Rick Ackerman

Given the constipated action of the last two days, we shouldn't expect much during the rest of this holiday-shortened week.  The 240-minute chart shown remains bullishly impulsive nonetheless, and I therefore would not recommend attempting to impede the flow too aggressively. Although the futures were flatlining Tuesday evening, night owls undaunted by tedium may be able to leverage the external peak at 1609.75 that is discernible on the 3-minute chart (2:00 p.m. EDT).

Despite yesterday’s weakness in gold, technical signs remain as bullish as they’ve been in months.  In the chart below, notice how the rally off last Thursday’s low exceeded two prior peaks (#1 and #2). This surge represents a bullish “impulse leg,” according to our Hidden Pivot System, and the last time one occurred, back in April, it predicted a $100 surge. This time, however, the impulse leg looks even more promising, since the two peaks exceeded were more challenging than the ones surpassed last spring. The implication is that once the rally has been fully corrected, August Gold will take another leg up that is equal to or greater than the $81 leg just completed.  In theory, however, before this happens, the futures would need to pull back by at least $16 to be fully recharged.  Tuesday’s $28 pullback more than met that requirement, and although there could be more backing and filling in the days ahead, from this point forward August Gold is good to go for an $81 thrust. To be sure, there are cautionary flags out at the moment, since the recent bear market low at $1179 exceeded a key Hidden Pivot support of ours by $40.  This suggests that weakness will return during the summer. However, we’ve learned to keep an open mind concerning our technical indicators and to never chisel our expectations in stone. More immediately, though, gold looks like a bull play on a time horizon of about 5-7 days. Assuming yesterday's 1238.30 bottom survives, the countdown for the $81 thrust would begin at exactly 1259.10.  Getting long at that price would still be risky, however, since placing a stop-loss in the obvious place – i.e., beneath yesterday's 1238.30 bottom -- would imply  entry risk of more than $2000 per contract. In practice, we

Bears shouldn't get their hopes too high just because the futures closed well off yesterday's peak levels. Settlement was actually toward the middle of the day's range, but not before buyers had put in a top that slightly exceeded June 20's 1619.50 'external' peak. This means they finished the day correcting a bullish impulse leg that seems likely to beget a C-D follow-through.  The action shortly after midnight (ET) looked promising for night owls, but you'll need to drill down to the 2-minute chart to find an 'external' peak subtle enough to work for camouflage.  It lies at 1612.50 and was created on July 1 at 3:28 p.m. EDT. _______ UPDATE (3:26 a.m. EDT): The set-up described above played out more or less as described (A=1610.50 at 1:54 a.m.; B=1613.00 at 2:14 a.m.), but it fell a tick shy of its 1614.50 target and would have produced a break-even trade at best. The futures subsequently dove 5 points, presumably gratuitously, providing ample reason for night owls to call it a day.  DaBoyz will have to content themselves with screwing the pooch for another six hours, when there may be a mote of 'good' (i.e., other-than-bad) news to exploit.

Newmont's explosive burst yesterday was the most promising impulse leg we've seen in a while -- a nearly 12% price gain in mere hours. Buyers pulled back on the close, presumably to keep the stock from running away before they load up. The midpoint pivot at 30.79 (red line) will pose a key test, but if it's touched, a fresh impulse leg would become manifest on the hourly chart (see inset). Notice that that would put the stock just above the look-to-the-left peak at 30.77 recorded June 20 on the way down.  A b-c pullback from just above it could set up a nice buying opportunity. However, because it could be perceived by others as a breakout, buyers could rush in quickly.  To leverage this set-up, assuming it occurs as I've described it, I'd suggest zooming down to the 1-min chart and buy-stopping your way aboard at the 'x' entry point of the small pattern.

The chart that accompanies today's August Gold tout shows why Monday's weak retracement is potentially very bullish. Indeed, it could set up an excellent buying opportunity if things play out in the way I've sketched them.  Traders, especially night owls, should check it out.

