a low that missed a bear market target of ours by less than $2 on Wednesday. The intraday bottom at 1221.00 fell 1.80 shy of a 1219.20 target for the August Comex contract that had been disseminated to subscribers when the futures were trading $200 higher. So now what?  Because the target was an important one, a “Hidden Pivot” support that had been ten weeks in coming, we should expect a substantial bounce, even if it doesn’t last for long.  By substantial, we mean $100 or more over a period of perhaps 5-7 days.  However, the more feeble the bounce, the more bearish the implications for the intermediate-term.  To be more specific, if the futures were to take out the 1219.20 support within the next day or two, or exceed it after having bounced no higher than $20-$30, that would be a very bearish sign going forward. So far, the rebound has amounted to $23, most of it achieved in after-hours trading. This is a modest showing, to be sure, although hardly

The 150.39 rally target shown is a tempting spot to try shorting, since the ABC rally pattern has many characteristics that we like. Accordingly, I'll recommend buying four July 146 puts if DIA trades above 150.35. Stop yourself out if the puts trade for 0.20 less than you paid for them. You could also offer 400 shares short at 150.37, stop 150.47. ________ UPDATE (10:50 a.m.):  Today's comically stupid rally has gotten us filled a hair off the so-far high. For tracking purposes, and based on reports in the chat room, I'll use a 0.79 fill on the puts, implying you should stop yourself out if they trade for 0.59. Our theoretical risk, commissions included, will be about $100. ________ UPDATE (June 28, 11:00 a.m.): Just to have something to shoot for, let me suggest offering four July 142 puts short for 0.82 against the July 146 puts we own for 0.79. Mark the order good-till-canceled.  Sure, this is greedy and overweaningly ambitious. But we are worth it!  My strong gut feeling is that the dumb consumer-spending story that catalyzed Wednesday's feeble short-squeeze is about to be overwhelmed by the hugely more important story that the Fed-engineered 'housing boom' is deader than Kelso's nuts.  In any case, the stop-loss I've advised limits theoretical risk to $100, commissions included.

Copper could fall a further 10%, to as low as 2.6955, before finding traction.  Check out today's tout for specific details, along with a risk-averse strategy for bottom-fishing at a lesser Hidden Pivot target either today or tomorrow.

If the futures close beneath this week's 2.9855 so-far low, expect further slippage to at least 2.9765, the next Hidden Pivot support in the sequence shown. Camouflageurs keen on bottom-fishing should look for an entry spot on charts of minute degree or less. Notice that the highest possible 'A' here -- a one-off, in this case -- implies a bear market low at 2.6955, a 9.4% fall from these levels. ______ UPDATE (July 1, 2:00 a.m. EDT):  The support noted above has held so far, but if the rally is the real McCoy it should be able to at least equal the 3.235 D target of (60-min) A=2.9855 (6/25); B=3.0935 (6/25); C=3.0155 (6/27).  _______UPDATE (July 8, 2:28 a.m. EDT): The rally appears to have failed from a high at 3.1790 that fell well shy of my benchmark.

Today's commentary describes exactly what must happen for Comex Gold to generate the most bullish signal we've seen in months. Specifically, the August contract must surpass the two labeled peaks without a corrective pause once the first has been exceeded.  That would create a bullish impulse leg on the hourly chart, with the implication that any subsequent pullback be viewed as a buying opportunity.  Camouflageurs, take note:  If the b-c pullback comes from a high just a tick or two above the 1254.30 peak (#2), that could provide a very subtle -- and therefore low-risk -- way to get aboard.