GCZ11

The futures were stymied yesterday trying to reach a somewhat ambitious rally target at 1746.80 (see inset).  The 1725.40 midpoint has yet to be touched, but if and when the futures push above it, the implied $21 follow-through would become an odds-on bet. _______ UPDATE (Moments later): The futures have popped $4, to $1726, in a blink.  Camouflageurs should look for a point 'B' high that falls between 1734.10 and 1738.50 to leverage a low-risk entry, although there are some lower "external" peaks to work with as of this moment, 7:28 p.m. EST. _______ FURTHER UPDATE (10:18 a.m. EST): We initiated a four-contact long position around 8:35 a.m. EST, using a 1735.70 entry trigger.  The bullish ABC pattern was 'camo' perfection, with three single-bar coordinates and a point 'B' high that fell in the middle of the topping range I'd given.  Half the position was exited at its 'p' midpoint, 1741.80, leaving us with two contracts and a paper-profit-adjusted cost basis of 1729.60.  We'll plan on taking profits on an additional 25% of the position if and when the 'camo' pattern's 'D' target at 1754.00 is reached.  Use a 1729.50 fixed stop for now. Note: Using camouflage on the 5-minute chart, it would have been possible to get in as low as 1715.00, with an 8:05 a.m. entry and a 1726.70 minor-D target.  _______ POSITION CHANGE (2:21 P.M. EST):  The December contract has gone dead, so I'll recommend rolling into the February (GCG12) contract at a current price of around 1751.00.  Use a 1758.00 target to exit the third of four contracts initially bought.  The two contracts we are long have an effective cost basis of 1733.00 after imputing to them the paper profit on the two contracts already exited. If we cash out the third, it will leave us

We took the money and ran yesterday, exiting the last piece of a long position at 1709.00 on a stop-loss. The position was held overnight and produced a theoretical gain of $2200 for each initial four-lot acquired.  I have mixed feelings about bailing out, since one of these little rallies that we've boarded is going to be the one that launches the futures toward the 1977.70 target shown in the chart.  The 1756.40 p sibling of that number has already been smashed, and that is bullish, but our immediate enthusiasm should be tempered by the failure of last month's rally to push above any of September's peaks.

We've been using an important Hidden Pivot support at 1627.30 as a minimum downside objective, and my gut feeling is that it will hold.  If not, however, we could expect the selling to continue down to at least 1580.30, the 'D" target of a lesser pattern (see inset).  Alternatively, the most bullish scenario I could foresee that is based on Hidden Pivot logic would be an upturn from anywhere north of 1645.50, the midpoint pivot of the lesser pattern. Were a rally from within a point or two of that number evolve into an impulsive thrust on the hourly chart, it would be very bullish for the near-to-intermediate term.  In any event, if you are camouflage-equipped, you should plan on bottom-fishing near 1645.50. _______ UPDATE (8:36 p.m. EST):  Europe's latest bailout, this time for Italy, has goosed the futures into a steep climb. Use 1712.50 as a minimum upside target for now, keeping in mind that anything above that would suggest that plenty of buying power remains to be spent.  For camouflage purposes, you can try getting long if, on the 15-minute charts, the futures create an A-B impulse leg by exceeding the 1708.90 peak from last Wednesday without taking out the more obvious one at 1710.80.  This was occurring as we went to press. _______ FURTHER UPDATE (9:50 a.m. EST):  Using three single-bar coordinates, respectively, at 1693.10, 1709.60 and 1703.60, entry came at  1707.80 at around 10:45 p.m. Half of the  usual four-contract position was to have been exited at 1711.90, and a third contract at 1720.10, the 'D' target of the pattern.  We are currently long a single contract with a cost basis, adjusted for theoretical gains so far, of 1686.70.  We'll swing for the fences on this one, letting it run with a fixed stop for now

Yesterday's modest rally may have felt encouraging while it was progressing, but check out the hourly chart (inset) before you get too enthused.  My expectation is still for a drop to at least 1627.30, an important midpoint Hidden Pivot, before the December contract finds good traction.  More immediately, because we lack a crystal ball and are therefore always open to the unexpected, we would consider a thrust exceeding the 1714.60 peak-let shown heartening.  It might also create a set-up for a bull trade, since any b-c pullback from some high a tick or two above 1714.60 would make for good camouflage.

The benchmarks we've set for bulls to regain unambiguous dominance were ambitious, lying at 1747.70, or even more decisively, at 1833.00. Absent a determined push toward those numbers this week, we can expect the futures to continue their downward course to at least 1627.30, an important Hidden Pivot midpoint support identified here earlier.  Bulls would earn a respite, however, and the benefit of the doubt, if they can merely exceed 1695.20 today.  That would create a bullish impulse leg on charts of lesser degree, as shown.  Click here if you’d like to learn more about the Hidden Pivot Method.

An important Hidden Pivot at 1627.30 is my minimum downside objective for now, although bulls could regain the advantage with a quick surge to 1833.00, a tick above an external peak recording September 19.  More immediately, we could look for a far subtler sign of recovery on a print today exceeding 1747.70. The significance of this number is shown in the chart.

The bull market will face a crucial test at 1627.30, the midpoint support of the pattern shown. That is my minimum downside objective for the bear cycle begun last Tuesday from 1804.40, but you can use 1610.00 if it fails, since there are two possible 'A' starting points for the pattern (see inset). Bulls could still recover the advantage, but it would take nothing less than a quick pop to 1833.00, a benchmark referenced here earlier.  _______ UPDATE (9:31):  The overnight rally will have been little more than a cruel hoax if it can't hit 1768.10 today, fat chance. That's what it would take to undo the technical damage of yesterday's breach of key 'external' lows near 1720 recorded in the early days of November.  The nearest downside target is 1710.00, a minor midpoint pivot, but if it's breached, it's 'D' sibling at 1681.50 will be in play.

Set the snooze alarm to go off if the futures hit 1788.00 to the upside or 1744.90 to the downside, since anything between those two numbers is just noise. My short-term bias is bearish, since the futures have looked as though they couldn't impulse to save their life. My downside target is 1733.10, a Hidden Pivot support that you could bottom-fish with camouflage or, more adventurously, a small stop-loss.

Once again, in the throes of a superficially impressive rally, the futures narrowly failed to surpass an obvious external peak (1787.90), telegraphing the pointless ups and downs that followed. The look of things on the lesser charts is bullish nonetheless, and so I'll suggest using the 1813.50 target shown as a minimum upside objective for the near term.  Its 'p' sibling at 1787.20 has already been exceeded by a few ticks, and while that's encouraging, it is not quite sufficient to imply that a finishing stroke to 'D' is a done deal.