Gold

The futures may need a day or two to consolidate Friday's rally, but if there's more strength behind it than I am imagining, it would be confirmed by a move past 1292.50 today. That's the midpoint resistance of the pattern shown, and a close above it would imply the futures are imminently bound for its Hidden Pivot sibling at 1333.90. The corresponding numbers for the April contract are 1293.60 and 1335.10, respectively. Night owls can use the 15-minute chart to attempt bottom-fishing. At the moment -- 11:34 p.m. EST Sunday night -- the relevant pattern, with a D target at 1276.50, has respective abc coordinates at 1283.90, 1279.10 and 1281.30.

If you felt the sting of yesterday's selloff, take encouragement from the fact that it looks merely corrective on the daily chart. That's because the recent high at 1307.80 managed to exceed a prior 'external' peak recorded back in August before bulls took a breather. Healthy rallies tend to do this with each new thrust, creating fresh bullish impulse legs, while weak ones usually chicken out an inch shy of an earlier peak. The implication in this case is that when the presumptive correction ends, the next rally cycle could be good for as much as a $140 gain.  Expect more weakness in the meantime, however -- for at least the next 2-3 days, that is -- because yesterday's low decisively exceeded a 1261.60 Hidden Pivot support by $10. ______ UPDATE (11:28 a.m. EST): After turning from a low of 1257.00, the futures have traded as high today as 1274.70.  Ordinarily I would say the reversal is 'premature', but because it has already exceeded a key 'external' peak at 1273.50 on the 15-minute chart, signs look good for continued strength.

Considering how weak the stock market and the dollar were yesterday, we should have expected more of a pop in gold.  Still, the direction was up, the rally was mildly impulsive on the hourly chart, and that is surely progress. The rally pattern shown is more than a little gnarly, but it looks sufficiently serviceable to allow a projection to 1327.60 over the near term. Of course, the futures will first have to get past the midpopint resistance at 1301.30, and with it an 'external' peak at 1299.20 that stymied bulls yesterday. My hunch is that once the futures have exceeded 1301.30 by as little as a point, the move to 1327.60 will progress swiftly.

The futures look to be tortuously on their way down to at least 1264.00, although bulls could take encouragement from any impulsive rally that begins from somewhere above that price.  The most logical place for a 'premature' rally to commence would be at either 1274.60 or 1269.50, respectively the midpoint Hidden Pivot and the D target of the small downtrending pattern displayed at the rightmost edge of the chart. Stops as tight as three ticks could be used to bottom-fish at either number. _______ UPDATE (11:08 a.m.):  Posted in chat room 80 minutes ago: "The good news is that Feb Gold has gone bullishly impulsive on the hourly chart without having reached a correction target. What troubles me is that the rally is so feeble on a day where it stood to pick up power from the collapse of the broad averages. On balance, bulls get the benefit of the doubt, simply because of that nice impulsive leg (which is still developing).

Gold showed some pluck yesterday, rising moderately even though the broad averages were getting squeezed into the ionosphere. This is usually fatal for gold, but not yesterday. The February contract spent most of the day head-butting a 1305.00 midpoint resistance associated with a 'D' target at 1330.90. Once above the midpoint, look for an easy 25-pointer. Night owls should look on charts of 5-minute degree or less for boarding opportunities, since the lurch toward the target is likely to begin in off-hours trading.

Gold showed some pluck yesterday, rising moderately even though the broad averages were getting squeezed into the ionosphere. This is usually fatal for gold, but not yesterday. The February contract spent most of the day head-butting a 1305.00 midpoint resistance associated with a 'D' target at 1330.90. Once above the midpoint, look for an easy 25-pointer. Night owls should look on charts of 5-minute degree or less for boarding opportunities, since the lurch toward the target is likely to begin in off-hours trading. _______ UPDATE (January 25, 10:48 p.m.): The February contract popped briefly to 1307.80 on Friday but couldn't maintain altitude. There is no change in my outlook, however: A run-up to 1330.90 awaits if and when a lesser Hidden Pivot at 1305.00 has been decisively exceeded.

The stop-loss I recommended for those still long at yesterday's 1307.00 top would have ejected bulls from the position near 1296.20.  Buy-and-hold is NOT an option in this vehicle, since, more than three years into a bear market, any downtrend could be the start of something nasty. We shouldn't sweat the extra work of getting in and out as long as entry opportunities on the rallies are numerous and relatively easy to exploit. One to consider Wednesday night if you're a night owl is a bid at the 1285.60 midpoint Hidden Pivot support shown.  A three-tick stop-loss would be appropriate, but keep the position size down to a single contract unless you make entry via 'camouflage.' Of course, an easy move through the pivot would be warning of more downside to 1275.30, a Hidden Pivot support that could be bottom-fished with a stop-loss as tight as 3-4 ticks. ________ UPDATE (January 22, 9:21 a.m.): The futures were unusually uncooperative, pulling back to 1283.30 for a small bounce before making an eventual low at 1279.10.  In retrospect, the only 'easy' way in would have been via camouflage, where entry was sginaled on the 15-second bar chart at 1283.20 (7:34:30 a.m.)

The steep rally of the last week has made some in the chat room skittish, if not quite eager to jump off the train. However, I'd suggest hanging on for at least another day or two, since a rally of just 0.90 above the so-far high at 1297.50 would exceed August's external peak at 1298.40, generating a robust new impulse leg on the daily chart.  Traders who followed my most recent guidance would have been long from 1275.80 to Tuesday's 1297.80 high, for a theoretical gain of $2200 per contract. To reboard, or to get on board belatedly, night owls should use the following rally pattern to craft a 'camouflage' entry opportunity (5-minute): A=1293.80 (9:25 p.m. EST on 1/20); B=1297.50 (10:05); C= (still undetermined). ________ UPDATE (January 21, 11:38 a.m.): Using my guidance above, you bought near x=1295.80, took profits on half the position at 1296.70, and on 25% more at 1298.50. The single contract you'd have left, with a profit adjusted cost basis of 1291.20, can be held to swing for the fences.  I'd suggest tying it to an 'impulsive stop-loss' on the 5-minute chart, implying at the moment that you'd exit on an unpaused dive exceeding 1296.30.

Considering the clarity of the 1264.60 rally target we were using (see inset), the so-far $2.60 overshoot of this Hidden Pivot can only mean that still-higher prices impend.  We'll have to wait for the futures to pull back before we calculate a target for the next upthrust, but there's potential to hit 1300. What has all but clinched the move is that yesterday's blast exceeded a key external peak at 1256.20 recorded on 10/21. ______ UPDATE (January 16, 9:2 a.m.): The daily chart leaves room for an 'extension rally' to 1274.20 over the near term, but that would likely max out buyers for at least a short while.