Friday, November 14, 2014

I'm struggling to give the benefit of the doubt to the bulls, but I can't ignore the fact that every minor abc rally since last Friday's explosive one has failed at its midpoint pivot. This is typically a sign that the dominant trend -- in this case, the explosive rally, to give it the benefit of the doubt -- isn't destined to go very far. A particularly telling aspect of yesterday's constipated price action is that the second attempted rally failed to get past the very modest peak of the first.  Clearly, there is no real buying interest here, even if the right headline could change that for a short while. For now, and still giving bulls the benefit of the doubt, we'll look for a finishing stroke to the 1179.10 target shown. A quick and easy move past it would of course put the 1194.10 target flagged here earlier in play. _______ UPDATE (7:08 a.m. EST): There has been no 'white knight' in the form of a headline felicitous toward Gold -- "Terrorists Nuke L.A." ?? -- and so the futures have taken the path of least resistance overnight -- i.e., lower. If there's any life left in them, they will turn from 1148.00; or if not there, from 1141.50.  Either of these minor Hidden Pivots (60-minute, A=1162.00 on 11/13 at 9:00 p.m.) can be bottom-fished with a bid a tick above the pivot and a stop-loss as tight as four ticks. ______ UPDATE (8:30 a.m.): Don't think that because the futures "only" exceeded the 1148.00 HP support given above by 0.70, that it's doing okay. It's not. Notwithstanding the so far $4.60 rally off the 1147.30 low, when a Hidden Pivot as clear as this one is exceeded by even five ticks, it is foretelling yet more weakness.

One step up, two steps back. At that rate, the 2055.25 rally target will never be reached. Actually, yesterday's gratuitous swoon did not alter the target or its viability, even if it may have reduced the odds of getting there by an infinitesimally small amount. To believe otherwise is to imply that the bull market begun in March 2009 is over. Maybe, but we're not betting on it. The futures are in fact a bull trade from these levels, since there's 22 points of implied upside profit potential -- worth as much as $1100 per contract -- to any trader nimble enough to a catch a ride. As usual, getting aboard will be easier at night than during the regular session, when this vehicle tends to be overtraded to death. To initiate the trade I'll suggest bidding a tick above the 2029.75 midpoint support shown, stop 2029.00. That's the lazy way to do it, but if you want to shave another tick or two of theoretical risk from this gambit, or if you plan on doing some size, you could try a 'camouflage' entry on a chart of lesser degree.  If you have a bit of Hidden Pivot knowledge but are uncertain about how to do this, check the chart that accompanies yesterday's Gold tout in the archive.