Gold

Tuesday's strong upthrust got bulls' juices flowing in the Rick' Picks chat room, but I would caution you against letting your expectations get too high. Notice in the chart (see inset) that the A-B impulse leg begun in mid-August failed to surpass any of the peaks recorded when the futures were heavily distributed during the first two weeks of August. The doubts I've raised are nothing that another bullish pop on Wednesday or Thursday wouldn't cure, but we'll leave the burden with bulls until such time as that happens. In any event, the decisive move through the red line, a midpoint Hidden Pivot at 1205.40, has made December Gold a good bet to reach the 1226.50 target shown.  If they can do that and push just a little higher, exceeding an important 'external' peak at 1228.60 recorded on August 3, bulls can breathe a sigh of relief, since that would imply the rally is the first potential 'real McCoy' we've seen in a long while.

Gold's tiresome slog over the last month between 1190 and 1220 looks increasingly likely to end with a fall to at least 1165.30, a 'midpoint Hidden Pivot' support. If the futures fail to get traction there, look for more slippage to 1109.80. For gold bulls this would not be disastrous, only dispiriting. I still doubt that quotes will fall below $1000, not that that's going to cheer you if you've been nurturing a position acquired since 2011, when prices peaked just above $1900. If you're inclined to look on the bright side, click here. The chart shows that Comex futures could fall to as low as 1046 without negating a bullish pattern that projects to as high as 2278. We should remain open to the possibility, but if you want to be strictly objective about it, set a screen alert at 1391.40, since that is where the futures would generate a fresh, bullish impulse leg on the continuous monthly chart shown.

December Gold has trapped bulls with fake rallies two days in a row. It dove even more steeply on Friday, the second day, falling from a 1213.80 peak recorded in the dead of night to an end-of-session low at 1197.80. This kind of price action is bound to discourage bulls, and it could only occur if too many of them are too eager to jump on the futures every time they show a spark of life. Price action has been worse than discouraging, actually, it has been viciously punitive. That's why I will continue to remind you that, in the minds of most investors, gold is garbage. That description may sound harsh, but its purpose is to keep you from thinking that mere hopefulness will suffice to turn gold around. Although there are a dozen good reasons why gold could be considered undervalued at current levels, that doesn’t mean quotes couldn't continue to fall to levels that seem absurd. I doubt nonetheless that they are headed below $1000, but that still leaves $200 of downside to torture the faithful. We can continue to trade impulsive rallies in the meantime, but only by way of the lesser charts, so that entry risk is very tightly controlled. _______ UPDATE (Sep 17, 9:44 p.m.): The futures are technically on track for a run-up to D=1223.90,  but they'll need to do better than that -- with effortless aplomb -- exceeding the 1228.50 peak shown here, to deserve our mild interest.________UPDATE (Sep 21, 10:19 a.m.): Gold has plunged $20 after failing by $7 to reach my 1223.90 target. What a shocker. Just keep reminding yourself that, as far as most investors are concerned, gold is 'garbage'.  If you don't lose sight of that unfortunate fact, it cannot hurt you.

I've been so skeptical about gold's rallies for so long that I'll stick closely to the technical evidence to guide me this time, lest I miss the start of the real McCoy. Although the December contract looks almost certain to reach the 1223.90 target shown, I doubt that it will push far past it. That's because the point 'B' high of the pattern was so anemic, failing to exceed the mid-August peak. That would have generated a robustly bullish impulse leg on the hourly chart, making the current move more likely to get legs. Whatever happens, we should watch closely to see how buyers handle the Hidden Pivot resistance at 1223.90. If they demolish it, that would be reason to trade more aggressively with the flow. For now, however, traders should regard a move to that number as all but inevitable.______ UPDATE (Sep 13, 4:35 p.m. EDT): Today's punitive reversal actually increased the odds that 1223.90 will be achieved, since the intraday high generated a fresh bullish impulse leg on the hourly chart. Otherwise, the analysis above can stand as given. I am skeptical and no masochist, and that's why I am not gung-ho to jump on this vehicle, even when it looks 'good'.

