Monday, October 20, 2014

Friday's wallow altered gold's immediate prospects only slightly, although bulls might wish by now that those prospects, which are mildly bullish, be realized sooner rather than later. For the purpose of analysis, and to get a firm handle on Monday's odds, we'll use the small but very predictable pattern shown. If buyers' hearts are in it, they "should" be able to push this mule above the 1246.20 mipdoint pivot shown. As always, a decisive breach would tip the odds in favor of a continuation of the trend to its 'D' target -- in this case, 1260.30. ________ UPDATE (October 22, 1:50 .m. EDT): No change, although I should note that anyone who bought the pullback yesterday to the 1246.20 midpoint pivot could have made as much as $900 per contract on the scalp.

Europe’s all-too-predictable relapse into recession is gathering force, threatening not only the pipe dream of economic and political unity, but eroding grandiose illusions that have helped prop up the world’s financial house of cards. The unwillingness of France in particular to play by the EU’s -- i.e.,  Germany’s -- rules appears to have doomed the EU dream. The idea of a borderless Europe bound by a common currency and a shared desire to forever banish war from the Continent was a lofty one, but it was mired from the start in deeply rooted political animosities, grass-roots skepticism and bureaucratic overreach. Now these problems, along with a great many others, have turned the EU project into a Tower of Babel. A million pages of meticulously codified EU rules might as well have been written in cuneiform, so inscrutable and arcane have they become. And useless as well. France’s prolonged economic death rattle has been made possible by running annual deficits larger by half than the 3% “allowed” by Brussels. And now, channeling  de Gaulle for what could turn out to be France’s last hurrah, the French have flouted Merckel’s authority, and common sense itself, by proposing to remedy the problem by hiring more government workers and expanding tax breaks.  Portugal, Greece, Spain and the other deadbeat rabble have been cheering them on, and why not? They think they have nothing to lose -- that Germany is the only country with any skin in the game. Their folly is about to be laid bare, however, unless Germany gives in and allows Europe’s Central Bank to monetize the collective debts of Europe Fed-style. Deflation at Critical Mass This is simply not going to happen. Germany, and even the deadbeats, know it is too late for such remedies. With Germany sliding into recession, full-blown

We'll soon learn whether a relatively quiet and news-less weekend -- Ebola aside -- has quelled the short-covering fever that gripped the last two sessions. The futures appeared bound for the 1902.50 target shown when the closing bell imposed a recess on a possible bear market's first short squeeze attempt worthy of the name.  A breach of the target would necessitate sliding our abc coordinates north in order to project a new one at 1911.00. Night owls may have the best opportunity to board the implied rally with risk tightly under control, but thereafter a tightly stopped short from 1911.00 would probably be less risky than one from 1902.50.