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.
The futures have consolidated sufficiently to be ready for another big leg up. However, a glance at the daily chart suggests bulls may need to be shaken out one last time before December Gold can get off the launching pad. From an rABC/CI-trade standpoint, the ideal 'C' low would occur in the very small space between September 18's 1490.70 low and August 13's 1488.90. You should use A=1490.70 to generate a green-line (x) trigger (see inset) even if the point 'C' low winds up being slightly beneath 1488.90. Obviously, this trade is intended for experienced Pivoteers. Don't hesitate to jump on it, though, if there is sufficient clarification in the Trading Room to make you feel confident about participating. _______ UPDATE (Oct 1, 12:35 a.m.): The rABC pattern has yet to trigger a buy signal but is still valid, albeit with a point 'C' low that would be well below 'counterintuitive' range. Assuming tonight's 1468.60 low holds, the trade would trigger at x=1481.80 (with a profit target of p=1494.90). Please note that that would imply more than $5000 of theoretical entry risk on four contracts. _______ UPDATE (Oct 1, 11:12 a.m.): The rABC buy signal drum-rolled above triggered at 1478.70 and has quickly propelled the futures to within a hair of a profit-taking opportunity at p=1492.50. Sudden and sharp as the rally was, a stop-limit order at 1478.70 would likely have been filled, since the futures dipped back to 1478.70 a few minutes after breaking out above it. _______ UPDATE (Oct 1, 9:45): The futures have pulled back moderately after triggering the trade noted above and getting buyers to a profit-taking level at p=1491.30 (revised slightly). Several subscribers reported having done the trade and making money on it. However, I didn't establish a tracking position because the opportunity played out
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.
