Gold

Gold has been huffing and puffing for two weeks without making much headway. That's not saying it can't still pop through p=1840.80 with brio, but we'll need to see it happen before we get excited. Thereupon, p2=1913.10 would become out minimum upside objective, with a shot at 1985.40 for the bull cycle begun three weeks ago from 1696. As always, a decisive penetration of any of the three Hidden Pivot levels implies a continuation of the trend to the next. The pattern looks likely to produce winning 'mechanical' buys if gold hits an air pocket as it seems wont to do whenever bulls get too interested. _______ UPDATE (Aug 17, 11:06 p.m.): Maybe the D=1772.2 downside target shown in this chart will provide a respite for buils, however brief and unsatisfying? ______ UPDATE (Aug 18, 9:32 p.m.): It provide no respite whatsoever when the 'hidden' support gave way like wet tissue. But none of us could have been surprised, since gold, in its tedious bottoming process, seems to delight in disappointing bulls about 90% of the time. This may be an even more dismal spell than usual, given the dollar's bullish breakout (see my DXY update elsewhere  on this page.  

At the current pace, this anemic uptrend will reach the D target at 1985.40 by next June. Something's got to give, obviously, since no bull market can survive such torpor. We may be spared waiting, however, if the futures pop to p=1840.80 sooner rather than later. A decisive move past that Hidden Pivot would imply the December contract is no worse than an even-odds bet to continue to at least p2=1913.10, if not necessarily to D.  In the meantime, Friday's downdraft tripped a so-so 'mechanical' buy at x- 1789.50, stop 1769.90 (daily, A= 1727.00 on 7/27). I didn't recommend the trade because getting long ahead of a weekend is almost always unappealing.

The picture shown makes much better visual sense than the tortuous, gutless pattern I posted here earlier. (It had an erroneous target to begin with.) The new graph will enable us to use p=1840.80 as a minimum upside projection, and D=1985.40 as a best-case objective for the next 6-8 weeks. Depending on how the uptrend interacts with p=1840.80, I may move 'A' down to the marquee low at 1793.50 to produce a slightly higher target. There are no guarantees that the rally will achieve 1840.8, since the chart lacks sufficient information as yet to determine this.  At a gut level, though, it looks safe to use 1840.8 as a minimum upside projection.

I said I'd loosen up on gold if the December contract popped through three 'external' peaks,  the highest of which lies at 1785.80. It very nearly succeeded, falling just 1.30 shy of my benchmark when the clock ran out on buyers Friday. However, I remain distrustful of gold's rallies nonetheless and probably would not have become less skeptical even if this rally had met my bullish criterion.  Beginning with the July 21 bottom, it has been a shaky, ratcheting affair all the way up. The fact that it couldn't muster the extra inch it would have taken to surpass the small-ish peak at 1785.50 has left my mild skepticism intact. Accordingly, I've used two modest patterns to project unambitious targets. The first lies at 1788.90, just $6 above, and comes from a reverse pattern begun with a low near 1800 in early May. The second, at 1804.60, is derived from a larger rABC tracing back to a point 'a' low made in February. I'll be watching closely to see how much resistance they put up, but either can be shorted using 'camouflage', especially if you've been long on the way up.

Although there's a solid consensus in the chat room that a major bottom is in and that my 1665.00 target will not be reached, I have my doubts. They are based entirely on the decisive downside penetration of p=1773.80 on July 5. I have only very seldom seen 'p' obliterated in this way without giving way to a follow-through that hit 'D'. If gold's robust two-day rally is going to be an exception, the first evidence of this would come with an impulsive thrust exceeding three 'external peaks that lie, respectively, at 1744, 1751 and 1771. That's the kind of power rallies typically exhibit when ending bear markets. If this one can vault all three peaks with no visually significant pullbacks along the way, I'd infer it is the real deal -- at long last. (July 27 note: For the December contract, the three peaks lie at, respectively, 1763.70, 1770.80 and 1785.80.)

