December 2009

I took my eye off the ball briefly when an abortive rally Wednesday night threatened to disrupt a promised pullback to at least 1090.20, but that's still the number to watch.  There's another HP support near there, as well as the trendline support shown in the accompanying chart.  A breach shouldn't be viewed as fatal, and in fact we'll be on the alert for signs of a devious breakdown, since nothing has changed to fundamentally undermine the bullish case for gold. Most immediately, the futures would need to pop to 1123.90 today to get back on a bullish track.

The healthcare circus on Capitol Hill continues to amuse, delight and entertain as Republicans maneuver to delay the alleged “reform” in every possible way. Pelosi thinks the GOP’s “mischaracterization” of the legislative package is what has been obstructing its passage.  In fact, were it not overwhelmingly obvious that a solid majority of Americans fear, despise and oppose this legislative turd, the Senate’s 39 Republicans wouldn’t have had a prayer of stalling it for an hour, let alone for days or weeks. Now it now looks as though they have a serious shot at derailing it until after Christmas, at least.  It will take some help from a Democrat, however -- Nebraska Sen. Ben Nelson, who is troubled by provisions that would provide public funding for abortions.  Nelson isn’t Harry Reid’s only problem. There’s also Joe Lieberman, who will allow the bill to come to the floor only with the so-called public option stripped out of it.  Minus this feature and some abortion goodies, left-wing Democrats don’t want the reform either, even if they oppose it for all of the wrong reasons. But for conservatives, nothing could be sweeter than seeing liberal extremists like Howard Dean calling for the rejection of the entire proposal. This aligns him perfectly with House and Senate conservatives who would like to start again from scratch.  Don’t Count Reid Out  Even so, Reid cannot be counted out to deliver something by Christmas, even if it’s the legislative equivalent of a third-trimester abortion.  Unfortunately, although Lieberman and Nelson appear to be hanging tough, we’d be surprised if they do not both capitulate after being offered some compromise that will allow them to save face. But we wish them well anyway, since they are all that stands in the way of what the Wall Street Journal labeled “The Worst

Today's tout for the Dollar Index includes a weekly chart that will help put things in perspective. Although a rally to the 83.33 midpoint shown in this chart would be widely viewed as a bull-market monster, in the context of the long-term trend, it would be no more than a corrective blip up to key resistance.

Hidden Pivot obstacles loom at 77.42 and 77.53, and we should be able to tell how much more buying power is left to drive this rally once we've seen DXY interact with them.  The latter number is doubly important, since it lies just above a key peak at 77.47 recorded on October 2.  Looking at a much bigger picture on the weekly chart, the trend could continue to as high as 83.33 without affecting the likelihood that the uptrend since March 2008 has been just a garden-variety bear rally. _______ UPDATE (12:23 a.m.):  DXY has blown the roof off resistance in night trading, taking out all three resistance points  noted above.  Since there has yet to be a pullback, the full power of the impulse leg begun from 74.27  on December 1 has yet to be revealed.

A Hidden Pivot just above, at 45.44, has the potential to be a bear-rally stopper.  Accordingly, we'll plan on getting short when the target is closely approached by buying four January 45 puts (QQQMS). They should be trading for around 0.90, but the best way to determine their fair price is to monitor the bid/asked spread when QQQQ gets within 20 or so cents of the target. I am not suggesting a stop-loss on this trade because it seems highly unlikely to me that the Cubes will simply blow past the target.  Mark this order good-till-canceled.

The futures looked bound for at least 17.905 over the near term, but if they take out that Hidden Pivot without much effort, the rally could go to 18.040 or even 18.120.  Some important peaks lie at 17.910 and 18.050, and shorts would be toast if they are exceeded by an unpaused thrust by tomorrow.

Wednesday's wildly idiotic price action reminded us of the days when the bonds were wont to act as though they had to do "something" nutty every time the Fed came out with a "more-of-the-same" announcement.  Yesterday brought more more-of-the-same "news" from the Fed, and gold traders went nuts for an hour before it dawned on them that the central bank's plan to keep administered rates exactly where they are was not exactly earth-shaking news.  Later in the day, around 7:40 p.m. EST, February Gold had recovered completely from its swoon and was poking above the spiky intraday high at 1142.50.  A no-brainer target at 1147.30 can serve as a minimum upside objective for Wednesday night (see chart).  That would get the futures past the first of three peaks immediately above, but at least one more peak would need to be smashed to imply that the correction is over.  Above 1147.50, the next interesting pivot is  1155.00.  ______ UPDATE (12:32  p.m. EST):  The futures are down $10 from their highs in deference to tonight's surge in the dollar.  The pullback  is not yet impulsive on the 15-minute chart, even, so you could say that Gold is holding up pretty well so far under the circumstances.  The 1147.30 target that had looked so promising would be negated by a print below 1129.30, a mere dollar beneath tonight's so-far low.  FURTHER UPDATE (3:10 p.m. EST):  The 1090.20 target I proffered here a while back is still the one to care about. I said I wouldn't touch February Gold until it hit that price, but an 1102.30 Hidden Pivot support that I posted in the chat room was too tempting to pass up. I advised exiting this scalp-trade at 1106.50, but the rally carried an additional $4, to 1109.60, before gold resumed its familiar trajectory.     ow gold minimum , as I originally had

With Time magazine’s momentous selection of Ben Bernanke as Person of the Year, there were reports of people dancing in the streets in, um, Oslo.  Leave it to Time to figure out a way to make Henry Luce roll in his grave while the magazine tries to outdo rival  Newsweek in the race to claim publishing’s trophy for irrelevance.  While the understandably isolated delirium over Bernanke’s selection subsides, we thought we’d update the prospectus on gold with a contribution from a Rick’s Picks subscriber who has requested anonymity.  His thoughts run counter to the popular notion that investors can count on steady buying from China to lend buoyancy to bullion quotes. As the writer makes clear, China may have a mind of its own, and it will not always be perfectly aligned with the thinking of gold bulls.  Here we go:  While many precious metals bulls have been insisting for months that China is gold and silver's greatest ally, we saw first-hand last week exactly how capable the Chinese are of pulling a rabbit out of a hat when need be. Much of the finger wagging for the recent decline in the price of gold - as usual - has been directed towards those dastardly Americans. This time  around, the gold bull's disdain had to do with the recent US jobs report on December 4. Yes, the numbers - which are unquestionably fabricated - had an impact on the precious metal markets; nevertheless, those gold bulls who insist upon using the adage of "see no evil, hear no evil, speak no evil," where China is concerned are fooling themselves and living in a sugar-coated dream world.  A full two days ahead of the jobs report, Chinese officials called gold's recent surge a "speculative frenzy." Yet, it is the jobs data that

When looking for camouflage entry possibilities, we should bear in mind that the opportunity manifest in a small pattern will never exceed that of the larger pattern surrounding it. This was a concern when we considered charts for February Gold and the E-Mini S&Ps. Both said “higher,” but not before corrective patterns in each had run their course. We also looked at T-Bond futures and found reason to wait for further, significant weakness before we step in to buy.