Gold

The tortuous pattern shown should be serviceable for now, although we have come to expect gold's nasty, gratuitous dives to fall short of their 'D' targets -- in this case 1740.00.  The p2 secondary pivot (p2) at 1769.20 is another matter, however, and it should be used to attempt bottom-fishing with a tight stop-loss. Specifically, I'll suggest managing the trade with a reverse pattern where a=1836.80 on 1/25 at 6:00 a.m. EST.  Theoretical entry risk will be around $500 per contract, so this one is not recommended for novices. _______ UPDATE (Feb 4, 8:22 a.m.): Gold's moves in either direction are 100% gratuitous but tradeable nonetheless. Although the April contract failed to dip to the secondary pivot where we'd planned to do some bottom-fishing, the current rally will become 'mechanically' shortable if and when it touches x=1826.60. With about $12,000 of theoretical entry risk on four contracts, this gambit calls for a deft 'camouflage' touch. Here's the chart.

The rally has been unimpressive, but it is inarguably getting the job done. We've been using the pattern shown, with an 1873.90 target,  to stay on the right side of a challenging trend. It has helped us to avoid disappointment whenever gold dives from somewhere shy of a minor target, but also to spot money-making opportunities on the way up, including a recent $8000 winner that had been explicitly detailed here.  A similar opportunity would be signaled via a 'mechanical' buy if the futures were to fall to p=1813.50 (the red line in the chart). The appropriate stop-loss would be at 1793.30, implying $8,000 of entry risk on four contracts, but we'll find a less stressful way to get aboard if and when the opportunity comes.  ______ UPDATE (Jan 26, 9:16 p.m.): If today's gratuitous, stage-managed plunge continues, it will trip a 'mechanical' buy at x=1783.20, stop 1752.00. Don't bother with this one unless you are proficient enough with rABC 'camo' setups to cut the implied $12,000 entry risk on four contracts to no more than a tenth of that.

The week ended with a very real profit of as much as $8,000 for anyone who followed my explicit instructions. Can we do it again, you ask? Probably, although trading this particular vehicle successfully will always be akin to extracting opportunity from a hacking cough. Our winners are  necessarily leveraged at the tops of disappointing rallies and at the bottoms of gratuitously scary dives. That, after all, is what gold does -- has been doing for years. Between these extremities lies the aforementioned  hacking cough, and although its volatility should make for bountiful trading in theory, it is too much work to concern ourselves with here. The pattern shown has rewarded 'mechanical' buyers twice, but I doubt a third winner will be so easy. Even so, you can use the 'reverse' pattern shown, with an 1873.90 rally target, to plot your strategy or merely assess the strength of the uptrend, such as it is. The bad guys seemingly lack the guts to push the futures below C=1753.00, but I hesitate to use this observation to greenlight any old 'mechanical' buy set-up that comes along. ______ UPDATE (Jan 19, 10:40 p.m. EST): This evening's vertical spike has stalled very precisely at p2=1843.70 of the bullish pattern that has guided us for the last month. A decisive push through it would clinch more upside to the 1873.90 target, but it will be more interesting if this Hidden Pivot gives way easily. That would set up a test of the key 'external' peak at 1922.80 recorded on June 1.

The 'reverse' pattern shown triggered a 'mechanical' buy on Friday slightly above the green line I'd flagged at 1783.20. A subscriber who reported doing the trade didn't say how, but I'll assume a tight 'camo' set-up was used that might have triggered as low as 1783.90 (for instance: 60-minute, reverse a= 1785.40 on 1/6 at 9 a.m.). I'll recommend exiting half the position on the opening Sunday night, since gold's rallies have been balky and short-lived.  Thereupon, implement a trailing stop that would put half of any profits booked up to that point at risk. A third contract should be offered $10 higher, but check back, since that could change depending on how this vehicle opens on Sunday. ______ UPDATE (Jan 10, 7:13 a.m.): Exiting two contracts at 1796.40, Sunday evening's opening price, leaves two contracts (or 50% of the original position) with an effective cost basis of 1770.00. Offer half of what remains at 1813.30, just below the pattern's midpoint Hidden Pivot, with an o-c-o order stopping out the entire position at 1785.60. (This is an 'impulsive' stop on the 30-minute chart that references two very recent, external lows.) _______ UPDATE (Jan 11, 8:55 p.m.):  If you followed my instructions, you're sitting on realized gains of $4,300 and are still long a single contract (or 25% of the original position) with an unrealized gain of $5,000. Use an 1801.00 stop-loss for now, O-C-O with an order to exit the remainder of the position at 1839.  A 'dynamic' trailing stop can be substituted above 1828. ______ UPDATE (Jan 12, 5:23 p.m.): The dynamic stop suggested above triggered at 1825.40 after the futures topped at 1828.20.  The total profit on the position would have been around $8000. Do nothing further for now.

