Comex Gold Futures

Yesterday's flurry of selling looks ready to taper off, but there are too many sloppy posssible lows just beneath to gamble much on bottom-fishing.  Nevertheless, here are three places to look for the turn, if one comes, ranked most appealing to least:   1101.50, 1104.20 and 1103.20. Alternatively, a pop early in the session above 1113.90 would signal a bullish trend change, albeit a frail one. _______ UPDATE (10:21):  I'd say the selling is getting just a tad overdone, but to steal a line from Rahm Emanuel, a good crisis (i.e., the shock, yes shock, of learning that the economy is weak)  should never be wasted by Wall Street's most well connected shakedown artistes, namely those cagey bullion bankers.  Please note that I posted a 1057.90 minimum downside target in the chat room at 10:18, with April Gold trading around $1068.  The so-far low has been 1060.40 -- not quite close enough for us to infer the selling is exhausted. _______ FURTHER UPDATE (2:35 p.m. EST):  The futures have relapsed to a new low at 1059.00 -- probably close enough to consider the 1057.90 target achieved. Any slippage beneath the target, though, and we should infer more downside to at least 1052.80.  That's a Hidden Pivot, and you could bottom-fish there with a stop no wider than 0.90 points.

Around 11:30 p.m. EST, the futures were breaking down below the 1112.80 midpoint shown in the chart. This suggests more slippage to as low as 1110.10, its 'D'  sibling.  Night owls can try bottom-fishing at the lower support, stop 1109.20.  Be frugal if the expected rally from our target gives you the chance to substitute a trailing stop for the initial one, since it could be a painful drop if sellers take out the obvious supports.

I flagged a minor rally target at 1111.10 in the chat room yesterday afternoon, predicated on a push above its sibling midpoint, 1107.10.  Well, the midpoint is toast, the futures having climbed as high as 1108.80, but buyers have since turned skittish.  The pullback remains shallow so far nonetheless, and I would suggest that night owls loiter on the 1- and 3-minute charts to pick up on the kind of subtle ABC rally pattern with the potential to get one aboard without much risk. ______ UPDATE:  This morning's moderate rally exceeded the first peak mentioned in today's commentary (1110.90)  but not the second (1118.50). This is telling, as far as I'm concerned -- indicative of buying that lacks the power and inspiration to see its way to new all-time highs soon.  You might say that the Golden Groundhog has seen its shadow. _______ FURTHER UPDATE (12:01 p.m.): The second peak has now been exceeded, but it is a sign of this rally's lack of confidence that the move to new recovery highs required a B-C pullback on the hourly chart.  Now let's see how the futures handle the next Hidden Pivot resistance at 1127.80, my minimum upside target for now.  Traders should look for an entry opportunity on any pullback to 1113.60, the HP midpoint associated with 1127.80.

It would take a rally today exceeding 1105.70 to jolt the futures from their dirge.  Although the downtrend turned mellow ten days ago, it is a downtrend nonetheless, and no rally since then has been able to puncture the two prior peaks we require on the hourly chart to signal a meaningful trend change.  From a too -abundant selection of downside possibilities available to us at the moment, I discern only one, at 1062.50, that looks like it could be worth bottom-fishing. A stop-loss at 1061.75 is recommended. _______ UPDATE (1:40 p.m. EST):   Today's rally is robustly impulsive on the hourly chart and likely to provide buoyancy in the day's ahead.  There has been no correction so far on the hourly,  and the futures will therefore have a chance to double the power of the rally via the small push it would require to surpass two more external peaks, the higher of which lies at 1118.50.

Yesterday's slight breach of the targeted bottoming range implies more weakness ahead.  However, there are three places where the futures could turn and perhaps even reverse the downtrend:  at 1078.50, 1071.60, or 1069.50.  The first and last of these numbers can be bottom-fished with a tight stop-loss, but a breach of the lowest would shorten the odds of a downdraft to 1039.20., a key Hidden Pivot flagged here earlier.

Wednesday's moderate weakness changed nothing in the immediate outlook.  A print today above 1104.80 would turn the lesser charts bullish, and that external peak can be used to create a camouflaged entry opportunity if there's a shallow pullback from just above it. However, if the selling continues, look for a potentially tradable bounce from somewhere in the range 1074.50-1075.90.  _______ UPDATE (1:05 p.m. EST):  This morning's breach of the 1074.50-1075.90 bottoming range we've been using spells a 1039.20. A midpoint support at 1071.60 is all that stands between.  For the April contract, that means 1072.50/1040.00.

The mildly chaotic series of ups and downs of the last three days has produced, not dueling impulse legs on the hourly chart, but a preponderance of bearish legs that tips the bias negative for the near term.  Traders can still use a pullback today from just above 1104.80 to get long via "camouflage," since that would be the first speculative sign that Gold is turning around. Alternatively, a move lower would encounter potentially tradable support in the range 1074.50-1075.90.

Officially, February Gold is still headed down to at least 1074.50, but in practice it is putting up too respectable a fight for us to consider the target a done deal. Also in practice, the futures could create a potentially explosive impulse leg with a relatively minor thrust. Notice in the chart that there are three peaks, two of them external, that are spaced just $1.60 apart. An unbroken push surpassing all of them would be just the thing to energize bulls, but they would rampage on a breach of peak number four on the same push. Camouflage entry on a pullback from just above #3 might be possible, but any rally above #4 is bound to be noticed. The trick will be to use a hair-trigger buy-stop to enter if there's a quick, shallow b-c pullback from just above 1104.80.  Alternatively, if bullion falls, a minor midpoint at 1089.90 should evince support, although the pivot doesn't look sufficiently compelling to bottom-fish.

A print today at 1117.50 would turn all of the intraday charts bullish, but any less than that won't significantly diminish the odds of a fall to at least 1075.40 over the near term.  The first point at which I would turn speculatively bullish, however, would be at 1102.00, since a print at that price would refresh the bullish impulse on the lesser charts.  Because the futures appeared bound for a minor, 1102.20 target late Sunday night, traders should look for a camouflage entry opportunity that approximates the pattern shown in the chart. ______ UPDATE (10:30 a.m.): Bulls failed to leverage a move slightly above 1102.20 overnight, and the futures dropped back without triggering a buy signal. More recently, as of 10:27 a.m., they've slightly overshot a 1093.00 downside target and are rebounding sharply. The presumably gratuitous rally, currently at 1097.60, will start to look slightly interesting on the two-minute chart if its hits 1101.10