February

I wouldn't trust a rally if it starts the week, but neither am I inclined to bottom-fish until such time as the futures drop into 'voodoo' territory just below 2000. A dip beneath two January lows near 2004 is obligatory in any event, so let's watch for it to develop. If and when that happens, we may be able to find a reverse pattern trigger of small degree to catch a ride north.  Big, meaningless days seem to be cropping up with greater frequency lately, so we should resolve to remain unexcitable if anything interesting appears to be happening.

Gold has relapsed to the green line twice since triggering what had looked like a fine mechanical buying opportunity shortly before Christmas. It has done little since but tease, vex and antagonize, but if past is precedent, the tedium will be broken soon by a big rally to the 2184.80 target shown. That's no assurance that buying now, at levels beneath where we might have been long anyway, will produce a better trade. Since the futures remain in theory a good bet to rally back up to p=2086.40, we'll continue to look for ways to get aboard with risk tightly controlled. The entry risk for the 'textbook' 'mechanical' buy was $20k on four contracts.

Feb Gold's bounce from the green line took time to develop and is still not airborne. But the uptrend should at least reach the red line, validating the strong 'mechanical' buy signal that triggered on the pullback.  We are used to disappointment in this vehicle, and impatient about when the long-term bull market will once again shift into high gear. When it does, the next target of consequences above the one at 2184.80 show in the chart lies at 2273.60, a Hidden Pivot resistance derived from a continuous monthly chart where A=681 in 2008.

February Crude has been on a 'mechanical' buy signal since early December, when a pullback first touched the green line. The futures have since gone flat, dancing a jig a 'x' that suggests DaBoyz are in no hurry to let it loose. Geopolitical mayhem, including the targeting of tankers in the Suez, has had surprisingly little effect, and we hesitate to ascribe this to ordinary forces of supply and demand. But with China's economy weakening and the U.S. headed as always into recession, perhaps that is the explanation. Crazy world! In any event, the futures have pussyfooted at the green line for long enough that the buy signal, even if still theoretically valid, is no longer enticing.  Look for quotes to fall below C=64.21 over the next eight to ten weeks, pulling gas prices down below $3 in most states.

Two conventional ABC patterns are driving crude higher to, respectively, 75.80 and 77.48. Both of these Hidden Pivot resistances are shown in the chart, with HP levels that should be tradable. That implies that a pullback to the green line from Friday's high at our sweet spot would trigger an appealing 'mechanical' buy.  Also, a subsequent rally to the target could be shorted with a tightly constructed reverse pattern.  The larger ABC has a midpoint resistance at 73.44, and an 'x' green line at 72.26 that also would be buyable. Bottom line: Expect Feb Crude to continue higher, with no dips below C=69.28, to at least 77.48.

Silver futures fared worse than their gold counterpart last week, leaving a 'mechanical' buy triggered on December 29 hanging by a thread. The weekly low at 22.888 came within a dime of stopping out the trade, which I did not recommend. There is a voodoo number not far below the pattern's point 'C' low where bottom-fishing could be attempted with relatively little risk, but we'll nature take its course before we hatch any bullish plans.

The futures made a little headway toward the 2184.80 target with a marginal penetration of the pattern's midpoint resistance, p=2086.40. The target is slightly higher than the one given earlier, which used a one-off 'A' on the hourly chart. A pullback to the green line (x=2037.10) should be treated as a gift, since it would enable a 'mechanical' buy that looks quite fetching in prospect. The implied 50-point stop-loss would demand the use of a 'camouflage' trigger designed to cut entry risk by at least 90%. I will furnish timely details if possible, so be sure to check your email 'Notifications' if the trade gets close. _____ UPDATE (Jan 5): Sellers pushed the futures down to the green line, triggering a 'mechanical' buy with an unacceptably wide stop-loss at 1987.80. I did not put out a trade because there was no a-b segment clear enough to set up a lower-risk, reverse-pattern entry. We'll spectate for now, but with the goal of jumping in on the long side if the right opportunity comes along. 

Friday's selloff early in the session put Silver a tradable step ahead of Feb Gold, since it triggered a 'mechanical' buy at the green line (x=23.80) that has yet to occur in gold. There are no guarantees that the theoretically profitable bounce that occurred subsequently will keep on going, but the bullish signal would remain viable nonetheless, even if the futures slip beneath 23.80.  The signal offers no assurance of a further move to D=26.86, only the likelihood of a profitable one-level move from x to p.

Feb Crude came down hard after peaking last week 30 cents above a level where I'd suggested looking for a set-up to get short. There was no discussion of this in the chat room, so I have not established a tracking position. The nasty tumble is good news for motorists, since it implies that $3 gas will be with us for at least a little while longer, Here in Florida, and elsewhere in the U.S. (although surely not in California), there is a chance that the price of premium gas will fall below $3.  Depending on how sellers handle the 70.34 midpoint support, the weakness could continue down to as low as D=64.49.