GCG12

The bad guys had gold on the run Sunday night, presumably bound for the 1672.30 downside target of the pattern shown.  It would take nothing less than a pop to 1733.00 overnight or Monday to put bulls back on the offensive. The bearish target can be bottom-fished -- preferably with camouflage, but if you want to take the easy (but somewhat riskier) path, because the pattern has such gnarly appeal, you can bid 1672.40 with a 0.50-point stop-loss. Nimble traders can also look for a turn at 1685.70, the midpoint support of the lesser pattern shown with purple ABC coordinates.  Keep in mind that 'camo' shorts would be aligned with some even larger downtrends that point to either 1638.00 or 1633.10.  _______ UPDATE (11:43 a.m. EST):  Bottom-fishing at 1672.30 could have produced a small profit, but probably no worse than a scratch when the futures subsequently headed lower. There was a 12-minute bounce of $3.40 from 1672.60 at 8:42 a.m. (3-min); and a $3.80 bounce from 1672.00 that lasted just a few minutes. Since we were using an initial stop-loss of 50 cents, the bounce we'd anticipated need only have been $1.50 to give us a reason to take a partial profit on half the position.

I'll stay closely on top of the lesser charts so that we don't miss an explosive rebound from yesterday's plunge, but my gut feeling -- still -- is that the futures must come down to at least 1633.10-1638.00 to carve out a durable bottom. Regardless, we can get long with impunity and almost at will on any 'camo' opportunity that arises. The one shown in the chart accompanying today's commentary is just such a one, but there are others waiting to be leveraged based on impulsive thrusts exceeding any of the four numbered peaks shown.  If there is a fill thereof overnight that meets our rules for 'camouflage,' I'll establish a tracking position for your further guidance.  As of around 10:09 p.m. EST, the futures were struggling  to complete a minor abcd rally that promised to deliver 1725.90.

Today's commentary took notice of the most recent downleg's narrow failure to reach a compelling midpoint support. This is bullish as far as it goes, although we'll want to see further proof each step of the way. Most immediately, that would require a pop above the 1751.30 peak labeled in the chart. If the implied 'point B' peak were to fall below the slightly higher peak just to the left of 1751.30, it would set up an excellent 'camo' buying opportunity. I've sketched this out hypothetically to guide you (see inset) and will record and track a four-contract position officially if things play out more or less as sketched. _______ UPDATE (2:16 p.m. EST):  Gold head-faked its way to a fleeting peak at 1760 before collapsing more than $50 to a so-far low at 1707.80. There was an opportunity to get long via 'camouflage' for the final upthrust, but you'd need to have been nimble to come away with a profit. Now, my minimum downside target (5-min) is 1703.10, the Hidden Pivot midpoint of A=1760.50, B=1711.70 and C=1727.30.  My very strong gut feeling, however, is that the 1633.00 midpoint support of a larger pattern drum-rolled here earlier will need to be achieved before February Gold can try to find traction.

Because the turn came yesterday from just above the 1702.60 Hidden Pivot support where we were bidding, we hold no position officially. The futures look like they're about to fly or die, the corrective action since late September having gone on for too, too long. My trading partner John Boutiette, no slouch in the Hidden Pivot department, is focused on the trendline shown in the chart as a make-it-or-break-it level, and I would agree. A decisive push above the line, which comes in today around 1757.50, would doubtless send bears scrambling for cover. But until that happens, downside risk to as low as 1633.00 will remain.

We exited our long position Monday night for a small paper-gain of about $800. I mentioned looking for a new entry spot near 1702.60 in today's commentary, but my hunch is that a better one will come at 1633.00, the midpoint hidden Pivot support of the pattern shown. Bottom-fish 1702.60 using camouflage or, more simply, a 0.70-point stop-loss, but if it's hit, brace for another round of selling.  Alternatively, bulls could regain control with a pop today or tomorrow exceeding 1770.50.

We hold a single contract with an effective  cost basis of 1708.00.  A trailing stop would have gone into effect on a rally to  1770.00, but because the last upthrust fell $3 shy of that target, we've taken a $45 ride south on a fixed stop.  This was unpleasant but consistent with our intention of holding the position come hell or high water.  Even so, I'll now suggest using a fixed stop at 1716.10, since it would be a crime to take an actual loss on a position that at one point had shown a paper profit of nearly $6000 per contract.  If we're stopped out, we can continue to get long whenever it suits us, risking little or nothing in theory each time, until we finally catch the Big Ride we've been waiting for.  FYI, today's carnage targets 1716.40, $5 beneath the so-far low.

We're long a single contract with a cost basis of 1708.00 after imputing to it paper profits we made closing out three contracts earlier. Raise the stop to 1716.10 for now. A key test awaits at 1770.20, the midpoint Hidden Pivot of the large pattern shown. It can serve as a minimum upside objective for the near term, with a 'D' sibling at 1869.80, a major rally target given here earlier.  If and when 1770.20 is touched, we'll switch to a stop-loss that would take us out of the remaining piece of our position if a downtrending impulse leg is generated on the hourly chart.

We're long  two contracts, from an initial position of four, with an effective cost basis of 1733.00. Look to exit one of those contracts at 1758.00, a few ticks below the 'D' target of the 'camo' pattern we used to get on board. (Note: Initial entry was via the December contract, but we rolled the position intraday into February.) Since we're swinging for the fence on this trade, I'll suggest a 1733.30 stop-loss for now, one-cancels-the-other with the closing offer of one contract at 1758.00.  Upside potential is to 1869.80, the 'D' target of the big pattern shown. Its sibling p midpoint lies at 1770.20, so we'll make that our minimum upside objective for the near term. A two-day close above it would make 1869.80 an odds-on shot. _______ UPDATE (6:28a.m. EST):  We exited on the overnight high, 1758.00, before the futures dropped back by $10.  This leaves us with a single contract whose cost basis is 1708.00. A 1704.20 stop-loss is suggested for now.

The futures were stymied yesterday trying to reach a somewhat ambitious rally target at 1746.80 (see inset).  The 1725.40 midpoint has yet to be touched, but if and when the futures push above it, the implied $21 follow-through would become an odds-on bet. _______ UPDATE (Moments later): The futures have popped $4, to $1726, in a blink.  Camouflageurs should look for a point 'B' high that falls between 1734.10 and 1738.50 to leverage a low-risk entry, although there are some lower "external" peaks to work with as of this moment, 7:28 p.m. EST. _______ FURTHER UPDATE (10:18 a.m. EST): We initiated a four-contact long position around 8:35 a.m. EST, using a 1735.70 entry trigger.  The bullish ABC pattern was 'camo' perfection, with three single-bar coordinates and a point 'B' high that fell in the middle of the topping range I'd given.  Half the position was exited at its 'p' midpoint, 1741.80, leaving us with two contracts and a paper-profit-adjusted cost basis of 1729.60.  We'll plan on taking profits on an additional 25% of the position if and when the 'camo' pattern's 'D' target at 1754.00 is reached.  Use a 1729.50 fixed stop for now. Note: Using camouflage on the 5-minute chart, it would have been possible to get in as low as 1715.00, with an 8:05 a.m. entry and a 1726.70 minor-D target.  _______ POSITION CHANGE (2:21 P.M. EST):  The December contract has gone dead, so I'll recommend rolling into the February (GCG12) contract at a current price of around 1751.00.  Use a 1758.00 target to exit the third of four contracts initially bought.  The two contracts we are long have an effective cost basis of 1733.00 after imputing to them the paper profit on the two contracts already exited. If we cash out the third, it will leave us