August 2011

The downtrend seemed to struggle late in the session in a so-far failed attempt to grope its way down to the 38.670 Hidden Pivot 'd' of the pattern shown. The picture lacks sufficient clarity to offer good odds for bottom-fishing at a 'p' midpoint or 'd' target, but we can still use 37.295 as a worst-case price objective for the near term. That number comes from taking the lower b-c pairing shown.  Alternatively, it would take a print today at 40.780 to turn the lesser charts bullish once again.

A minor correction target at 1712.50 sticks out on the three-minute chart, although the hourly says that any slippage could lop off an additional $9, sending the futures down to 1703.90 in search of traction.  The midpoint support -- now a resistance -- of the larger pattern lies at 1748.60, so any rebound to that number should be scrutinized by camouflageurs looking for tradable opportunities.  The same goes for bottom-fishing at either of the two downside targets, but the lower will probably be the safer bet. ______ UPDATE (8:42 a.m. EDT):  Although I won't assume subscribers caught this trade, it would have been easy to get aboard overnight, or later in the morning  at 1726.90, when the futures set up a 40-point thrust with the following 'camo' pattern on the one-minute chart: A=1710.90  (9:39 a.m. EDT), B=1729.50, and C=1722.20. Take a look at this one, since impulse leg and abc coordinates had absolutely everything we look for.

It seems like a terrible waste of energy to haul gold down by nearly $200, as has occurred this week, only to run it back up to new all-time highs next week.  Or will it be different this time?  Show of hands: How many of you think the POG will never, ever reach $2000 an ounce?  That’s what we thought.  Still, you can’t blame bulls for grumbling when DaBoyz decide to let the bottom drop out for a couple of days.  And that’s exactly what they did, presumably because they had grown wary of chasing gold who-knows-how-high. And make no mistake, it is bulls who caused this week’s carnage, including the $112 selloff that occurred so swiftly yesterday.  It’s not as though a bunch of sellers panicked and dashed for the exit all at once, trampling the strong hands who have sponsored gold’s rise from $250 an ounce.  No, it was a case of buyers simply going AWOL – for just a short while, we are pretty confident. There was no conspiratorial meeting in a smoke-filled room to arrange all of this, just a tacit consensus that gold was ready for a breather before it launches its inevitable assault on $2000. Yesterday’s “breather” should have scared the pants off speculators and investors who had grown complacent about the trend. But that is what bull markets are supposed to do:  punish bulls and bears alike. Otherwise, it would be too easy for all of us to get rich.  Thus do we see bursts of virile strength punctuated by devastating swoons. Losses are often recouped so quickly that even hard-core bulls are left in the dust, too bewildered and dazed to climb back aboard.  And yet, more than anyone else, they understand that the monetary forces that have been pushing bullion relentlessly

With the Gold Bugs Index scraping up against some bullish targets we've been using for a while, it's time to take a fresh look. Check out today's HUI tout if you want to have your bullish imagination stretched!

Some rally targets slightly above 600 that I'd identified a while back have been achieved, so it's time to stretch the bullish imagination once more.  Notice in the weekly chart that a Hidden Pivot target at 720.13 holds so many charms for the astute Pivoteer, to wit: 1) a coy, one-off point 'A'; 2) a spire-like 'B' that took on some daunting external peak as gracefully as the samurai who wields bamboo instead of steel; and, 3) single-bar coordinates at all three points that say "Hi there!" Nor should we fail to notice that the 541.69 midpoint pivot has been central to the oscillations of a presumptive accumulation that has been developing thrust for ten months. All we can ask for at this point is a feint just a few pips above last April's 609.22 high, since any qualifying pullback from that number would set up an entry opportunity just as this vehicle is finally breaking free of its mooring.

Yesterday's ostensibly fabulous rally suspiciously fell 1.50 points shy of the 1163.25 midpoint target I'd flagged here. A faint hint of chicken-heartedness, perhaps?  Rather than diss the effort prematurely, let's give them another chance today to get past the Hidden Pivot. Meanwhile, by hesitating almost precisely where we might have expected, buyers told us that the futures will go to exactly 1215.00 if and when they blow past 1163.25.  From there, all it would take to refresh the bullish impulse on the hourly chart would be a print at 1171.50, a tick above a peak made last Thursday on the way down.

We'll treat this selling with respect, since it should not have kicked in before the futures reached a middling Hidden Pivot resistance (unnoted here earlier) at 44.510.  The actual high fell 14 cents shy of that mark, and so the pullback should be regarded as especially dangerous if it racks up a second bearish impulse leg today on the hourly chart.  That would require a print below 41.455, and although it would be warning of more weakness to come, it could also create a buying opportunity at the as-yet-undetermined midpoint support of the corrective abcd.  Want to learn how to do Hidden Pivot Analysis yourself, and to kiss your guru good-bye? Click here for information about the upcoming webinar in October.

We'll continue to navigate each day with an eye on subtleties, since they'll never let us go far wrong.  For the moment, I would suggest using the 5-minute chart, scrunching the bars just a bit so that the 'visual noise' is transformed into shadowy areas that will distract us less.  Thus does a Hidden Pivot support at 1816.80 come into view -- but with the subtlest inference of a turnaround possibility on any upthrust exceeding 1849.60.  Bottom-fishing near the target is warranted, but it will call for camouflage.  Please note that the 1957.50 rally target proffered here yesterday was not affected by yesterday's decline, but we will nonetheless put it on the back burner for now.

Now that was impressive! An earthquake, of all things, shakes the Big Apple yesterday as it hasn’t been shaken since 9/11, and Wall Street never even breaks stride. Early reports suggested that some denizens of the Bowery were fearful the city might be under attack again.  They may have breathed a sigh or relief, however, when it became clear that the tremor was “only” a magnitude 5.8 earthquake, not a suitcase nuke. Before the Virginia-centered quake hit shortly after 2 p.m., a strong rally was already in progress from the night before, propelled by who-knows-what.  The temblor had no discernible on the markets, but it rattled big cities up and down the Middle Atlantic coast.  Breaking news pushed Hurricane Irene temporarily off the front page even as the mounting storm, with sustained winds above 90 mph, threatened to wreak havoc on the East Coast this weekend. Traders were unfazed by it all, however, and by day’s end the buying spree had become a runaway freight train, sending the Dow up 322 points. The mania steepened in the final hour, sellers evidently having realized that resistance was futile.  At the same time, Gold and Silver were getting pummeled, as so often occurs when the stock market behaves as though all were right with the world.  December Gold came off its overnight high by $93, hitting a low of $1819 in the late afternoon, while September Silver was off a whopping $2.78, or a little more than six percent.   As the Great Recession tightens its grip, we look forward to a resumption shortly of the buying in bullion and the continuation of the stock market’s penitent decline. Even so, we are forced to acknowledge that there is nothing in the technical picture that would preclude a very strong bounce here – to new highs, even. We said as