Gold

A Rick's Picks 'lurker' asked whether a longstanding target in the low $800s is still valid.  Indeed it is, as the chart clearly shows. Moreover, it would take a rally exceeding the 1432.90 point 'C' of the pattern to invalidate the target. If you are inclined to supplement coldly rational technical analysis with a smidgen of hopefulness -- not something I would recommend, actually -- then, yes, there is room for that here, since the futures have yet to exceed to the downside the 1125.20 midpoint pivot of the pattern. Failing to do so is a common feature of healthy bull markets, and a failure precisely at the midpoint as has occurred here is even more encouraging. But there is a double-edged sword in this interpretation, since if the support fails badly, a further decline to as low as $817.50 would become significantly more likely. _______ UPDATE (8:50 a.m. EDT): If you've been waiting patiently to jump on a rally, the first decent one we've seen in  at least a week was over in about 16 minutes shortly before dawn.  Two whack-o price bars that were manifestly untradable pushed the futures to a so-far intraday high of 1196.30. Suspiciously, the rally failed to exceed a key 'internal' peak at 1199.30 recorded on May 5. That is also the point 'C' high of a bearish pattern projecting to 1155.60, and if buyers can't get past it today or tomorrow, look for a relapse to that number.

Yet another exasperating day, so we'll focus on a somewhat bigger picture.  The one shown is made compelling by the razor-sharp ABC coordinates, but also by the precise pounding yesterday on the midpoint pivot at 1180.25.  Bulls appear to be fighting, if not for their lives, then for their sanity. Regardless, they'll have to hold this brick above 1180.25 to prevent more slippage to D=1161.20. An opportunity to get long via camouflage is present here already, but I wouldn't risk more than $60 theoretical to get on  board. Alternatively, a decisive penetration of p (i.e., by at least 3.5 to 4 points), and then a rally back up it, could set up a 'mechanical' short. _______ UPDATE (through May 10, 6:00 p.m. EDT):  There's nothing to see here, folks, so let's move along.  On the 15-minute chart, the gratuitous price spasms of the last three days look like atrial fibrillation on an EKG (see inset).

Gold was buoyant for only about 20 minutes yesterday, but that was sufficient to push it above the 1185.70 rally target flagged here in the middle of the night.  By day's end the gain had been trimmed to a modest $10 or so, but at least the futures were moving in the right direction.  Now let's see if they can reach the 1197.70 target shown.  This goal is conservative, but that's appropriate, since there wasn't enough buying power on Monday to reach even a minor midpoint resistance, let alone breach it. The pivot has migrated lower and now sits at 1192.00. As always, an easy move through p would suggest a continuation of the trend to its 'D' sibling -- in this case, 1197.70. _______ UPDATE (May 5, 8:23 p.m.): The rally is getting shakier, since yesterday's thrust failed to exceed any new 'external' peaks on the hourly chart.  The futures will need to touch 1207.50 to accomplish this today; otherwise, look for a relapse to at least 1180.20, a midpoint support that comes from the hourly chart (a=1206.50 on 4/30). ______ UPDATE (May 6, 11:06 p.m.): Yesterday's spasm traced out a gratuitous hump on the intraday charts that was amounted to much less than we might have hoped.  The good news is that the 1185.00 Hidden Pivot support shown has a chance to stanch the blood, at least for the time being. ________ UPDATE (May 7, 9:01 a.m.): Gold rarely fails to disappoint, and so it was last night. Although bottom-fishing the 1180.20 support I'd noted above could have been worth as much as $470 per contract to anyone nimble enough to exit on the fleeting spike to 1186.90 that followed, this would have happened AFTER sellers had already trashed the 1185.00 support featured in the chart. In the

Although lately I've been treating a longstanding bear-market target in the low $800s as practically a done deal, my trading partner, John Boutiette reminded me last week that, from a purely technical standpoint, such an outcome would not even become probable, let alone certain, until sellers trash the 1120.50 midpoint support shown. So far, the low of the 43-month-old bear market is 1134.10, leaving about $13 of room before we have reason for deep concern. And just to be sure, I'll stipulate that the June contract close beneath 1120.50 for two consecutive months before we assume the 808.50 target is in play. Meanwhile, that midpoint support should be regarded not only as a minimum downside objective for now, but as a potential spot to try bottom-fishing with a tight stop-loss. _______ UPDATE (1:42 a.m.): Something has pushed the futures into a moderate rally early Monday morning. On the 10-minute chart, where A=1176.90 at 9:10 p.m., it points to a minimum 1185.70, subject to possible Hidden Pivot (p2) resistance at 1184.50. 

