Gold

Shhhh. I've refrained from drum-rolling the 1447.50 correction target (see  inset) because it looks so likely to produce a precisely tradeable bounce. I didn't want to queer the opportunity by giving it too much attention, but now you won't have to worry about bumping heads with the riff-raff. Friday's weak rally did nothing to change the odds that the futures will get there, but how far and how long the bounce goes is unknowable at the moment. The chart appeared here last week, but I didn't explain why the pattern is so enticing. Mainly, it is a matter of the A-B impulse leg exceeding a true external low at 1488.90. This set-up is textbook-perfect, and subtly so, and that's why it behooves us to make the most of it. _____ UPDATE (Nov 11, 9:15): My forecast caught the intraday low within $1.40, but also the tradeable bottom of a so-far $10 bounce. Only two subscribers mentioned this, so I have not established a tracking position.  If you would like me to continue following gold futures, please say so in the room so that I am able to gauge interest in them. ______ UPDATE (Nov 12, 7:48 p.m.): Subscribers were able to re-use the 1447.50 target to bottom-fish for a second straight day. Monday's gambit yielded a theoretical, four-contract gain of slightly more than $3000; today's could have netted as much as $5000.  Check posts in the trading room between 10 and 2 if you're skeptical these trades worked for-real. The rally was continuing Monday night, but it would need to surpass  1467.40 to imply it's about to get legs. Subs should have cashed out half of the position by now in any case, with the remainder tied to a wide 'impulsive stop-loss' on the 15-minute chart. At the moment, that

Gold has been stalled for three months and is getting mighty tiresome. This is notwithstanding an upthrust last week that allowed subscribers who followed my detailed guidance to make a quick $3400 profit on four contracts. The trade was pegged to a 1535.90 target that has helped keep us on the right side of the trend for nearly a month.  If buyers should push past it this week, 1547.60 would be the next stop, and thence 1586.10 (daily chart, A=1412.10 on 8/1). Rather than pretend we have a crystal ball, we'll simply wait to see what bulls can deliver. So far, considering stocks are in the grip of lotus eaters, bullion has held its own. This is encouraging, but don't expect much until the bull run in stocks falters. _______ UPDATE (Nov 5, 5:41 p.m. EST): The high and low of gold's dive today fell within the tedious range of the last month and has not damaged the pattern projecting to our aging target at 1535.90. Psychological damage is another matter, since the selloff, possibly gratuitous, has occurred in the space of just one day. But if we stay focused purely on 'technicals', there is not yet any reason to despair. _______ UPDATE (Nov 7, 10:42 p.m.): Sure this is depressing. But even if the so-far $100 selloff from early September's high had been three times as bad it wouldn't negate the huge bull move that began from 1208 fifteen months ago.  This nasty correction has a little farther to go before it hits a Hidden Pivot support that could turn gold around. It lies at 1447.50 and can be used to bottom-fish.  It can also serve as a minimum downside target for the moment.

Careful! I'd practically guaranteed a run-up to at least 1535.90 over the near term, but it was not to be. Bulls who were counting on it got sandbagged on Friday -- or perhaps worse, since the high occurred just inches from the secondary pivot, 1521.40.  Hidden Pivot geezers will recall that when a rally reverses from very close to p2, the retracement often goes on to stop out the point 'C' low of the pattern. This is known as 'Matt's Curse', named after the 15th Century explorer who set sail for the southern tip of Florida but got no further than the Bermuda Triangle  Matt's Curse has yet to be statistically validated, but even so, the gratuitous nastiness of Friday's reversal warrants caution, since it suggests that we, meaning everyone who trades this vehicle, had grown just a tad too bullish. If the retracement comes down to the green line (x=1492.50), I'd be tempted to execute a 'mechanical' buy there, stop 1478.00, but let's play it by ear for now. ______ UPDATE (Oct 28, 8:05 p.m. ET): The trade triggered, but you should check the Trading Room for alternative entry strategies (and my rating, a 6.9), since the 'mechanical' one has initial risk of nearly $1,500 per contract. Just one subscriber, using mini-contracts, reported getting aboard. I'd suggest taking off at least half if the futures make it to p=1507.00. _______ UPDATE (Oct 31, 8:57 a.m.):  A nearly $30 rally from yesterday's  headless-chicken low has hit 1512.20 so far, allowing exit from half of a four-contract position at $1507.  The gain on two contracts would have been $1900 for anyone who did the trade. Offer another contract to close at 1535.40, half a point below the original target. _______ UPDATE (Oct 31, 5:49 p.m.): Bring the offer to sell one