Hawk-eyed Pivoteers who scrutinized the chart displayed here yesterday may have noticed that the overnight retracement that primed gold for Monday's strong rally did not quite pull back into the correction window. This means that the bullish impulse leg begun from last Thursday's low at 1179.40 is still technically intact and lacking a b-c leg so far. This is of course bullish -- potentially very bullish -- but we'll need to see how the corrective phase plays out to get an accurate read. Camouflageurs, please note: If things should develop as shown, the 'x' trigger could yield a stellar buying opportunity. ______ UPDATE (July 2, 7:12 p.m. EDT): Today's commentary notes that the $14 selloff did not diminish the bullish look of the 240-minute chart shown.  In fact, the pullback is now sufficient for us to consider the August contract sufficiently recharged for a thrust to as high as 1319.80.  Pivoteers will recognize that that target will remain valid only if Tuesday's 1238.80 low endures. It might not, but I've refreshed the chart so that you can see  nonetheless the pattern that is driving the buying.

Monday's short-squeeze was deftly engineered, since DaBoyz were able to bring the Indoos back to the approximate midpoint of the intraday range. This is a continuation pattern, and the effect is to leave bears on the ropes for yet another day of body blows.  The good news -- for bears, that is -- is that all of the price action so far has occurred in the context of a larger, bearish impulse leg created when last Monday's bottom exceeded two prior, significant lows.  Now, if bulls are about to seize control in a big way, we'll know it by the way in which the next down-leg interacts with whatever midpoint Hidden Pivot occurs. This is shown hypothetically in the chart,  and if things play out similarly to what I've sketched, the 'p' support will be a good place to bottom-fish aggressively with the usual, microtight stop-loss.

[The apex of yesterday's 174-point short squeeze left our bearish option position (see below) undisturbed, since the put options we'd have exited on a 59-cent print traded no lower than 61 cents. When the flood tide receded, the puts rose to end the day at 81 cents. If DaBoyz should attempt to leverage Independence Day seasonality yet again, we're prepared to blow out the position for a probable loss of $100, commissions included. RA] A bearish option trade that we recently recommended in the Diamonds illustrates how Rick’s Picks attempts to establish short positions that are essentially riskless, or very nearly so, in a rampaging bull market. Last Tuesday, with DIA trading near 148.78, we told subscribers to buy put options if this popular trading vehicle, a proxy for the Dow Industrials, rallied to a Hidden Pivot target at 150.39. Here is the trading “tout” exactly as it went out to subscribers that night: The 150.39 rally target shown [click here] is a tempting spot to try shorting, since the ABC rally pattern has many characteristics that we like. Accordingly, I’ll recommend buying four July 146 puts if DIA trades above 150.35. Stop yourself out if the puts trade for 0.20 less than you paid for them. You could also offer 400 shares short at 150.37, stop 150.47.” The 10-cent stop-loss we advised on the stock may seem extremely tight to experienced traders, but it turned out to have been a little wider than we needed; for in fact, the Diamonds peaked on Thursday’s opening bar at exactly 150.42, three cents above our target. This is shown in the chart above.  In the chat room moments later, several subscribers reported buying the puts for 0.79, so that is the price we used as a cost basis for our naked-short position.

We hold four July 146 puts for 0.79 and are attempting to short four July 142 puts against them for 0.82.  If successful, that would give us a vertical bear spread with a virtually riskless shot at a $1284 payoff. You should adhere to the 0.59 stop-loss on the puts, however, since any rally strong enough to trigger it is likely be the sort of brute we should not want to tangle with. Our loss would be about $100, commissions included.  That's more loosey-goosey than I usually advise when we've got a put position with a profit that we could nail down, but the trade feels like it's worth gambling on. _______ UPDATE (July 2, 12:53 p.m. EDT): This morning's low on the July 146 puts was 0.59, so we exited the position for an $80 trading loss.