ARCHIVED COMMENTARY
A Gold Support
Lies Just Below
For edition of January 08, 2007
We caught the exact low of gold’s $23 plunge in the chat room Friday with a 603.00 projection, but I wouldn’t count on it to hold. The good news is that a promising Hidden Pivot support lies not far below it at 594.50. It looks capable of engendering the turnaround so many have been patiently awaiting for so long. If the action in February Gold plays out as expected, it would correspond to a 40.94 downside target in Newmont Mining that was flagged here recently.
(Click on image to enlarge)
Even though the bear cycle apparently has further to go, we jumped on DROOY shares nonetheless, since the stock has been making its way down to a Hidden Pivot target at 0.76 for quite a while. Officially, we bought a thousand shares at 0.78 on Friday, using a relatively wide stop-loss. A trader in the chat room reported buying 100,000 shares at the low of the day, 0.76, and this may have played a role in the stock’s subdued histrionics near the end of the session.
The Usual Idiots
We also nailed Friday’s low in the mini-euro within a single tick, although the trade I’d advised was timed out. The day's first pass at the euro's Hidden Pivot target – a brutal 70-tick plunge that occurred in the space of mere minutes – failed by nine ticks to reach it. Thereafter, it took a little more than two hours for the futures to work their way down to the pivot, 1.3025, making their actual low at 1.3024. I didn’t mention it in the chat room, but the resilience of the low could tell us whether the dollar’s corresponding strength – and therefore gold’s ongoing weakness - is likely to continue. If the low is easily breached within the next day or two it would imply that there are still plenty of euro sellers out there.
Regarding the stock market, Friday’s sell-off can be ascribed to the usual bunch of idiots responding to stronger-than-expected (by whom?) payroll numbers. If the Fed “easing” junkies want to be reassured that the economy is not merely weak but verging on collapse, they need only procure a copy of The Richebächer Letter, which spells out exactly why this is so in language that only an economist schooled in the U.S. could fail to understand.
Cooked Data
My question above concerning who was expecting those payroll numbers was rhetorical, but fellow guru Dan Norcini has come up with an interesting answer. Dan writes as follows: "My view on these jobs reports is that the data are so unreliable as to be comical. There was not a single player expecting a number of the magnitude we got this morning simply because of extrapolations from the various ISM surveys and Challenger Grey reports as well as the other private firms issuing numbers.
“These firms get paid by their subscribers to produce data that is accurate and reliable so as to provide those clients with information to use in financial planning and strategy. How these private firms whose businesses rely on accuracy could be so far off the mark is something that few seem to stop and think about before blindly accepting the wild numbers from the same Feds who have so cooked the CPI that it has become meaningless and a waste of the trees that go into making up all the pencils used to create and scribble it.”
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London Seminar
A Hidden Pivot seminar in London appears likely, judging from the strong initial response. If you’re interested in attending a two-day class there, probably sometime in the spring of 2007, please let me know via e-mail, including your contact information. The cost would be $1,500 USD.