Finally, a bottom in sight? Judging from the chart, with its textbook rhythms and clarity, it will be hard for the August futures to avoid reaching D=1665.00 and then bouncing tradeably from this Hidden Pivot support. The downtrend has obliterated several minor supports where I'd suggested bottom-fishing, but also a major one at 1773.80, the midpoint of the C-D leg. This suggested there was urgent selling still to come, and we will likely see the last of it within $1-$2 of the target. The pattern is too obvious for traders to count on a precise turn from D, but even an imprecise one should serve for bottom-fishing with risk tightly controlled. _______ UPDATE (Jul 21, 11:15 p.m.): The futures took a trampoline bounce after swooning to 1678, but I am not ruling out the possibility of a relapse that gets closer to my 1665.00 target. Alternatively, a push exceeding 1744.30 would put bulls back in charge.

August Gold finally turned higher on the final bar of the week, a suspicious development from which some in the chat room seemed inclined nonetheless to take encouragement. My take is more skeptical, given the way sellers cracked the midpoint Hidden Pivot support at 1794.90 a week earlier. It suggested that the futures are likely to reach 'D' before they can make a good-faith attempt to end the long dirge begun from $2000  in April. Please note the small adjustment in the chart -- a shift to a higher point 'A' that has lowered the target by a few dollars to 1707.20.  Note as well that a two-level rally to x=1888.70 would set up a 'mechanical' short of a kind that has worked well for us in the past. _____ UPDATE (Jul 12, 5:38 p.m.): Chat room remonstrations have sought equal time for predictions of a 1670 low before this cinder block can turn around, so here it is: a 1665.00 Hidden Pivot target. Certainly not impossible, but I will be looking for a tradeable and potentially important turn from higher levels nonetheless. Specifically, I expect the futures to bounce from 1718.30, and thence from 1707.20 if there's a relapse. If 1707.20 is exceeded on a closing basis for two consecutive days, however, or exceeded by more than $4 intraday, I would infer that 1670 is indeed going to be reached (and slightly exceeded).  That would be a great place to back up the truck and buy 'em hand-over-fist.

I've been so down on gold lately that I should probably recuse myself, but here we go anyway: The trampoline rally off Friday's heavily manipulated low is likely bound for at least 1828.80, the D target of the reverse pattern shown. It is not quite a done deal because of the hesitation at p. That's why bulls should be careful if and when the move hits p2=1817.30, where a tradeable reversal could occur. Meanwhile it would take a print exceeding 1882.50 to negate the 1756.90 downside target that has been in play for nearly a month. ______ UPDATE (Jul 5, 11:20 a.m. EDT): So much for giving gold the benefit of the doubt. Today's freefall looks bound for D=1746.30, a back-up-the-truck spot for bottom fishing as far as I'm concerned. Here's the chart, with a pattern that caught a beautiful mechanical short just head of what eventually will have been a $136 selloff.  _______ UPDATE (Jul 6, 8:06 p.m.): We're now working on a 1710.00 target, although the bearish forecast did not prevent our exploiting a mid-day rally worth as much as $2300 to anyone who followed my 11:43 a.m. Trading Room 'rABC' guidance. (It also went out in timely fashion to all subscribers in the form of a 'Notification'.))))))))))))) 

Gold remains a study in disappointment and tedium. We've focused on a too-obvious pattern with a bearish target at 1756.90, and even shorted it on paper at 1851.20,  but with no great expectation of the futures getting there. Nor are they likely to achieve the very bullish, 2082 target of a much larger pattern any time soon. If you'd prefer to trade this vehicle nonetheless, try bottom-fishing in the range 1787-1792 with a 'camouflage' set-up using a chart of five-minute degree or less. _______ UPDATE (Jul 1, 9:27 a.m.): The futures are in a presumably meaningless bounce from 1783.40. That's below my bottom-fishing range, which was tied to a p2 'secondary pivot' at 1788.30.  The $6 overshoot is sufficient for us to presume that the next leg down, if and when it comes., will be an even-odds bet to reach the worst-case, 1756.90 target. Ray-rah-sis-boom-bah, Gold! You go, girl!