Gold

Thursday's explosive rally brought the April contract within summiting distance of a 1308.00 peak from a year ago that I'd labeled 'the Matterhorn' in an earlier analysis.  From a Hidden Pivot perspective, this number is a very important benchmark, since, if the rally exceeds it without pausing for breath, it would greatly shorten the odds that the bear market begun in September of 2011 is over. To be sure, the 814 target I've been using as a bear-market projection will remain in play until such time as 1432.90 is exceeded to the upside. As a practical matter, however, the bear would be gravely wounded if this rally can hit 1308.10 without an intervening correction of more than $89. It will take at least another 2-3 days of strong buying to accomplish this, so sit back and relax for now.

Gold has taken flight Wednesday night following a lackluster performance during the regular session. The sharp rally projects most immediately to 1218.50, which would be a gain of nearly $24 over the last settlement price. Night owls should position from the long side because of the upside potential that remains. All should note, however, that a decisive push past 1218.50 -- i.e., to 1220.10 or higher -- would hint of more strength to come. A Hidden Pivot at 1223.60 would become a logical target at that point, or possibly even 1237.50 if bulls rampage.______UPDATE (10:14 a.m. EST): When a rally blows past a target, as gold has done this morning with a pop to 1244.40, it means the rally cycle isn't over. The 'Matterhorn' at 1308.00 looms, but it is now a lot closer. If the rally continues, uncorrected, and surpasses 1308.00, I'd infer the bear market begun in the fall of 2011 is over.

Monday’s surge did everything we’d asked of April Gold and more, raising the odds that this rally is more than the usual Whoopee Cushion effusion that has repeatedly teased bulls to the limits of their patience for the last four years. At the intraday high, the futures had demolished a daunting resistance at 1191.90, where April Gold peaked precipitously in mid-October. That leaves only a lesser peak at 1232.30 (see inset) and January 2015’s ‘Matterhorn’ at  1308.00 as impediments to the resumption of the long-term bull market. If the rally, which is still uncorrected on the weekly chart, continues without a significant pause, surpassing both of those peaks without taking a breather, I’d infer that the bear market is over.  In the meantime, because the uptrend is becoming overextended, I’ll forego a night-in-advance trading strategy, since getting aboard this late in the rally is going to be tricky no matter how we attempt it. I do not mean to suggest, however, that it could not get much more overbought, and go significantly higher, before buyers take a rest._______UPDATE (5:30 p.m.): So far, so good. We keep expecting gold to go kamikaze, but the rally continues to hold up surprisingly well. Tuesday's so-far shallow correction portends an imminent thrust to as high as 1222.80 over the near term. That's assuming the so-far retracement low at 1185.90 holds and that buyers have the wattage to push past midpoint resistance at 1204.40. A pullback to that number after it has been exceeded for a few bars by about $3.50 would set up a 'mechanical' buying opportunity, stop 1198.20.

Buyers got second wind on Friday, turning what had begun as a disappointing day into a romp for bulls. The rally extended gold's winning streak, the best we've seen in nearly a year, while raising the likelihood that October's 1191.90 high will be tested. If the futures exceed that peak and go on to better May's 1232.30 high without correcting significantly in-between, it would give bulls more credibility than they've had in years.  A pullback from a just above 1191.90 could provide an excellent low-risk buying opportunity for Pivoteers prepared to act when fear and uncertainty are ratcheted to-the-max.

The futures are bound most immediately for the 1165.90 target shown. Although several subscribers reported getting long from around 1143 based on guidance provided here yesterday, I am not establishing a tracking position because the trade did not conform to our criteria for 'mechanical' entries. If Thursday night's price action does, however, it could conceivably set up a 'mechanical'  buy on a pullback to p2=1151.55, stop 1146.75. Initiate this trade only if you understand the rules, but be aware in any case that with a little more work, a 'camouflage' entry can get you aboard at the same level with considerably less risk. As always, an easy move through the target would imply more upside in the days ahead._______ UPDATE (10:25 a.m. EST): The futures have mildly disappointed, selling off sharply after getting no higher than 1164.00.  The 'mechanical' trade from 1151.55 was not possible, by the way, since there was no pullback to the pink line before gold summited.

