Gold

I've tried very hard lately to give gold the benefit of the doubt, seizing on every bullish impulse leg on the hourly chart as the possible start of something good. The weekly chart leaves less room for optimism, however. In fact, it tripped a 'mechanical short' from 1128.30 last week, stop 1180.00, for a possible ride to as low as 971.20. Nothing less than a rally exceeding July 11's 1348.90 peak would suffice to put the bear in retreat, although I'll continue to look for encouraging signs in much less powerful rallies. Most immediately, that would imply a push past May's 1234.00 peak. If bulls can't muster this feat by early September, it would provide fresh evidence that the bear market is still very much with us.

With stocks plummeting around the world, it’s clear that gold has miserably flunked the safe-haven test. Virtually no one would have predicted that bullion prices would barely budge if the Dow Industrials were to fall more than 2100 points in just three days. And yet, that’s exactly what happened. Why? Forced liquidations and falling oil prices were obviously weighing on the precious metals sector. But it’s also possible that despite the ferocity of the selling, the institutional heavyweights who control the markets were confident that everything would turn out all right. If so, not only did they feel little fear as shares fell, they may also have been relieved to see some hot  air come out of a potential bubble. While we winced as trillions of dollars of market valuation vanished in a blink, they saw opportunities for bargain hunting as stocks came to fully discount a rotten Q3. Whatever the case, the best way to look at gold's charts at the moment is to pretend we know nothing about the stock market's troubles. Seen from that perspective, December Gold appears to be consolidating for a push above 1200 in the weeks ahead. Notice that although the futures gave back most of yesterday's modest rally by day's end, the intraday high poked slightly above an 'external' peak at 1169.00 recorded back in early July. This generated a bullish impulse leg on the daily chart, implying that the pullback from Monday's high is likely to produce a follow-through rally. Were it to equal the rally from mid-August's 1108.50 low, the futures could trade as high as 1206.00 by month's end or early September. _______ UPDATE (August 26, 12:45 a.m. EDT): The hourly chart shows the futures bound for a clear Hidden Pivot at 1127.20.  If this minor support fails, gold is

We saw gold's rise steepen last week as the tempo of the stock-market plunge picked up. Under the circumstances, shouldn't Friday's climactic selling on Wall Street have produced a corresponding surge in the price of gold?  Instead,  bullion futures rallied to a modest new high Thursday night, only to recede and go flat while investors verged on panic the following day.  We'll give gold the benefit of the doubt for now nonetheless, since the lesser charts remain bullish. But we should play close attention to the bearishly impulsive abc pattern that took shape on the hourly chart as the week drew to a close. Specifically, if the pattern shown exceeds its d target, that would be warning of possible weakness ahead. The point c high, and therefore the target, will remain speculative until the futures begin to trade on Sunday night. Alternatively, if quotes move higher from the get-go, that would alleviate any suspicions we might be harboring about the robustness of the bull trend. In such circumstances, an 1181.00 target would obtain, subject to an upside breach of the 1164.80 midpoint resistance with which it is associated.  The bullish pattern is noted with green ABC coordinates; the bearish pattern, with lower-case red ones.

Gold's rally from the August 8 low near 1082.00 has exhausted my big-picture targets, but we can still zoom in on some lesser patterns to come up with usable targets for the extension of the larger bull cycle. The one shown has a D target at 1167.60 that looks like it could prove useful. Trading concerns aside, we'll know that there's yet more buying power percolating below the surface if buyers push easily past that Hidden Pivot.  Night owls can attempt a mechanical 'buy' at 1158.50 if the setup develops in the way we require. _______ UPDATE: 7:54 a.m. EDT): The 1167.60 rally target flagged above came within three ticks of nailing the exact top of last night's sharp rally. If you initiated a short, please let me know in the chat room and I'll establish a tracking position for your further guidance. The pullback has been mildly impulsive, and I'll suggest monitoring it this morning to gauge the strength of the selling: a=1165.30 (2:00 a.m.); b=1148.50 (6:00 a.m.); c= 1155.70 (?; 5:30 a.m.).    

