Gold

The riff-raff were out in force last week, frontrunning the 3751.30 target of the too-obvious pattern shown in the chart. Coy as ever, the futures turned lower from a peak that fell 7 points shy of the target, a well-defined Hidden Pivot.  Looking ahead, there are three possibilities to consider: 1) the gallimaufry gets sucked in by a marginal feint above the high; 2) the futures surpass the peak and keep on going; or 3) a significant correction paves the way for a new burst of exuberance. I rate #3 the most likely, although that wouldn't preclude a head-fake first to a marginal new high.  The healthiest and most bullish scenario I could imagine would begin with a pullback to 3520.70, a midpoint Hidden Pivot that could be bottom-fished aggressively with a tight stop. That number is based on the record 3714.00 high remaining intact. However, it would need to be adjusted by the incremental amount of any new top that occurs in the week(s) ahead. If a correction is starting that trounces the 3520.70 support, expect it to continue down to at least 3424.10, or to 3327.40 if any lower. These numbers would also be subject to a 1:1 revision if the futures take out last week's high. _______ UPDATE (Sep 22, 3:15 p.m. EDT):  It didn’t take long for gold bulls to show their hand. Today’s hyperdrive rally has set the December Comex contract on a path to at least 4128.10, a Hidden Pivot that lies 345 points, or 9%, above current levels. There is no room for debate or doubt, as far as I’m concerned. The move must be traded with small-pattern ‘triggers’ to limit risk, since powerful trends attract crowds that cannot but beat their own brains in and cause the rally to become diabolically evasive

Switching from the November contract to the December yields a somewhat higher target at 3751.20. Like the earlier target at 3719.70, this one looks likely to be reached. However, the odds of an overshoot have improved by a tad. That's because the futures spent a whole week consolidating just beneath the 'D' target, which would be a lot of work just to produce a marginal pop to a new high a mere $36 above the previous one. Regardless, we'll be ready to get short there cautiously, since the pattern is compelling, even if too obvious to predict a top precisely. UPDATE  (Sep 18, 12:08 a.m. EDT): Fed “news” caused the futures to head-fake to 3744.00, slightly above yesterday’s all-time high. Having frightened themselves with this breakout, traders then retreated $64 to leave our short offer unfilled. The target remains valid, although it is no longer a good bet for us.

Following a sharp run-up to new record highs earlier in the week, October Gold has begun a retracement that looks likely to continue down to at least 3522.40 [corrected], the midpoint Hidden Pivot support of the pattern shown; or to as low as 3433.90 if any lower. The pivot is a logical spot to attempt bottom-fishing with a tight stop loss.  Specifically, you should use a reverse-pattern trigger interval (TI) of 3.0 points or less on the 15-minute chart if the futures fall into the range 3521.20=3522.50. If you are unfamiliar with this tactic, you should use your own method of risk management to limit entry exposure to no more than $150 per contract. _______ UPDATE (Sep 5, 4:04 p.m. EDT): The futures dipped no lower than 3544 before taking off again like a bat out of hell. This left our niggardly bid choking on dust, but not without heightening our awareness that getting aboard to augment long positions will require more aggressive bidding. In the meantime, you should use 3719.70 as a minimum upside projection for the near term. A pullback to 3448.90, however unlikely, can be bought 'mechanically' with a stop-loss at 3358.60.

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.