ARCHIVED COMMENTARY
Gold Shakeout:
Quick & Nasty?
For edition of May 16, 2006
Via the bulletin launcher, I disseminated a precise correction target yesterday for June Gold as well as a recommendation to buy bullion futures (or the equivalent thereof) aggressively if and when the target is reached. If the hidden-pivot support works as anticipated and the futures trampoline from it, the correction will have amounted to nine percent from recent highs. That’s a pretty steep move, occurring as it will have over the course of just a couple of days, but it would hardly be extraordinary.
Naturally, there is a possibility the June contract will reach the target and continue falling. But that would have little financial consequence for us, since our “buy” order will be linked to a very tight stop-loss. Besides, any such breach of the support would yield additional and possibly actionable information concerning the strength and likely duration of the pullback. Usually, we infer that if a pivot is exceeded even slightly, the trend will continue at least to the next. Keep in mind as well that a pullback to as low as $613, a roughly 16 percent drop if measured from the recent high, would not even dent the bullish case from a technical standpoint, since it would merely mark a 0.618 correction of the rally from mid-March’s lows near $540.
Selloff No Surprise
Fortunately, as nasty as this shakeout has been, it should not have caught any readers by surprise, since it is closely in line our warning less than a week ago under the headline “Yellow Flag Out for Gold Bulls”.
For the record, a perhaps even more urgent warning was disseminated in yesterday’s Touts concerning the stock market. Specifically, we zeroed in on a visually obscure but nonetheless crucial support for the Nasdaq 100 Trust (QQQQ), inferring that its breach, even if slight, would hold dire implications for investors. The way in which things played out on Monday was interesting to say the least, and I would strongly suggest that you check out my current analysis for the QQQs to see why. As a practical matter, we will be looking diligently for an opportunity to get short while we still can, leveraging this last gasp of bullish hubris for all it’s worth.
***
** Hidden-Pivot Seminar **
A subscriber has offered to produce a Hidden Pivot Seminar in the New York City area for those of you who were unable to attend my course in Colorado a while back. If you’re seriously interested, please contact me by e-mail, ranking your preference for August, September or October. I am also considering a West Coast seminar later this year or early next, so if you think you might attend, drop me a line
