Gold

As the new week begins, Comex Gold is taking its wonted Sunday night pounding, down as much as $28 at the so-far lows.  That put the futures within $15 of a test of mid-April's sodden lows -- a test that we'd said here earlier was all but assured.  I'd identified bear-market targets at 1352.90, or possibly even 1218.60 if any lower, but it's time to mention another at 1190.40 that comes from a lesser pattern shown in the chart (see inset).  Bulls could take encouragement, however, from a rebound today that exceeds 1367.30, since that would create a bullish impulse leg on the hourly chart. It would be the first, faint bullish sign generated in nearly two weeks. _______ UPDATE (12:11 p.m. EDT): Looks like the lunatic fringe is pushing gold for a change.  The manic rally of the last hour is insignificant on the daily chart but bullishly impulsive on the hourly. To see what it's made of, we'll need to monitor the follow-through (C-D) leg that begins with A= 1349.30 at 10:00 a.m.   From a camouflage standpoint, an excellent buying opportunity was signaled at 1363.80 (11:57 a.m.). Check out the 3-minute chart if you want to see why.

Gold's reversal of a $30 selloff yesterday showed promise, especially since the low had not quite reached my 1363.90 downside target. However, whatever bullish conclusions we might have drawn are getting trashed early Friday morning as the futures head for a likely test of the 1368.00 low. Bulls could regain control with a bullish thrust today exceeding 1397.00, but failing that, the futures will remain a good bet to continue lower for a retest of the much more important low at 1321.50 recorded in mid-April.

A reversal from 1363.90 is probably the best bulls can hope for at this point, but if the selling picks up and the futures close beneath 1352.90 for two consecutive days, you should brace for a slide all the way down to 1218.60.  The chart appeared here recently, but I have updated it to reflect a picture that has darkened somewhat with the accelerating selling of the last couple of days.

A 1405.60 downside target noted here earlier is close to being achieved.  Traders can try bottom-fishing there via camouflage, but if you'd prefer the lazy man's approach, a straight bid at 1405.60 can be used for a single contract, stop 1405.20.  If the stop is hit, expect more downside to at least 1390.80, another Hidden Pivot support you can use to get long speculatively. ________ UPDATE (9:19 a.m. EDT): Gold turned higher from 1404.60, a point below our target.  On the 1-minute chart, the first valid camo entry signal came at 1410.90 (9:02 a.m.), but the futures have turned surly since after failing to reach the pattern's 1413.40 target before dipping below 'C.'  If you had done this trade by-the-book, you'd be out now with a small profit.  _______ UPDATE (11:51 a.m.): Gold has relapsed to a so-far low at 1389.00, affirming an even lower, longstanding target at 1350.  Regarding the relapse to the lower target given above, it was anticipated in the chat room via thefollowing post at 9:30 a.m.: My hunch is that Gold's nastiness [this morning] portends more slippage to 1390.80 over the near term.

One must drop down to the 30-minute chart or lower before yesterday's rally begins to look even a little bit interesting. Even then, the move is not bullishly impulsive, since it failed to exceed any true external peaks. That would require a print today above 1449.60, an 'eternal' high recorded May 10 on the way down. I'd set a snooze alarm there, since any less would be mere noise.  A pullback from a tick or two above it would be tradable, but be alert to the possibility that the 'x' trigger could come up very quickly.

The chart is intended to remind you why we've been expecting a relapse to at least  1352.90. Using a finer chart, the target has been adjusted slightly upward from the 1350.50 previously given.  You should note as well that if the target, a midpoint support, fails to hold, its 'D' sibling at 1218.60 would become our minimum downside objective.  There is a second bracket of hidden supports that could come into play that derive from an alternative A:  p=1366.20/D=1246.00.  As always, a discernible bounce precisely from p would confirm the pattern and its D target.  ______ UPDATE (9:50 .m. EDT) June Gold was a short Sunday night from 1437.60, based on the pattern (90-minute) A=1461.20 (May 10, 4:30 a.m.); B= 1418.50 (May 10, 10:30 a.m.).  With p=1426.90 already decisively breached, the 1405.60 target of the pattern is no worse than a 50-50 bet over the very near-term.  That last number can be bottom-fished -- but only using camouflage, since it closely coincides with a too-obvious structural support recorded on April 23.

Traders should ponder the many beautiful crags and crevices on the 18-second (!) chart accompanying this tout.  Each is potentially a handhold for us -- if not exclusively, then certainly in a way that limits competition so that we will have entry points that are relatively easier to exploit than in the past. Charts divided into sub-minute intervals are a new Tradestation feature, and their appeal is dazzling. For me, at least, the hard part will be getting used to trading from the short side, since our strategies in gold and equity shares have generally had a bull-market bias. If you're signed up for this morning's weekly tutorial session, please come prepared to trade.  If not, and the art of 'camouflage' trading sound appealing, consider taking the Hidden Pivot Webinar in June. For further details click here and use the code 7D5629 for a $50 discount.

The chart shows yesterday's snoozefest in a context that could ultimately prove tradable for night owls. Assuming C=1455.40 holds, the D target at 1494.50 can be shorted with a stop-loss as tight as three ticks.  There's also room for some buying on the way up, predicated on an impulsive thrust that surpasses at least two of the many 'external' peaks available.  As always, an easy move past D would imply that there is additional buying power remaining to be spent. ______ UPDATE (10:15 a.m. EDT):  This dog got no lift whatsoever -- just a couple false starts from a lower point C at 1456.80 -- before it headed south. Nevertheless, the bad guys will have trouble pounding it much lower than the so far intraday low of 1440.50, since structural support from a 5/1 low at 1439.70 is nigh.

In an interview I did yesterday with Al Korelin, I identified 1350.50 as a minimum downside target for the near term. It is the 'p' midpoint support of the pattern shown, and if it is decisively breached we could be looking at 1216.20.  Regardless, I would suggest aggressive bottom-fishing either via camouflage or with a very tight stop if the higher number is reached. (FYI: I expect a very precise hit.)  Since we never want to chisel a forecast in stone, leave room for a bullish outcome, predicated on an uncorrected upthrust exceeding 1495.00. That would create a robustly bullish impulse leg on the hourly chart with follow-through potential to as high as 1520.50 over the near term.  _______ UPDATE (10:55 a.m. EDT): Despite today's moderate strength, I'm still calling for a correction down to 1350.50, basis June Comex. However, today's rally is encouraging, and if the futures were to hit 1495.10, it would generate the most bullish signal we've seen in quite a while, implying minimum, further upside to 1520 shortly thereafter.  Today, the best buying opportunity remaining would come on a 'b-c' pullback (basis (June Comex) from anywhere between 1477.50 and 1484.80. The intraday high so far is 1473.40 -- not quite sufficient to generate a bullish 'impulse leg' on the hourly chart.