Gold futures have been stair-stepping higher for two weeks, pausing precisely at each Hidden Pivot in a succession of rally targets that I've posted in the chat room. The bullish pattern I recommend using for this move is shown in the accompanying chart, and it leaves room for more upside over the near term to 1153.40. The midpoint resistance has already been breached, indicating that the rally is likely to reach a minimum 1142.20 today or tomorrow.  Night owls who fully understand the technique should consider a mechanical entry on a pullback to p=1131.00, stop 1127.50. _______ UPDATE (7:55 a.m. EDT): The futures topped overnight at 1141.80, four ticks from my target. If any subscriber is still long for the presumptive final push for this cycle to 1153.40, please let me know so that I can establish a tracking position.  Strictly speaking, the 'mechanical' trade I'd suggested would not have filled, since the pullback came down only to 1132.10, missing our bid by a small but crucial $1.10. Given the bullish target, however, there were other ways to get aboard, as some of you may have discovered.

Gold did nothing interesting yesterday, but I still like the quiet buoyancy of the rally begun earlier this month. If it pulls back to 1102.00-1103.00, I'll recommend buying a single contract, no stop. On the chance that it doesn't pull back, use the 5-minute chart to get long via 'camouflage'. I've sketched a hypothetical set-up for such a trade in the accompanying chart. The key here is an AB impulse leg that exceeds 1122.20 without getting past the slightly higher external peak at 1122.70. _______ UPDATE (9:35 a.m. EDT): The impulse leg somewhat overshot the mark, topping at 1123.70.  Entry at the new point x, 1121.80, would have worked anyway, probably because the impulse leg was perceived as a failed rally relative to the obvious high at 1126.30 recorded on August 12. I'll assume no one did the trade unless I hear otherwise in the chat room, but FYI, my minimum upside projection is 1125.60. Anything more than a few ticks above it would portend 1129.40 (p2), or perhaps D=1133.20. This is an unusual time of day for gold to be rallying, and we should therefore take encouragement from the fact that the rally is holding.

It's encouraging that yesterday's thrust exceeded an 'external' peak at 1119.00 recorded on July 20 (see inset), refreshing the bullish impulsiveness of the hourly chart. The overshoot was by only a dime -- pretty subtle, since it will look like a double top to most technicians other than Elliott Wavesters. But to us the rally was impulsive, and it implies a follow-through thrust over the very near-term to the 1126.90 target shown. The futures will first have to knock off the midpoint resistance at 1114.00, but if they can manage this feat without much effort, you could consider a push to at least 1126.90 a solid bet. Anything exceeding 1126.90 on the first try would be a bullish harbinger for the remainder of the week. _______ UPDATE (5:15 p.m. EDT): So far, so good. A strong rally yesterday brought the futures to 1125.50 -- 1.40 from our target. Now let's see how much stopping power this Hidden Pivot has got. An easy move through it would be very encouraging.

Monday's rally faded in the stretch, but not before poking above three 'external' peaks to create a still-promising bullish impulse leg on the hourly chart (see inset). The retracement left intact the pattern shown, and we can use it for gauging the strength of any new upthrust.  Assuming the point C low at 1093.30 is not taken out, an easy move past p=1103.10 would imply bulls are warming up for a shot at D=1112.80.  we could take further encouragement from a move past that Hidden Pivot resistance, especially if the futures continue to surpass new 'external' peaks in the process.

There are no crystal-clear patterns that would yield a commensurately clear target, so the one shown at 1041.50 will have to do, at least for now. I've favored it because of the many bounces that occurred precisely from the 1080.25 midpoint pivot that is associated with the target.  There are five possible 'mechanical' trades that could conceivably be derived from this picture over the next week or so: 1) a tightly-stopped long from p (although the many bounces from p that have already occurred will have diminished the usefulness of this pivot); 2) a short from p after it has been exceeded by a perhaps three or so points; 3) a tightly stopped long from p2; 4) a short from p2 after it has been decisively penetrated; and, 5) a long from D=1041.50. More downside to these Hidden Pivot targets should NOT be regarded as a foregone conclusion. My gut feeling is that gold will rally very sharply if the stock market begins to fall dramatically. That would imply the futures are basing here rather than being under distribution. The first hint of this would come on  a rally exceeding a visually distinctive external peak. At present that peaks lies at 1119.00 (July 20).