We'll probably know before the opening bell whether Thursday's nasty, $34 selloff was merely gratuitous. Rumor had it that some big sellers clobbered gold yesterday because they felt like it, but we'll reserve judgment until it has been confirmed by the Times (take your pick which Times). Notice, however, that the 1253.50 rally target we've been using this week is still valid, albeit barely, since the low of yesterday's hit-job left the point 'C' low of the rally pattern intact. My bias was mildly bearish shortly before midnight, but I'm not going to lay any odds. If bears should triumph, look for support and a tradable bounce from 1164.50 (daily chart, A=1224.50 on 4/6).

The hourly chart has taken an interesting turn, literally. Notice that the futures pulled back sharply and precisely on Tuesday from the red line, a midpoint Hidden Pivot at 1215.10 associated with a 1254.50 target that lies $39 above it. Although we can't predict for certain whether the futures will eventually get past it, if and when they do, it would augur more upside to at least 1234.80 (p2), and thence 1254.50. Both of these Hidden Pivots should impede the rally noticeably, but if they put up little resistance, we could infer that still higher prices are coming. Also implied is that a pullback to p=1215.10 after it has been exceeded by perhaps 3 to 5 points would set up a ‘mechanical buy’ with a 1202.00 stop-loss. Entry before then is not only possible but recommended, provided you use camouflage to limit the initial risk to perhaps $50 theoretical per contract.

A $20 rally here, a $10 rally there, and pretty soon we're talking about the dawning of a bull market!  It's too early to tell, of course, but we should guard against the tendency to be dismissive of every positive event in the bullion asset world. In this case, it's a two-day rally with so-far shallow corrections and a shot at a third straight day of upwardliness. My minimum objective for the very near-term is p2=1219.50 (see inset), but anything above it would imply more strength to at least 1226.40. Most bullish of all would be an easy move past that last number and a close above it. Were that to occur, the next impediment on the way higher would be 1235.70, and thence 1256.20.  Traders should prepare to jump on this vehicle when these 'mini-breakouts' occur.

Some subscribers evidently were able to make hay with the 1181.50 buy trigger flagged here Sunday night.  "I also took the [gold] trade by buying JNUG this morning 3000 shares," reported one subscriber in the chat room, at 11:45 a.m. "Just sold for 5K profit. Paid this months mortgage on my house. Thanks Rick." Down on gold as I've been lately, the lesser charts looked ripe for a turn for reasons that I explained in detail.  Indeed, the futures vaulted $27, to an intraday high of 1206.70. Moreover, they were holding on to most of the gain Monday night.  Because the peak of the upthrust exceeded highs recorded last week near 1205, it was bullishly impulsive on the hourly chart. I won't presume to have a crystal ball, since a pullback low has yet to be established, but we'll use the pattern shown to project a next rally leg once point 'C' is in.

Relative to the low at 1142.40 recorded March 17, June Gold remains in a bullish trend that it has been correcting for the last three weeks. What validates this interpretation is that early April's 1224.50 high slightly exceeded a prior peak at 1223.70 recorded on March 2 (see inset). That makes the entire rally picture since March 17 low bullishly impulsive, although recent weakness has created a bearish impulse leg of lesser degree. This is 'dueling' impulse legs, and for the moment, the bullish one still holds sway. Even so, there's an outstanding correction target at 1168.00, and this Hidden Pivot support must hold if we are going to give bulls the benefit of the doubt. More bullish still would be a rally Sunday night that exceeds 1181.50, an event that would turn the two-minute chart bullishly impulsive. A bc-type pullback from just above that number would presumably be tradable via 'camouflage' and entail theoretical entry risk of perhaps 0.40-0.60.