Gold

Today's selling should have gone no lower than 1322.70 if the dirge begun on July 6 from a peak at 1384.40 is about to end. Instead, the breach of that Hidden Pivot support portends yet more slippage, presumably below some 'structural' supports beginning with the one at 1314.80 recorded on June 28, when the futures pulled back sharply from their Brexit spike. This would pose no great threat to the larger, bullish trend that has obtained since January, but it should put bulls in a cautionary frame of mind for the week ahead. The possible resumption of the bull market would be signaled thereupon by a booster-stage rally of at least $32.00. That would signal the possible beginning of a move with the potential to push gold above $1400 for the first time since 2012.

Sellers have been so persistent lately that it seemed appropriate to display a chart that puts their so-far blatant ineffectuality on display. Just another bullish flag, one might infer, and no more than a hint of menace even if December Gold should fall a further $50. We'll wait till that happens before we start to worry, but only the bold and the nimble have reason to trade this vehicle right now. Nudge me in the chat room if you get the urge to throw a harness on this rabid badger. Otherwise, sit back and enjoy the show!

Tuesday's seemingly pointless chop actually created a bullish impulse leg on the hourly chart, although anyone who slept through the process should be held blameless. I've sketched a hypothetical 'counterintuitive' entry set-up for your guidance, but I would caution against using it unless the point 'C' low falls within the range 1339.00 - 1340.00. _______ UPDATE (August 24, 9:00 a.m. EDT): The trade tripped at 1341.90 (4:00 a.m. EDT) and got within three ticks of the 1344.40 midpoint pivot where partial profit-taking would have been appropriate. However, it's doubtful anyone who took the signal would have escaped the extreme, $11 downdraft that occurred moments ago for who-knows-what reason. I'll wait till I hear from traders in the chat room before I score this one, but I won't be tracking it.

Since bulls managed to hang in there until a Fed-induced seizure passed, we'll give them the benefit of the doubt on Thursday by focusing on the bullish pattern shown, with a 1374.50 target, rather than on a still-valid correction target at 1328.50.  Spasms between the green and red lines have been so freakish that I won't even hazard a suggestion that you attempt a 'mechanical' entry at either. 'Camouflageurs' who think they're up to the task can try to get aboard that way, but I'll be content to watch from the sidelines. _______ UPDATE (August 19, 1:15 a.m. EDT): Like you, I'm running out of patience after seven straight days of gratuitous spasms. The modest, 1374.50 rally target remains valid nonetheless, as does the bearish one down at 1328.50 if buyers should decide they've had enough for now. _______ UPDATE (August 21, 1:05 p.m.): No change despite Friday's weakness. _______ UPDATE (August 22, 7:32 p.m.): Zzzzzzzzzzzz.

The pattern shown, with a 1374.50 target, is barely hanging on, having spent two straight days struggling to get airborne. Today's pullback to the green line was technically a 'mechanical' buy, but we'll pass up the opportunity and watch from the sidelines. A cautious stance is warranted because the 'counterintuitive' buy signaled when the green line was hit on the way up looked too promising to have failed. Looking ahead to Friday, if sellers prevail, expect a quick drop to the 1327.90 downside target of the corrective pattern. If the pivot is exceeded, that would imply more weakness is coming next week. There are bullish targets still outstanding above $1400, but bullion could remain under pressure if the broad stock averages continue higher. _______ UPDATE (August 13, 12:34 p.m. EDT):  We'll back away until the carny operators who have been spiking gold each and every morning lately decide that it's time to modify their grift. The 1327.90 target in the chart (see inset) remains valid and seems more likely than before to be hit, since bulls will have grown increasingly discouraged by the recent succession of bull-trap spikes._______ UPDATE (August 16, 6:25 p.m.): Today's gratuitous feint to 1364.30 slightly raised our correction target to 1328.60. Notice that the futures bounced precisely from the red-line 'midpoint' pivot. This makes a presumably tradable bounce precisely from the new target more likely if it is reached.

