Gold

Gold spent last week turning the previous week's plunge into potentially gratuitous mau-mauing of bears by the nefarious forces that control bullion's price action. We'll take a cautious stance, since the rally has occurred off a quite-impulsive down-leg that is shown in the chart. For your peace of mind, I'd suggest being not quite as enthused about the rally as we were frightened by the still-pungent plunge. For the time being, use the pattern shown to avoid getting fooled.  If the point 'C' high eventually migrates above the August 4 'externall' peak at 1835.90, I could warm somewhat to gold's intermediate-term prospects. As always, you should tune to the chat room and your email alerts if you want to stay apprised of timely intraday opportunities.

Strong employment numbers and the higher interest rates this supposedly will bring drove gold sharply lower on Friday, according to the usual experts. What rubbish! Gold dropped simply because it was time for it to drop. It's not as though the market actually divines the future and discounts it in a rational way. If investors possessed even a mote of rationality, gold would be trading above $2000, discounting the biggest monetary blowout in history.  Instead, bullion looks poised to drop even further, since the bounce from an opportune midpoint Hidden Pivot support at 1763.30 was so weak that it's hardly visible on the hourly chart. (That didn't stop us from making money with some very precise bottom-fishing. Check out my 10:48 post in the chat room to see how.)  For now, we'll use p2=1722.40 as a minimum downside target and 1683.50 as worst case for the next 2-3 weeks. This is jumping the gun, since I ordinarily wouldn't project another leg down until the midpoint pivot has been decisively breached. In this case, however, I'll give bears the benefit of the doubt, since they seemed so feisty on Friday. We can use the chart shown in the usual ways, to get long or short as opportunities arise, so stay tuned to the trading Room if you care! _______ UPDATE (Aug 8, 10:53 p.m.):  The 1683.50 target nailed the low of an $85 death dive within three-tenths of one percent.  Virtually any strategy you might have used to get long at the low -- or short ahead of the spectacular, gratuitous swoon -- would have produced a large profit with almost no pain.  Maximum gain on the short position from the time the tout went out would have been a little more than $34,000 on four lots; the so-far bounce could

December Gold's promising mid-week rally died an inch shy of a mid-July's peak at 1839, disappointing bullion fans for the umpteenth time.  The rally was impulsive nonetheless on the hourly chart, and that is why we should view the pullback, sharp as it's been, as merely corrective.  We'll continue to use the 1858.60 target of a middling 'reverse' pattern as a minimum upside objective, but for trading purposes I'll suggest focusing on the bullish pattern begun from Wednesday's 1795.60 low. Stay tuned to the chat room for tradeable details as they develop in real time. _______ UPDATE (Aug 4, 8:30 a.m. ET):  Gold has taken a stab higher today, slightly exceeding the midpoint Hidden Pivot resistance of a pattern projecting to as high as 1850.10 over the near term. We'll use that Hidden Pivot as a new minimum upside projection, since you can never go far wrong in gold by lowering your sights. Skeptical though we should be, a pullback to the green line (1818.70) would trigger a 'mechanical' buy sufficient appealing to warrant a rating of 7.0. We needn't treat p2=1839.60 as anything special, although a little extra caution there is suggested, assuming it is reached. Here's the latest chart. ______ UPDATE (Aug 4, 10:41 p.m.): The 'mechanical' long from 1818.70 barely survived the wickedest head-fake reversal we've seen in recent memory. All we can do now is stick with our game plan, implying a stop-loss at 1808.1, a single tick beneath today's hellacious low. It should be held o-c-o with an order to close out the position at p=1829.20. _______ UPDATE (Aug 5, 10:48 p.m.): The trade stopped out for a $4000 loss. This was the first losing trade using a 'mechanical' signal in as long as I can remember. The Hidden Pivot Method doesn't care how wacky

A seemingly modest rally target at 1858.60 is still  viable, although the August futures seem in no great hurry to get there.  The 'reverse ABC' pattern shown in the chart would trigger a long if last week's weakness continues down to x=1777.20. However, I have little enthusiasm for gold at the moment and would therefore suggest using the micro-contract if you are uncomfortable with the implied $11,000 of entry risk tied to the full-size contract. At least half the position should be exited if the futures rally from the entry price to the red line (p= 1804.40).  I rate the trade a '6.6' -- worth a try, especially if you can execute it via a much smaller rABC pattern capable of reducing initial risk by perhaps 95%. ______ UPDATE (Jul 29, 3:31 p.m.): Today's encouraging upthrust has shifted my crosshairs cautiously higher, to the 1912.50 target of this reverse pattern. That's $54 above the old target, and it would become an even-odds bet following a two-day close above 1831,30, or an intraday stab exceeding 1850.