Rick's Picks will always be a good place to visit if you're a gold bull in need of a reality check. I promise to call 'em as I see 'em, relying solely on charts rather than sentiment to guide my forecasts. Right now, those charts are saying one thing very clearly: gold sucks.  This pains me as much as it does you, since, like many subscribers, I've got ingots, Maple Leafs and Krugerrands socked away for that rainy day we all know is coming. And it truly vexes me that one can buy a St. Gaudens double eagle -- one of the most beautiful coins ever minted -- for close to melt value. (Hey, swap 'em for bitcoin, you jackasses!) Rally 'Too Subdued' Which brings me to today's chart, a picture of Comex Gold that goes back to late 2016.  Notice that the current rally off an 1167.10 low recorded two weeks ago has been rather subdued. Given that the prospect of a drop beneath the December 2016 low at 1162.00 should have scared at least some bulls out of their positions, we might have expected this rally to be steeper and livelier. Instead, it has died just shy of the green line where a "counterintuitive" buy signal would have been tripped (see inset). The so-far failure of the CI trade to trigger is a bearish sign. It suggests that another test is coming of the 1162.00 low, and that if support there fails, gold will be headed down toward 1000 to test a more important low that occurred at 1046 in the final days of 2015. That's the technical picture, and there is no way to sugar-coat it.

I am very skeptical of rallies in gold to begin with, but even moreso in this case, since the low from which it has proceeded occurred in far too obvious a place -- i.e., a few ticks above a key bottom at 1162 recorded in the final days of 2016.  Even so, the pattern shown qualifies as a moderately appealing 'counterintuitive' buying set-up. The actual signal to initiate the trade would occur on an uptick to 1224.70 (weekly chart, A= 1162.00 on 12/16/16). This looks like an odds-on bet at the moment, along with a continuation of the uptrend to at least p=1282.30 (assuming that p does in fact get hit). As always, we can use price action at p to tell us whether this rally is just another cruel tease. If the futures relapse without even having reached p, that would be cause for serious concern.________ UPDATE (August 28, 11:10 p.m. EDT): The futures relapsed to 1205.80 after getting withing $4 of the 1224.70 trigger point flagged above.  We'll continue to watch.

Gold ripped bulls a new orifice today, crashing a midpoint Hidden Pivot support at 1192.50 and greasing the skids to the 1140.30 target shown (see inset). The breach of the midpoint was sufficiently blunt that we can infer further slippage to at least 1140.30 is very likely. The December futures will have a chance to bounce from the 'secondary pivot' at 1166.40, but I wouldn't count too heavily on it. A rally back up to the green line (1218.60) would signal a mechanical short, stop 1244.80. ______ UPDATE (August 16, 9:10 a.m. EDT): The futures have bounced from 1167.10, less than a dollar from the secondary pivot noted above, after being down more than $17 overnight. The yellow flag is still out, and the 1140.30 target will remain valid in theory until such time as 1244.70 is exceeded to the upside.

Although there's still no compelling technical evidence that gold is headed below $1000, there would appear to be little chance that the December futures will not full a further $14 to the 1187.70 target shown (see inset). Traders looking to scalp a promising low can bid there (or slightly higher), stop 1186.90, but don't pass up an opportunity to take a partial profit on a rally of as little as $3-$4. Also, beware of the sleaze factor, since a subscriber  reported being unable to fill a 1202.90 bid Monday morning -- that had been my minimum downside target for the last several weeks -- even though the futures initially traded down to 1202.00 (and rallied $9 before relapsing).

Shifting to the October contract yields a compelling downside target at 1197.7o that can replace a projected range of 1192.70-1201.10 given here earlier for the August futures. Basis the December contract, this is equivalent to 1202.90.  As always, I'll recommend bottom-fishing this Hidden Pivot support aggressively only to subscribers who have made money being short on the way down. A rebound in the meantime to p=1240.60 (basis the December) would set up an enticing if belated 'mechanical' short. We'd want to execute it via a 'camouflage' set-up to significantly reduce the initial, theoretical risk of nearly $1200 per contract. ______ UPDATE (August 7, 1:22 p.m. EDT): So we're not caught unawares if enthusiastic buyers show up unexpectedly, I've set a chart alert at 1237.90, since a print there would turn the hourly chart impulsively bullish.