This chart revises our downside targets somewhat to, respectively, a minimum p2=1467.10; or D=1447.50 if any lower. The A-B impulse leg is a clean one that allows a little more room to the downside than the smaller pattern given earlier. It is setting up for a 'mechanical' short at 1506.20, but because initial risk on a 1526.00 stop-loss would be nearly $2000 per contract, we'll look for an alternative entry trigger on a lesser chart. An rABC set-up using the hourly might work, but we can play it by ear until such time as 1506.20 is achieved. ______ UPDATE (Oct 22, 10:19 p.m. EDT): The longer gold moves sideways, the less attractive the short trade would become. At this point, I'll treat any rally exceeding 1508.00 as a bullish opportunity, with immediate upside potential to 1535.90 (60-min, A=1467.90 on 10/1).  _______ UPDATE (Oct 24, 6:15): The 1507.00 midpoint resistance of this pattern looked shortable when it was first hit this afternoon, and at least one Trading Room denizen did so on my suggestion. However, even though the pullback would have  produced a profit of $240 per contract at the subsequent low, the shallowness of the correction suggests buyers are revved up for another bull leg.  Assuming they blow past p on Friday, that would imply the futures are bound for at least D=1513.80. ______ UPDATE (Oct 25, 8:51): The overnight thrust through 1507.00 all but guarantees a run-up to at last 1535.90 off this pattern, which has appeared here before (see above).  It has been reactivated and energized -- perhaps sufficiently to use a 'mechanical' bid at 1507.00 to get long belatedly. The stop-loss would be at 1497.30.

The daily chart remains unmistakably bullish, but this correction, which is about to enter its third month, continues to try our patience. For the moment, the futures are under the spell of 'Matt's curse,' which holds that a trend reversal precisely from p2 is likely to exceed 'C', stopping out the pattern (see inset). So far, December Gold has bounced weakly from p2 twice without exceeding 'C'.  This is a punk performance, for sure, but it's no reason to bet against bulls and a possible rally to as high as 1525.90 (a=1467.90 on 10/1) this week. If the futures should relapse, though, brace for a fall to 1458.70 (60m, A= 1522.30 on 10/0), or 1450.50 (A=1540.30 on 9/25) if any lower.

Gold looks like it will need to correct further before it can resume the steep bull trend begun in late May.  Most immediately, the December contract would trigger a 'mechanical' short if the bounce from Friday's low hits x=1507.00. Your stop-loss would be at 1525.90, implying initial risk of $1900 per contract. This is a promising pattern as far as 'mechanical' opportunities go, meaning I regard odds of a relapse to D=1450.50 as high. However, if the trade is stopped out, you could bank on more upside to at least 1535.90 over the near term (60-min, A=1467.90 on 10/1 at 10:00 a.m. EDT). Here's a GLD chart if you want to try the mechanical short but don't trade futures.  The bounce off Friday's low would need to hit 141.54 (stop 143.26) to trigger the trade).

Rick's Picks subscribers were probably among the few traders who made money Monday on the long side of gold. In the process of falling by more nearly $20 from Sunday night's high, the December contract rallied $8.70 early in the session, allowing us to catch half of the move on an rABC pattern for a quick, lovely gain. In the trading room, actual profits reported in slightly less than an hour ranged from $410 to $520.  You should check the chat room scroll to see whether the discussion might have activated, and then enabled, your interest. The trade had been mentioned Sunday night as a possibility pending the creation of a point 'C' low for the relevant pattern. It came at around 9:12 a.m., and although I mentioned in my post at that time that I wasn't too enthused about the buy side, the opportunity looked too good to pass up. And now, looking just ahead, the futures appeared bound still lower --- to at least D= 1487.20 if p=1493.50 is decisively penetrated. If you trade this vehicle, stay close to the chat room for real-time guidance.

Gold survived a hostile 'news' day on Friday, bruised but unbowed. The nutty swings left the December contract in good shape to achieve the 1542.10 midpoint pivot shown in the chart. As always, an easy and decisive move through this resistance would make the 1619.10 'D' target a odds-on bet to be achieved. Since there is as much as $11,000 of potential profit in the trade per contract, we should be alert to entry opportunities that occur on the lesser charts intraday. An rABC setup on a 5-minute chart, for instance, can cut initial risk by as much as 95%, provided we are quick.

The chart shown simplifies the short-term picture as much as possible. Although we do not usually rely on 'reverse' ABC patterns like this one to trade against, they are proving their worth when used analytically. In this instance there is a clear 'D' target at 1517.80 that we should expect to show some stopping power. If it proves to be a pushover, and particularly if the futures close above it for two consecutive days, that would set up an almost certain test of late September's peak near 1543. Alternatively, a pullback to the red line (p=1491.30) can be used to get long 'mechanically', stop 1482.50. Please note that initial theoretical risk would be $880 per contract, so the trade is not recommended for beginners or small accounts. ______ UPDATE (Oct 3, 8:31 p.m. ET): Buyers shredded the 1517.80 pivot, implying more upside to come. Now, if the futures touch 1515.90 without dipping below 1510.60 first, that would put a 1532.40 target in play. The midpoint resistance lies at 1521.50 (30-min, A=1504.00 on 10/3 at 9:30 a.m.). _______ UPDATE (Oct 4, 9:26 a.m.): News-related histrionics have negated the trade. The futures have since tripped two minor rABC 'buy' signals that have produced profits at their respective midpoint pivots but which were out of reach for trader not spring-loaded and glued to the 5-minute chart.