The ABC pattern shown is ugly enough to be useful, especially since it has already gifted us with a 'counterintuitive' buy signal at the green line that could have been worth as much as $900 per contract if traded. All of the 'external' peaks on the hourly chart have been used up, however, so we'll bide our time waiting to see whether buyers can power this vehicle past the target. If so, it would imply that a larger pattern with the potential to reach 1424.60 is in play. Here are the coordinates on the 240-minute chart: A=1259.10 on 6/23; B=1368.90 on 6/24; and C=1314.80 on 6/28.

Today's rally was over in a relative blink, but not before it tripped a 'counterintuitive' buy signal at the green line (see inset) for a shot at 1374.50. I advised passing up the opportunity in the chat room, however, because I didn't quite trust it. In retrospect, although the futures spent nine hours doing nothing after signaling the buy, the very shallow pullback that followed appears to have left shorts on the hook. They were chasing this vehicle higher Tuesday evening, presumably bound for the red line, a midpoint Hidden Pivot resistance at 1351.70. Bulletin: As we went to press, the buying spiked the December contract nearly $6 in ten minutes. To trade the rally, which points to 1356.20, I'd suggest using the Hidden Pivot levels shown in the chart-within-the-chart. In theory this would allow you to use the stop-loss applicable to the small pattern to catch a ride to the 1374.50 target of the larger one. ________ UPDATE (August 10, 10:38 a.m. EDT): The  trade detailed above could have produced a gain overnight of as much as $1350 per contract on initial risk of about $200. In actuality, when the futures popped above p=1350.10 of the small pattern and pulled back to the pivot before launching sharply higher, the pullback low was 1349.70, meaning the trade was never more than four ticks in-the-red. Also, partial-profit-taking on 75% of the position would have left you with a single contract, cost basis 1337.80, to 'swing for the fences'.

Gold futures have made no headway since early July, when the December contract came within a hair of a 1385.80 target that had taken six months to reach (see chart-in-chart inset). The correction has been relatively shallow so far, and that's encouraging. However, the bigger picture shows that this latest phase of the 2016 bull just missed 'impulsing' past an imposing peak at 1392.60 recorded in March 2014. Such timidity should temper our expectations at the moment for an explosive breakout. More likely in my estimation would be some backing and filling of the 172-point gain achieved since early June.  I'm not ruling out a big move over the next few weeks, and it would have powerfully bullish implications if it were to exceed the 1432.90 peak (an approximation, since this is a continuous chart) achieved in August 2013 without a significant pullback on the weekly chart. Most immediately, Friday's slide left me with no strong bias, only a mild interest in this set-up taking shape on the hourly chart for a possible 'counterintuitive' buy Sunday night or Monday: A=1336.70 (7/29 at 5:00 a.m., EDT): B=1374.20; and C=?. _______ UPDATE (August 8, 6:44 p.m. EDT): Monday's slight weakness negated the trade I'd suggested, but here's another pattern from the hourly chart that could evolve overnight into a 'counterintuitive' buying opportunity: A=1328.30 (7/27); B=1374.20 (8/2); and C=won't exist until a buy signal is tripped via an 11.50 point rally from a low occurring between 1329.00 and 1331.00.

The futures reversed sharply without having reached the 1352.10 correction target noted in my last tout. The rally created an impulse leg on the hourly chart that is sufficiently robust to justify using the bullish pattern shown. This implies that a pullback to the green line (1364.50) would trip a 'mechanical' buy signal, stop 1355.00. If the nearly $1000 initial risk seems too rich, consider using a 'camouflage' entry as an alternative.  Incidentally, perhaps the best way to have gotten aboard the rally Thursday morning was by way of a 'counterintuitive' entry with a buy-stop at 1360.20, the trigger price of the small red ABC pattern shown. ______ UPDATE (August 5, 19:21 a.m. EDT): This morning's knee-jerk reaction to 'bullish' payroll data has destroyed the bullish pattern noted above. Now let's see if a new one is formed with a point C low above the original A. If it is just above it, that could set up a 'counterintuitive' buying opportunity.  Currently, on the three-minute chart, the futures were a 'mechanical' short at p=1347.60, bound for d=1337.30 (where a=1366.60 at 8:27 a.m.) They'll have a chance to bounce from p2=1342.50 momentarily.