Comex Gold Futures

The futures slightly bettered our 1065.00 rally target during the regular session, but they looked to be developing thrust for another leg up early Monday night. For targeting purposes the daily chart offers the most clarity, although the 1128.70 projection it yields seems a tad ambitious on so fleeting a correction. The HP midpont associated with that number is 1086.20, so let's make it our minimum upside objective for the near term. Perhaps your best bet for catching a ride north would be to buy the 'd' target of a corrective pattern. As you can see in the accompanying chart, Monday's low occurred within a few ticks of just such a target.

It would be premature to infer that the expected rally to 1134 got underway at Friday's lows, but we can take encouragement nonetheless from the fact that the thrust so far easily speared two "external" peaks on the hourly chart. The upbeat mood could change with the start of a new week, but as things stand, the futures looked to be revving for a push over the near term to at least 1065.00. That's a Hidden Pivot, and its sibling midpoint lies at 1057.90 -- equal to Friday's recovery high. Because the high is therefore doubly resistant, we should infer from its breach, if it comes, that buyers are feeling feisty.

Trust my bullish hubris, but verify. Putting aside the plunge to 983 that today's commentary says would be cause for worry, we should be on the alert for a breakdown from the first bearish impulse leg on the hourly chart. It has already occurred,  creating a whacky-looking pattern that points to 1039.80. That's my minimum downside target for this correction, since its midpoint sibling at 1050.30 has already been exceeded.  Alternatively, the most bullish thing that could happen today would be for the futures to thrust above 1068.40 without having gotten near 1039.80.  Whatever happens, I'll be keeping a very close eye on the smaller patterns so that we don't become complacent. _______ UPDATE (11:21 a.m.): Gold is rallying sharply, notwithstanding today's moderate strength in the Dollar Index (DXY).  The surge will invalidate the 1039.80 target if it exceeds 1060.80, and it will start to kick bear butt at 1061.80.

On the basis of yesterday's action, I wouldn't change a word of my last analysis, so here it is again: The 1074.50 target looms as an important test of bulls' resolve. It will have implications for the intermediate-term forecast, since an easy move past it will greatly shorten the odds of a renewed burst to at least 1134. There is no question about the pivot itself, and that is why I expect to see at least tradable resistance when it is first touched.  There is a secondary pivot at 1080.00, and we should take account of it as well.  Accordingly, let's stipulate that if 1080.00 is exceeded on a closing basis, long-term bulls should consider jumping back in without further ado. Alternatively, it would take a print at 1043.70 today or tomorrow to threaten the bullish outlook without wrecking it.

The 1074.50 target looms as an important test of bulls' resolve. It will have implications for the intermediate-term forecast, since an easy move past it will greatly shorten the odds of a renewed burst to at least 1134. There is no question about the pivot itself, and that is why I expect to see at least tradable resistance when it is first touched.  There is a secondary pivot at 1080.00, and we should take account of it as well.  Accordingly, let's stipulate that if 1080.00 is exceeded on a closing basis, long-term bulls should consider jumping back in without further ado. Alternatively, it would take a print at 1043.70 today or tomorrow to threaten the bullish outlook without wrecking it.

No change. An unhurried target at 1074.50 still looms -- both as a minimum upside objective, but also as a potential rally cooler. Because last week's high at 1062.70 exceeded the March 2008 peak, albeit by a mere 2.70 points, however, any pullback from 1074.50 should be regarded as a buying opportunity because it will be following a major impulse leg. If you're keen on catching the implied 18-point ride north, and doing so with some camouflage, you may need to make your move before the sun rises on New York, since that's the only time "camo" seems to be turning up. _______ UPDATE (9:45 a.m.):  Gold was getting dinged by the night shift, hitting a so-far low at 1052.20 that lay two ticks beneath a Hidden Pivot target. Just a bit lower, touching 1052.00, would leave bulls in mild disarray overnight.

By puncturing the 1060 peak recorded in March of 2009 last week , the futures demonstrated their appetite for bigger things -- presumably a push toward a Hidden Pivot at 1134 identified here earlier. First, though, they'll need to reckon with a lesser but still formidable hidden resistance at 1074.50 that has been drum-rolled here.  The less effort they display getting past it, the shorter the wait, probably, before bulls storm higher into new record territory.  Most immediately, the lesser intraday charts would need to see a print today at 1053.90 before we could be reasonably certain bulls are ready to kick butt. The speck of resistance at that number is shown on the accompanying chart, and it deserves the same level of respect we gave the one at 1011.90 that signaled the start of this nearly 50-point rally.  Any b-c pullback from just above it should be seized upon as a camouflage opportunity of the most felicitous kind.  In the accompanying chart, I've sketched out how a stealth entry might play out in idealized fashion. _______ UPDATE (9:43 a.m.):  There was good camouflage for boarding a $5 rally with very little stress, although it did not unfold in precisely the way shown in the chart. Instead, the A-B impulse leg (nicely visible on the 15-minute chart) topped at 1053.70 (at 5:15 a.m. EDT) before pulling back to 1052.10 for point 'C'.  Entry (aka, point 'X') would have come at 1053.30, tied to a target at 1056.80 that was ultimately exceeded by 1.50 points.

The 1074.50 target kept our confidence from wavering when gold recently came under (futile) attack. I still expect sufficient resistance at that price to warrant a position adjustment by long-term investors.  A tradable pullback  seems highly likely, and even if it is not a big one, odds are good that you will be able to replace any stock exited with shares acquired at a lower price.   If the futures trash the target, however -- and by "trash," I mean close above it the day they first hit it -- that would indicate they are gunning for a major Hidden Pivot at 1134.50 identified here yesterday.

A side note on gold, culled from Wednesday morning's tutorial session:  If the December Comex contract blows past the 1074.50 target that has served for a while as our minimum upside objective, the next likely stop would be 1134.50. This Hidden Pivot comes from the weekly chart, where A=750.00 (12/05/08).  My gut feeling is that 1074.50 will put up enough of a fight to justify profit-taking by long-term bulls.