Within the next day or two we should have more evidence to tell us whether the rally begun in late December is the real deal. If bulls have any moxie, they’ll push this vehicle above the 1223.50 peak (see inset) without much ado. Still better would be an unpaused thrust exceeding the second, 1236.10. Our rule for bull markets is that each completed upthrust should pierce an old high or a layer of supply. The effect is to refresh the bullish energy of the daily and intraday charts. That’s the least we should expect of a rally if we are to presume it has sufficient energy to continue. Another point to consider: Although the futures have tripped a theoretical buy signal tied to a 1445.90 target that sits well above these levels, imagining gold at those heights is not what should inform our trading right now. That would amount to reckless optimism; our strategy should be skeptical and cautious. Practically speaking, it suggests we will need to wait for a mechanical buy signal on a pullback to the green line before we jump in. Even then, the $8000 per contract initial risk this would imply impels us to substitute a ‘camouflage’ entry strategy once the signal is given. However we might proceed, theoretical entry risk should be held to no more than $100-$150 per contract. _______ UPDATE (Jan 18, 9:47 p.m. ET): Gold significantly underperformed relative to silver today — enough so that we should regard it as a divergence. The intraday high fell $3.60 shy of the ‘external’ peak at 1223.50 noted above, falling shy of a bullish impulse leg that would have confirmed silver’s unambiguous lead. In fact, the minor trend in gold is bearishly impulsive, with a point ‘a’ high at 1215.80 that could be used to set up a short sale. We’ll forego this tactic, however, and simply watch to see whether gold’s immediate, bearish potential is fulfilled. ________ UPDATE (Jan 19, 10:07 p.m.): Gold has spent the last 12 hours recovering from a moderately oversold low achieved in the early going today. The immediate target is 1208.60, and thence 1210.60, but it will take a push above that last number to provide us with reason for further encouragement. If bulls return in force by day’s end, they’ll be shooting at 1226.90 (15-min, A=1187.50 on 1/13) next week. _______ UPDATE (Jan 20, 1:16 p.m.): The futures have in fact topped three ticks above the 1208.60 target given above. Let’s see if they can base for another leg up.