Gold

Although gold ended the week on an upswing, this occurred within the visual context of the corrective pattern shown in the chart. The pattern's A-B impulse leg is formidable, and that's why we shouldn't get too excited about the approximately $30 rally that has unfolded since the futures bottomed at $1490 last week. Note that that rally has generated a somewhat enticing 'mechanical' short at the green line (1513.70). We ignored it nonetheless because it was a risky bet to have taken home over the weekend.  Let's see what Sunday night brings before we act.  As of early afternoon, there were no disconcerting geopolitical developments that might send the markets into spasms.  Iran's Houthi proxies were threatening another attack on Saudi oil facilities, but that will have registered only dimly on Wall Street's go-go trade desks. _______ UPDATE (Sep 23, 5:52 p.m.): The futures have turned sharply from within a hair of stopping out the bullish pattern with a 1622.90 target first identified here nearly six weeks ago. For now, use its 1555.90 midpoint pivot as a minimum objective (and not for the first time, either). _______ UPDATE (Sep 25, 9:27 pm.): The futures were in a so-far feeble bounce Wednesday night after getting socked for a $23 loss intraday. The rally began in a too-obvious place just above some minor lows from last week, raising the odds of another swoon to put in a good bottom.

Gold's response to news that Iran destroyed a key Saudi oil facility is shockingly feeble so far. The futures are up $15 at the moment, but the rally has yet to surpass even a single important peak on the hourly chart. It also denied us an opportunity to get long via a 'counterintuitive' set-up predicated on a dip below 1488.90. As things stand, the 1622.90 target we've been using for a month is still in effect, but we'll need to see more buying enthusiasm before I can recommend jumping aboard. Specifically, a breakout above September 6's  peak at 1536.20 would put the 1622.90 target well in play again. _______ UPDATE (Sep 16, 9:03 p.m.): The CI set-up noted above may yet materialize, so stay tuned to the chat room if you're interested. _______ UPDATE (Sep 18, 9:54 pm.): The prospect of a dip below 1488.90 has dragged on for so long that I am no longer much interested in the 'counterintuitive' trade noted above.  The futures can still be worked, but if you're eager for action, it might require close attention to the intraday charts over the next two days.

Just when we thought we had gold figured out, it turned a promising rally into dross. Although the so-far $30 dive from an intraday high at 1532.00 may have disappointed bulls, it did not likely scare them. That's because bears have been struggling themselves for a week to do even minor damage to the bullish chart shown. Its 1622.90 target remains viable in theory, but it would appear that the point 'C' low associated with the target is likely to be breached. If the implied downthrust is spiky enough, it could set up an enticing rABC trade, where A= 1496.80 on 9/11 at 9:00 p.m. ET. The implied entry risk would be around $900 per contract, but a cheaper play in GLD may be possible. If there is interest in the chat room and the trade hasn't triggered before the regular session begins, I'll provide further guidance.

Gold's rallies have been generating successively less-overbought peaks on the daily chat (see inset), implying buyers are running out of steam and that distribution is creeping in. We'll adopt a mildly cautious stance for the time being, monitoring price lows on the daily chart for signs of similar divergences, which would be bullish.  The 1622.90 rally target given here previously remains valid in theory, but it would be negated if the correction exceeds the 1488.90 low (aka point 'C') recorded on  August 13. Bulls got sandbagged when last Wednesday's rally to 1566.20 reversed punitively after poking above a 1565.00 peak notched nine days earlier. That is why the retracement is likely to last for at least a few more days. Caveat emptor for now. _______ UPDATE (Sep 10, 9:28 p.m. ET): A breach of C=1488.90 looks imminent and would negate the 1622.90 target. Ordinarily I'd suggest using a 'counterintuitive set-up to get long after such a breakdown, but my hunch is that the rally won't get very far. We'll spectate for now, but stay tuned to the chat room, since the picture could change.

