Gold

Gold futures are ascending for the umpteenth time into a zone of multiple peaks that resemble the Denver airport. Are they finally breaking out? It would seem that way, but we should be cautious nonetheless, since every rally since last May has ended in disappointment. Gold hasn’t exactly fallen apart on the pullbacks, which added to our confidence in bullion’s long-term prospects. However, if this is a breakout we’ve been waiting for, we should be careful what we wish for, since it very likely means the 16-year-old bull market in stocks is over and that the Trumpster is in for some rough sledding. Looking just ahead, the futures should be presumed bound for at least p2=3584.30 if they poke decisively above the 3503.70 top recorded on August 8. _______ UPDATE (Aug 31, 1:40 p.m.): No change in my outlook, although it is interesting that gold is threatening to break out just as the stock market turned unusually sickly last week. My hunch is that the global economic crisis that has been brewing for decades will give bullion's bull market dramatic force. The first evidence of this we would see on the chart is a breakout above 3503.70, as noted above. If decisive, that would put the October contract on a path to 3719.70 We should know by the end of the week whether gold is just screwing with our heads yet again.

October Gold took off last week from a low that missed our stingy bid by $9, or 0.2%.  Friday's rally in bullion was of a piece with lunatic buying in stocks triggered by blather from Powell. However, I don't see gold as being on the verge of a melt-up like the one I'm predicting for stocks.  I've highlighted Friday's rally to show how insignificant it was amidst four months of meaningless dithering.  Yes, the move could conceivably turn into something worth watching. But there is little point in getting all het-up about it now.  When that finally happens, the futures should be presumed on their way to 3710.70.

October Gold's latest relapse has brought it down to within easy distance of the 3317.70 Hidden Pivot support I'd said would provide a risk-averse buying opportunity.  At the least, the target will have spared you the pain of trying to bottom-fish this brick as it began to fall from 150 points higher.  The pattern I used to project a tradable low is sufficiently gnarly that a turn from very near the target is likely.  Typically, I use 'reverse pattern' triggers to reduce entry risk to relative pocket change on trades that go against the trend. Since this tactic could require course corrections in real time, however, I can only suggest that you bottom-fish using your own risk-management methods. If the Hidden Pivot works, the futures should reverse from within no more than 4 to 5 points of 3317.70. If one assumes the turn will come from within a point or less of the target, it's possible to fashion a trigger on the one-  or three-minute chart that limits entry risk to less than $100 per contract.

Gold went all nitwitty at week's end on tariff news that threatened to disrupt the placid and predictable ho-hummery of the last four months.  On the daily chart, the move looks like just another peak to add to a series of three highs that have contained rallies since May. However, a closer inspection reveals that the new peak slightly exceeded the others. This means that gold has broken out, and although we shouldn't be surprised if it slips back into its accustomed wallow, we should treat a pullback as a corrective set-up for another leg up. Let's be ready to bottom-fish at 3410.70 just in case, since that is a midpoint Hidden Pivot support (a=3478.50 on 7/23) where a turn-up would be most likely to occur. A reverse-pattern trigger is preferable for entry, but you shouldn't need a stop-loss wider than 1.50 points. ________ UPDATE (11:13 p.m. EDT): A 1.50-point stop-loss would have gotten tagged shortly after sellers hit the red line, but a reverse-pattern trigger generated an entry signal at 3407.40 and a profitable exit on half at 3412.20 (60m, a=3418.00 on 8/8/). You're on your own if you're still in the trade, but don't be greedy, since the decisive breach of p was bearish. ______ UPDATE (Aug 12, 10:26 a.m.):  Gold is being made to look like garbage by sovereign buyers and bullion bankers who want it most. Most immediately, expect this manufactured plunge to hit 3317.70, a well-masked Hidden Pivot that can be bottom-fished with a tight reverse trigger.

Friday's lurch higher easily penetrated the 3344 midpoint resistance of the pattern shown, implying the uptrend will continue to at least 3425.40. Since the rally ended the day just beneath our sweet spot for setting up mechanical trades, I would strongly recommend tightly stopped bottom-fishing on a pullback to x=3304.30 (the green line).  If you get on board and make a few bucks on the way up, use a portion of your profits to cushion a stop-loss from 3425.40.

How are you coping with gold's endless dither? It just entered its fourth month, and there is not much to celebrate. Of course, everyone "knows" it will be moving higher. Just not now. Last week's tout warned subscribers not to get too excited if the futures should take flight, since no rally since April has shown any follow-through. And so it went yet again, with a fleeting surge to nowhere that was reversed just as quickly. Looking ahead, there is a magnetic Hidden Pivot target at 3695 that gold's handlers will not be able to put off indefinitely. Keep it in mind as we endure the anomie of markets that have been rigged by Hamptons capos for silent running.

The pattern shown looks too pretty not to work, and that means the futures are likely to fall to at least p=3276.40 (the midpoint Hidden Pivot support, shown as a red line) before they can attempt to surpass C=3389.30. True, the pattern lacks a one-off-point 'A'. But the well-formed A-B impulse leg, which exceeded two prior 'external' lows, more than compensates for this flaw.  Assuming the correction resumes in earnest this week, 3276.40 will be an opportune spot to try bottom-fishing with as tight a stop-loss as you can abide. Alternatively, if bullion's canny handlers gut my bearish pattern by popping the futures above C=3389.30, I wouldn't get too excited, since gold's rallies have gone nowhere since April.

Gold's tedious consolidation for a shot at 3681.60 is now well into its third month, sapping my enthusiasm for pretending there is something interesting to talk about. The August contract has tripped several profitable 'mechanical' buy signals since mid-May, but each required close tending to produce a win.  For the time being, the best opportunity we are likely to see would entail buying at the 'd' target of a reverse pattern on the chart shown, or perhaps the 60-minute. I will signal this if warranted.

The pattern shown in the inset sucks for trading because the 'a' and 'c' highs are nearly equal, and because the a-b leg did not surpass any prior 'external' lows. That's why I'll suggest paper trading this one unless you know how to craft a small-pattern trigger (aka 'camouflage') that can reduce the $8200 entry risk to $270 or less per contract. However, merely spectating should help us determine with greater confidence whether the soul-crushing tedium of the last two months is more likely to give way to a breakout, or a breakdown. Regardless, if the August contract touches the green line (x=3394.70), that would trigger a theoretical 'mechanical' short, stop 3477. If the hypothetical trade produces a profit, that will imply that bears have at least a small edge at the moment. ______ UPDATE (Jul 7, 1:45 a.m. EDT): The futures will fall to at least 3301.80 before they can find a foothold. Bottom-fish there with a tight rABC trigger if you are familiar with the tactic. Otherwise, I'd suggest spectating.