Gold

Wednesday's pullback in the second half of the session may have disappointed bulls, but it left intact the promising pattern shown. With a near-term target at p2=1113.55, or 1127.70 if any higher, traders should maintain a bullish bias. Using the latter number, a Hidden Pivot, as a price objective, night owls can attempt a 'mechanical' entry by bidding at 1099.44, stop 1089.90. With a bit more work, it may be possible to cut the initial risk by as much as 90% by using a 'camouflage' entry from near p.

Gold's failure last week to extract much benefit from Wall Street's severe jitters should be viewed as a sign of weakness. Regardless, the February contract was in a minor bullish uptrend at the bell, so we'll give it the benefit of the doubt for the moment. A positive start to the week would require a decisive thrust above the midpoint resistance at 1095.40 (see inset). That would put the 1104.20 target in play, but the short-term outlook would become even brighter if the futures can hold above 1099.80. That is the midpoint pivot of a larger, bullish pattern begun from 1056.50 on December 31 that projects as high as 1127.70. ______ UPDATE (January 19, 8:34 p.m.): Tuesday's gratuitous swoon lowered my immediate target to 1099.70, subject to p and p2 resistance at, respectively, 1090.90 and 1095.30. 

Yesterday's tout laid out the bullish case while noting that it would take a very powerful rally to turn the weekly and monthly charts outright bullish. Not so the daily chart, which last week generated the most encouraging 'impulse leg' we've seen since October.  Will it launch into a follow-through leg equal to the first, a $57 surge? My hunch is that the futures will need to pull back a bit more before they attempt it.  If that gives buyers sufficient rest to recharge, we'll know it when they launch into a 'booster-stage' rally of at least $14. Until such time as that happens, my bias will neutral. Day traders should be ready to pounce on opportunities from either side of the market, long or short, but I will signal in real time if something bigger beckons. _______ UPDATE (January 13, 8:37 p.m. EST): Chat-room buzz focused on a supposedly elevated risk of gold taking a nasty plunge on Thursday. I can find nothing in the technical picture to corroborate this, but if it were to prove so, the first sign we might see would be a downdraft exceeding the two labeled 'external' lows without a visually significant upward correction. If you want to jump ahead of this prospect, consider shorting whatever downtrending abc pattern results from a breach of the 1091.80 low recorded at 3:15 p.m.

Yesterday's choppy rally exceeded the bullish target at 1091.10 that we'd been using to predict the course of this latest buying spree. The clear implication is that even higher prices lie ahead over the near-term. The move is especially encouraging because the target, a Hidden Pivot resistance, was a fairly important one -- the highest I could have projected using the hourly chart.  Now, I'll suggest setting an alert at 1098.10, a single tick above an important 'external' peak recorded on November 16. A print at that price would energize bulls for a push that could dwarf the very modest rally that has occurred since gold bottomed in mid-December near $1045. I've reproduced a long-term chart lest permabulls grow excited prematurely. At the very least, just to make the monthly chart seem interesting, the futures would need to surpass the two minor peaks shown. The higher peak lies at $1232, implying a 14% rally from these levels. Thereafter, a continuing move to the green line would trip a major 'buy' signal for a bull-market leg that could hit $2286.  This is still (very) wishful thinking at this point, but that's no reason to be dismissive of the relatively subdued rally that has occurred so far. For what it's worth, it would take a rally exceeding $1433 to negate the bear-market target we've been using at $814. _______ UPDATE (January 7, 10:13 p.m. EST): The futures continue to make steady headway in unspectacular fashion. On the larger intraday charts, the next benchmark for bulls to shoot for is 1123.00, where a technical significant external peak was recorded in early November on the way down. A thrust exceeding it would indicate that bulls have enough energy in reserve to keep this rally going. _______ UPDATE (January 10): Gold ended the week with

Although February gold settled somewhat below the intraday high, the bullish pattern shown, with a 1091.10 target, remains intact. A 'mechanical' bid at p=1073.80 would have required a stop-loss at 1068.00, but keep in mind that stops for this type of trade will be significantly wider than the ones we use with 'camouflage' entries. Note that we do not typically enter this vehicle on the long side in as forgiving a manner as most other symbols, since bullion rallies are so prone to disappoint. _______ UPDATE (January 5, 6:33 p.m.): No change. Tuesday's shallow chop looked like a bullish consolidation.