Gold came under pressure last week because the institutional thieves who tend the markets were busy pumping up shares. Even so, I am going to raise my minimum upside target to 1666.10 because of the healthy look of the monthly chart (see inset). The 1622.60 target of a lesser pattern I'd displayed here earlier remains valid. In fact, the pattern that produced it would trigger a weak mechanical buy if the December contract were to pull back slightly more, touching x=1522.40. I say 'weak' buy because the C-D leg never quite rallied to our sweet spot around 1574 before pulling back; it got no higher than 1565. I am not recommending the trade for that reason, but also because of the implied risk that the futures will breach C=1488.90 before resuming their upward course. How long that will take depends on how much more short-covering DaBoyz can milk from a supposedly imminent -- for about the 50th time -- trade deal with China. We already know that whatever supposed deal is reached, it will be a face-saving nothingburger, and that the broad averages will be an attractive short on the news. Until then, we should be prepared for stocks to waft higher. _______ UPDATE (Sep 5, 10:35 p.m. ET): Today's selloff tripped a mechanical buy at 1522.40, stop 1488.80, but I've suggested paper-trading this one because it has $13k of initial risk on four contracts.  Here's the chart; let's see how it goes. 

The strong surge that ended the week has brought clarity to the very bullish pattern shown. Its 1622.90 rally target will become a good bet to be reached if and when the futures blow past the 1555.90 midpoint Hidden Pivot. This is slightly lower than the target given here earlier, but it can serve for now as a minimum upside objective. How quickly the December contract gets there will depend on how the stock market does, since the chimpanzees who are paid handsomely to throw other people's money at a tiny universe of institutionally sanctioned stocks can only handle one theme at a time, even with the help of powerful computers. For the foreseeable future, that theme will remain: buy stocks, sell (or ignore) gold and bonds; or, sell stocks, buy gold and bonds.

A rally target at 1559.90 remains valid, but before the futures push toward it they must finish correcting the pattern shown. Sellers appear to be having difficulty pushing down to p=1510.00, the midpoint Hidden Pivot support, and that is mildly bullish. You can attempt bottom-fishing there with a stop-loss as tight as 1.00, or via any rABC pattern which emerges, but the trade is recommended only to scalpers familiar with this vehicle. A decisive breach of the support would likely continue down to at least p2=1495.70, or possible to d=1481.40.

Gold has pushed past a 1515.60 Hidden Pivot target that had been two months in coming, suggesting there is still significant buying power remaining to be spent. However, because I've raised a cautionary note with respect to the mining stocks, we should treat the gold futures a little more cautiously than we have been lately. For now, that means using the 1559.90 pivot shown as a minimum upside objective for the near term. The target is clear and compelling, and so an easy move past it would be signaling a continuation of the uptrend. _______ UPDATE (Aug 13, 8:15 p.m.):  Here is the pattern I am using in December Gold at the moment. It will become more authoritative if and when x=1522.40 is touched. The stock market's nutty exuberance this morning dangerously underestimates the risks of Hong Kong. _______ UPDATE (Aug 14, 9:47 p.m.) Next stop: 1555.90, my minimum upside projection at the moment, as well as the midpoint resistance associated with D=1622.90.

Assuming the short-squeeze bounce in the broad averages and FAANGs is about to get legs -- a possibility I've raised in today's The Morning Line -- bullion will be under pressure. The institutional chimpanzees who build and dismantle portfolios can only follow simple instructions that have a single theme. One such theme unfortunately is that when one is buying stocks, one is necessarily selling bullion. Adding to my newfound caution in gold (and silver) is that today's rally hit a Hidden Pivot target at 1515.60 that has been two months in coming. The slight overshoot is ostensibly bullish and would become still moreso if gold closes above today's high (1522.70) for the next two days. In any event, we'll see what surprises crop up before we draw any strong conclusions. _______ UPDATE (Aug 8, 10:34 p.m.): Gold held its own today with stocks on a mini-rampage. This seems bullish, but let's see how things play out ahead of the weekend. _______ UPDATE (Aug 11): Gold got little boost when the Dow was trading almost 300 points lower on Friday, so we should be prepared for bullion to turn weak if the broad averages reverse and rally. First, let's see how things open Sunday evening.