Wednesday, June 19, 2013

Shortly before midnight EDT, the E-Mini S&Ps were taking the sort of phony, mincing steps lower that could set up a luscious buying opportunity for camouflageurs working the night shift. If you read this message in the wee hours, check out the chart to see if the hypothetical trade I've sketched out matched reality.

If you're a night owl looking for easy pickings, the one-minute chart looks guileless at the moment (11:22 p.m.). The staircase of external peaks along the downtrend shown should provide you with a secure foothold, the moreso if you use the green line at 1642.75 (aka 'D') as a place to start looking.  However, any chart above the level of the three-minute will probably yield an appealing-looking short. On balance, because the market seems unable to resist the siren call of Helicopter Ben, the best play from here is probably to fade sellers.  Keep in mind that we are still targeted on a minimum 1659.50 for this minor rally cycle.

With yesterday's moderate selloff, August Gold approached a ledge from which it could fall a further $135, to a longstanding target at 1219.40, before finding a good bottom.  'Camouflage' traders should position from the short side for now, but if you'd rather watch from the sidelines with fingers crossed, it should be with the hope that buyers push this vehicle above 1370.00 today.  That would turn the lowly one-minute chart impulsively bullish, which, although not much, would be a step in the right  direction. _______ UPDATE (4:05 p.m. EDT):  Nothing to encourage today; for in fact, the futures effortlessly crashed a minor HP support at 1353.60 that I'd flagged in the chat room. As noted here earlier, the 1219.40 bear-market target will become no worse than an even-odds bet if and when August Gold closes for two consecutive days beneath 1353.70.

[Note:  August Gold's $23 dive yesterday brought it closer to the 1353.70 red zone identified when the commentary below was published Monday night. The intraday low was 1360.20, but you should keep in mind that the futures would need to close below 1353.70 for two consecutive days to become at least an even-odds bet to fall to a longstanding correction target at 1219.40. RA] We’ll shun jargon for a moment and make it as simple as we can for bulls who have patiently stood by gold since it began its long dirge nearly two years ago.  Looking at the picture below of Comex August futures, the weight of selling in recent months should be apparent even to those who know nothing about charts. It projects a potentially important low at 1219.40 that would imply a nearly 12% fall from current levels. That outcome, our worst-case scenario for the next 3-4 weeks, would become an odds-on bet if August Gold were to settle for two consecutive days beneath the red line at 1353.70. There would be no guarantees at that point that 1219.40, a major “Hidden Pivot “support, would hold, but we would be prepared to bottom-fish there aggressively in any event, albeit with a very tight stop-loss.  More specifically, we would use our proprietary “camouflage trading” technique to hold theoretical risk as low as possible. If you would like more information about this method, which we use daily to trade and forecast, click here or consider taking a free trial subscription by clicking here. Looking on the brighter side, the very best that bulls could hope for over the near term would be a strong bounce from 1368.20, which lies just below. Although that number is a minor “hidden” support according to the technical system we use, it is the