I've switched to an rABC pattern and a less ambitious target at 1858.60 because gold's trek higher has been so laborious, if not to say tortuous.  Intraday swings have been too nasty and frequent to use a buy-and-hold approach. However, the 'mechanical' set-up shown in the inset is designed to help make it easier on you, at least for a possible short ride from x to p2 or higher, as illustrated. We'll be better able to judge the strength of the uptrend, such as it is, once we've seen buyers interact with the target. ______ UPDATE (Jul 20, 8:35 p.m. ET): No one mentioned this in the chat room, but the trade suggested above was showing a $6000 profit on four lots at today's high. Because I was too preoccupied to signal an exit when gold surged this afternoon, I'll do so now for an $1800 gain on the pullback to 1809.10.

August Gold tripped a theoretical buy signal last week when it touched the green line (1809.8). We won't rush to get long(er), but the persistence with which the future head-butted the line could be likened to a gentleman caller who rings the doorbell four or five times to announce himself. The pullbacks were shallow as well, strongly implying bulls will dominate for the next couple of weeks if not longer.  I'll suggest using p=1869.40 as a minimum upside projection for now and trading with a bullish bias, but we'll need to see a convincing punch through it before we allow ourselves to enthuse over a further push to D=1988.70. ______ UPDATE (Jul 12, 6:37 p.m. ET): The futures' pathetic struggle at the green line today reminded me that I'd resolved not to be any more bullish in my comments than is justified by the technical evidence. My earlier assertion that the so-far shallow pullback after tripping a buy signal portends a week or two of strength was overreaching. We'll continue to use 1869.40 as a target, but I'm not offering it as a done deal. In any event, the August contract would need to close for two consecutive days above x to merit a more upbeat outlook. ______ UPDATE (Jul 14, 9:44 a.m.): Gold has popped to 1831.10 this morning, high enough to break free of the green line's gravity. You can use p=1869.4o as a minimum upside target for now.

Gold's price action lately has grown too defiant of logic and even rationality to merit diligent attention. The futures got crushed for a week in mid-June, but now sellers can't even push it down to a minor 'D' correction target. Instead, the August contract rallied on Friday, presumably gratuitously, to within an inch of a level that would negate the bearish pattern. I've set an alert at 1826.50, a tick above an external peak recorded June 16 on the way down. That's where the bullish case would become, if not compelling, then at least very faintly appealing. We might also look to get short using a 'reverse ABC' set-up if the futures make it up into the range  1810-1820. My point 'a' for the trigger pattern would be 1776.30, equal to a peak recorded at 10:00 a.m . June 29 on the hourly chart. (For a bigger picture that is bearish short-term but bullish long-term, check out the current commentary, So Maybe Gold Actually Does Suck.)  ______ UPDATE (Jul 6, 5:27 p.m.): The short trade suggested worked perfectly and generated a relatively quick, easy profit of around $2600 on four lots. A few subscribers reported getting aboard, some by interpolating with other gold vehicles, and covering at the red line as suggested.

Gold's less-than fascinating struggle to hold above an important midpoint Hidden Pivot at 1775.00 and a shelf of structural support constructed back in April has entered its second week. My gut feeling is that both will give way, sending the August contract down to p2=1702.80. But even if the futures were to rally instead, a move touching the green line (x=1847.10) would trip a somewhat appealing 'mechanical' short with a stop-loss at 1920.00. We'll want to attempt bottom-fishing if and when the Auggies fall to p2=1702.80, so stay tuned to the Trading Room if you're a player. Bulls looking for a glimmer of hope should set an alert at 1826.50, just above an 'external' peak recorded June 17 on the way down. _______ UPDATE (Jun 29, 10:20 p.m.): Here's a smaller bearish pattern with an interim downside target of 1739.40. A rally to x=1783.30 would trigger a weak 'mechanical' short, meaning it should be initiated only via a 'camouflage' set-up that reduce the implied risk of nearly $6000 on four lots. ______ UPDATE (Jul 1, 6:40 p.m.): The trade worked out perfectly, producing a $6000 gain in just a couple of hours. Shorting at 1783.30 would have been low-stress, since the futures never went higher than 1783.40 (!). As for covering the short position, the opportunity to do so came quickly and easily via a $15 plunge that followed the 1783.40 peak. Here's a chart that shows how the trade evolved.

My headlined enthusiasm for gold a few weeks ago looks to have been premature, as was my conjecture that the takedown artists who sometimes gang up on precious metals were finally outmatched by a waxing bull market. It would appear they are still very much in control, although I doubt they'll be able to push quotes much below 1600. That would represent a nearly 20% correction off last August's 2063 high -- perhaps all that could be imagined, given the deafening drumbeat these days warning of a horrific inflation that supposedly lies ahead.  For now, I'll recommend using p2=1700.70 (see inset) as a minimum downside projection for the near term. However, if this Hidden Pivot is easily breached, brace for more downside to at least D=1627.80. Alternatively, an unpaused upthrust exceeding 1826.40 would give bulls some breathing room, although it would not negate the bearish targets; that would require a print at 1919.30. _______ UPDATE (Jun 22, 11:34 p.m.): Bull have hung in there at p=1773.50, but the so far $12 breach of this midpoint Hidden Pivot suggests it will be a losing battle. Let's see what a new days brings.