I've come to view bullion's rallies with cynical detachment, but that doesn't mean we can't exploit the gratuitous head-fakes, swoons and dives for trading purposes. The pattern shown should be up to the task, even if it failed to provide a 'mechanical' entry opportunity on either of two nasty feints to the green line.  The pattern and the technique we use to leverage it 'mechanically' are too obscure to suggest we are getting front-run. Indeed, we should infer that gold futures are simply naturally nasty because they are controlled by some of the best-connected weasels in the trading world. We won't try to short D=1873.90, only observe how well it repels buyers. ______ UPDATE (Jan 3, 10:03 p.m. EST): Much as I'd like to tune out gold, the little s.o.b. would trip a 'mechanical' buy signal if it falls to the green line (1783.20). With a stop-loss at 1752.90 and implied entry risk of around $3,000 per contract, this gambit is recommended for 'camo' experts only. To all others, I would suggest paper-trading so that you can better understand how these set-ups work. _______ UPDATE (Jan 4, 5:07 p.m.): Here's a snack-size pattern to use for targeting and trading over the next day or two. It has triggered two 'mechanical' winners, but its main value now lies in its potential to measure trend strength via price action at D=1847.00. If you've made money on the way up, the target can be shorted with a very tight 'reverse' pattern that risks no more than $200 theoretical. _______ UPDATE (Jan 6, 8:04 p.m.): Perhaps you too are tiring of gold's relentlessly annoying rallies and phony breakdowns? Does this vehicle suck, or what?

Gold has shown no net gain or loss in a year-and-a-half and will likely remain trapped in a nervous range until something very significant changes in the big economic/financial picture.  The pattern shown, with a 1629.00 downside target given here earlier, has provided some excellent entry points for 'mechanical' and 'reverse' trades; but that's all gold is good for at the moment: just a trade. We can reconsider the dour outlook if the futures pop above mid-November's 1882 high or penetrates the downside target at 1629. The latter seems most unlikely, but the Hidden Pivot levels by themselves will remain useful in any event.

Gold's squirrelly histrionics have become too tiresome to deserve our close attention, but we can still use the excellent, gnarly pattern shown to exploit any price action that plays to our game. For starters, a fall to p2=1700.80 could be bought 'mechanically', provided you know how to set-up a 'camouflage' trigger that would reduce the nearly $30k of entry risk on four contracts by perhaps 95%. Nudge me in the chat room at the appropriate time if you care and I will show you how. (Here's the equivalent pattern for Feb Gold, where p2=1702.60 and D=1629.00.) Notice that a 'mechanical' short deep in the 'discomfort zone' a couple of weeks ago would have paid off at the same odds as the buy suggested above. ______ UPDATE (Nov 30, 6:18 p.m.): The February contract fell to the red line, generating a $30,000 payoff for anyone who shorted the most recent 'mechanical' signal -- at 1849.40  on 11/10. The 1629.00 target remains valid, but let's see if bears can extend their winning streak with a further fall to p2=1702.60 first. Gold may suck much of the time, but that doesn't make it any easier for bearish bettors to profit.

December Gold remains on track for a move to at least 1916.90, the 'reverse' D rally target shown in the inset. Two weeks of tedium have at lest partially consolidated the very robust impulse leg begun on November 3 from 1758. However, we shouldn't rule out the possibility of a $30-$50 swoon to alleviate gold's constipation before it heads up to 1916.90. The implied $2000 entry risk of bullishly trading the resulting pattern means we'll need to set it up on charts of lesser degree. You should stay tuned to the chat room, but also keep your email 'Notifications' switched on if you want to keep closely apprised. ______ UPDATE (Nov 22, 9:52 p.m.): The December contract fell almost $50, validating my warning, but technically it won't become a swoon until we've see a strong bounce that recoups the loss. In the meantime, a further fall to p=1797.40 would trip a 'mechanical' buy, and so would a hit at x=1737.70. Nudge me in the chat room if you would like me to vet your 'camouflage' entry set-up. _______ UPDATE (Nov 23, 5:48 p.m.): We're in no hurry to get long nor to play hero as gold's predatory masters simulate scary weakness. I still think we'll have our chance down around 1737.70.

Bulls remain on track to achieve the 1916.90 target flagged here earlier. It would take a little more more oomph, however, to push past 'Annapurna' at 1922.00 in order to generate a robust impulse leg on the daily chart. A further surge into the void above that peak would make December Gold a tempting short from the 'discomfort zone', if only for  scalp-trade.  Alternatively, a surprise plunge would trigger a 'mechanical' buy at p=1797.40, stop 1757.50. That's $16,000 of entry risk on four contracts, so check the chat room for 'camo' alternatives before you leap. ______ UPDATE (Nov 16, 5:11 p.m. ET): Today's stupid, and presumably gratuitous, plunge tripped a 'mechanical' buy signal at x=1855.20, stop 1843.20.  Mechanical trades work best when we are attempting to exploit pointlessly violent swings, so this set-up should offer a pretty good test of the theory. _______ UPDATE (Nov 17, 8:55 a.m.): A pretty good test, indeed. The futures surged to p=1867.10 overnight, producing a textbook profit-taking opportunity that would have netted a nearly $4800 gain for anyone who held onto four contracts acquired at X=1855.20 as advised.