Gold’s upward progress has been unspectacular. Even so, nothing, as the saying goes, is more bullish than an uptrend. Wednesday’s thrust was sufficiently robust that, for a change, we won’t need to give bulls the benefit of the doubt. That means we can take the 1154.40 target more or less for granted. The tradable implication is that it makes a pullback to 1142.90 a ‘mechanical’ buy, provided the futures are pulling back from at least 1147.00 and that the pullback takes at least 2-3 bars to play out on the hourly chart. I’ve sketched this hypothetically for your further guidance.

As last week drew to a close, the futures looked to be developing thrust for a shot at the 1273.80 target shown. Although Thursday's upside penetration of the 1232.65 midpoint resistance was decisive enough to shorten the odds of a push higher, the market environment evidently was not favorable to attempt it on Friday. Now, a 'mechanical' bid to get long at 1232.65 can be used once the red line has been exceeded in a way that meets our criteria for this type of trade. Basically, that would imply a thrust initially into the range 1236-38, followed by at least three consecutive bars that have some white space between the bottom of the bars and the red line. A relatively hefty, 1218.00 stop-loss would be needed, but you can reduce the initial risk by as much as 95% by using 'camouflage' to get long once the criteria for a 'mechanical' bid have been met. I've sketched a hypothetical entry set-up for your further guidance.

Subscribers reported using the 1127.70 target first broached here nearly two weeks ago to exit long positions a hair from Wednesday's top. It occurred at 1128.00, exactly three ticks above our price objective, a crystal-clear Hidden Pivot. The pullback since then has come down to as low as 1119.80, saving wear and tear on bulls who might otherwise have stayed in the position. As predictable as the rally was, we'll need to see how the February contract handles the pivot before we infer that the still-modest upthrust is more than just another tease. Take encouragement if buyers get second wind and push the futures above 1128.00 by week's end. It would be still more bullish if the February contract closes above that number for two consecutive days. Were that to occur, I'd infer bulls are game to test highs near 1190 recorded back in October. ________ UPDATE (February 1, 1:39 a.m. EST):  Zzzzzzzzzzzzzzz.  I've set a snooze alert at 1128.60, where the April contract would become impulsively bullish on the lesser intraday charts. A pullback from a high exceeding that number by 0.50 or less could set up an opportune 'camouflage' buy. _______(UPDATE ): February 3, 2:38 a.m.): Gold may not be going anywhere, but at least it's not going down. This is bullish, even if we might wish for better.

Gold is in the fourth week of a modest uptrend that projects to 1127.70.  I suggested bailing out of a long position on Friday for a small loss simply because there are easier ways to make a buck.  Our goal when we initiate a trade is to have it go in-the-black as quickly as possible. We should choose trading vehicles that we don't care about, since trading boils down to catching a profitable ride aboard a dot that moves up and down on a chart. If gold as a trading vehicle had a better track record -- i.e., one that offers better odds of actually reaching a 'D' rally target -- I'd have had no problem sticking with the position.  Perhaps at some point we will; for if and when gold's uptrends start reaching, then exceeding, minor Hidden Pivot targets with ease, we can start to take it more seriously. But using gold futures for leverage instead of any of ten-thousand other trading vehicles?  It's simply not worth the aggravation. _______ UPDATE (10:56 p.m. EST): At day's end the futures were head-butting the secondary pivot at 1113.55 (see inset), presumably bound for the 1127.70 target flagged above. Any progress above it would hint of more upside to come -- perhaps even a test of  mid-October's high near 1192.00._______ UPDATE (January 26, 9:40 a.m.): It was out of boredom that I suggested exiting the long position. Now, however, an exit has been signaled using a 'dynamic' trailing stop. Based on an overnight high of 1118.00, there remained $9.70 of potential profit from a move to the 1127.70 target. That implies that bulls should have stopped themselves out around 1114.70, which would have kept intact the 1:3 risk/reward relationship that I always recommend. The 1127.70 rally target remains valid nonetheless. If it