Gold futures have opened Sunday night on a bullish spike that is not very convincing. The short-term picture would brighten if buyers can get second wind and push this vehicle above the 1069.00 peak shown. Otherwise, the larger, bearish pattern, with a 1043.20 target, will continue to obtain. Even if so, traders can use the p2 pivot at 1052.75 to do some tightly stopped bottom-fishing. _______ UPDATE (January 6, 10:26 a.m. EST): The futures have rallied to a so-far high  this morning of 1092.60, somewhat exceeding my target. This is bullish going forward, but it will become significantly moreso if buyers can now power the Feb contract above  November 16's 'external' peak at 1098.00.  A pullback from just above that number could conceivably generate an excellent, low-risk buying opportunity for anyone not already aboard.

'Disappointing' was the word used most in the chat room to de1scribe yesterday's performance. However, in the impromptu analysis session that I held online Monday, I emphasized the short-term positives, since the futures are having almost as much difficulty achieving minor, bearish targets as bullish ones.  The pattern shown is tradable, albeit cautiously, with a bottom-fishing bid at 1063.90.  Since the point 'B' low is not of the highest quality, I cannot warrant that the D target will catch the low with the usual precision. If the trade lays an egg, we can try again, using a 'counterintuitive' entry based on the larger ABC pattern shown. I've sketched this hypothetically for your further guidance._______ UPDATE (8:27 p.m. EST): Trading this vehicle has become a form of self-abuse. And yet, it somehow keeps us engaged while going nowhere about 85% of the time.  Yesterday's hiccup did little to alter my moderately bullish outlook, but I'll suggest downshifting to the small ABC pattern shown to anyone who would attempt to catch a ride higher.  A pullback to any of the Hidden Pivot levels -- x (green line), p (red line) or p2 (pink line) -- could conceivably set up a 'mechanical' buy using a stop-loss as tight as 1.00 point once any of those levels has been exceeded by at least a point.  This possible set-up is true 'camouflage', since it has the potential to put one aboard the mother ship -- i.e., a larger, bullish pattern that projects to 1096.80

February Gold did what we asked of it last week, closing above the 1075.15 midpoint Hidden Pivot of the pattern shown. This is sufficiently bullish for us to infer that the futures are no worse than an even-odds bet to reach D=1082.70, perhaps as early as Monday morning. However, it would have required a close above that number to suggest that a major breakout is nigh.  Breaching 1082.70 could still happen, and soon. But until it does, we'll use relatively minor patterns such as the one in the inset to project the next potential rally leg.  If we were to shift to a bullish pattern of larger degree, the highest target I could project for the near term -- meaning the next 2-4 days -- would be 1089.70 (60-minute, A=1045.40 on 12/2).  As always, an easy move past a Hidden Pivot resistance will imply that the trend is likely to continue.  Traders familiar with the 'mechanical' entry technique can get long with a bid at 1075.15 after it has been exceeded by a few points, playing for a move to 1082.79; or on a pullback to p2=1078.93 of the larger pattern, playing for 1089.70. _______ UPDATE (December 30, 9:16 p.m. EST): Based on the bearish pattern shown, the futures most immediately were a 'mechanical' short from p=1062.30, and a bottom-fishing prospect at p2=1052.75.

The model portfolio holds a tracking position of one contract with a cost basis that has been lowered to 1047.60 by profit-taking on three contracts that were part of the original position. The futures were in an encouraging upswing in after-hours trading following two days of moderate weakness. However, they'll need to close above the 1075.15 midpoint pivot (see inset) on Thursday to develop bullish thrust for the final week of the year. Most bullish of all would be a rally ahead of the three-day weekend that settles above the 1082.70 target of the minor ABC pattern shown.