Gold

I suggested exiting a long position on Friday for a theoretical gain of about $2800 per contract, but not for reasons of bearishness. We were simply sticking with our discipline, which called for a stop-loss if a bearish impulse leg formed on the 15-minute chart. That was a yellow flag, to be sure, but strictly speaking, the rally begun from 1141.70 on November 30 is intact and looks healthy. Moreover, gold's resilience in the face of collapsing oil prices is encouraging. To get back aboard, I'll now recommend bottom-fishing at the 1208.90 target shown.  You can use a stop-loss as tight as four ticks, but be alert to a possible turn from above this Hidden Pivot. The first logical place where this might occur is from 1212.00, and thence 1211.10 . A very tight stop-loss could be used below a bid placed just beneath the higher number, but 'camouflage' is recommended.  _______ UPDATE (8:32 a.m.): Sellers pounded gold through every Hidden Pivot support identified above, so the bull no longer deserves the benefit of the doubt for the near-term. The closest downside target at the moment is 1204.40, but it would take a 1215.00 print to the upside negate it and perhaps turn things a round. _______ UPDATE (11:23 p.m.): The futures have rallied $8 from an 1191.80 Hidden Pivot target that came from a pattern that I characterized as "gnarly" in the chat room Monday.  We should be faintly encouraged by this, but the February contract would need to push above 1221.30 by Thursday before we could confidently infer that a sustainable rally is under way.

I've established a tracking position with a cost basis reduced by profit-taking to 1186.50. It is tied to an 'impulsive' stop-loss at 1215.20, implying traders should exit the position on any plunge that hits that number without an upward b-c correction following a breach of the first labeled low. This would not necessarily signal a resumption of the bear market; it is simply acknowledging that we cannot stick with a long position come hell or high water no matter how much we like gold. The position would still produce a $3000 profit on the stop-out, and we could hope to initiate a new long position as easily as we did this one. Looking just ahead, if the so-far two-day correction is about to end, we should see the futures pop to 1239.70 Thursday night. This would become an odds-on bet once the futures have exceeded the 1231.60 midpoint Hidden Pivot with which that target is associated. A move above 1239.70 would further attest to the health of the bull cycle begun on Tuesday from  around 1204. _______ UPDATE (11:06 a.m.): We exited the position for a theoretical profit of $2800 when the futures touched a low of 1214.80. I'm not too upset about this, since Russia evidently is selling gold just to cover fixed costs, including keeping its population fed and employed.  Trouble is, they're all employed in the energy business, or in a some line of business that supports it.

The 'camouflage'  trade set-up detailed here Monday night played out exactly as described, so I'm establishing a tracking position for the further guidance of subscribers who did the trade. The entry signal was tripped at 1204.00 on a small pattern that projected to 1217.30. Assuming half the position was exited at 1204.80 (the midpoint pivot), and an additional 25% at 1217.30, leaves us long a single contract with a profit-adjusted cost basis of 1186.20. For now, tie the position to an 'impulsive' stop-loss based on the 15-minute chart. This implies that you should stop yourself out on any weakness that exceeds at least on 'internal' and one 'external' low without an upward correction. At the moment, that would require an unpaused plunge exceeding 1215.30. I've sketched this in the accompanying chart to guide you. Keep in mind that the camouflage entry technique was used, as is our practice, to establish a position with greater potential than the small pattern employed to initiate the trade. In this case, the target of the larger pattern is 1265.70, a Hidden Pivot resistance that comes from the hourly chart, where A=1141.70 on 11/30. The above trade was headlined on the home page yesterday as "A Possible Trade in Gold for Oz Subscribers". If you would like to review the explicit instructions that went out to subscribers in the form of  a trading "tout," you can do so by taking a free two-week trial subscription. Once enrolled, on the home page select GCG15 in the pulldown menu under "All Picks By Issue." This will bring up the archived tout and the chart that accompanied it.

Gold futures behaved encouragingly well yesterday. For one, the correction off Friday's high reversed precisely at a midpoint Hidden Pivot support rather than going all the way to the 'D' target.  And for two, the reversal was strong enough to create a bullish impulse leg on the hourly chart. The subsequent pullback was well under way Monday night, and my gut feeling is that we'll be able to get long for any follow-through in the conventional way -- i.e., by entering at 'X'. The signal would be tripped at 1204.00 if the point C' low of the pattern at 1199.50 survives. You should use a timed buy-stop entry in any case, implying that you get long at X but stay long for just a minute or two, until you can determine whether lift-off will be quick and relatively stress-free.  Thereafter, your immediate goal would be to take a partial profit at p (1208.40 at the moment). _______ UPDATE (10:14 a.m.): The trade worked beautifully, tripping the 1204.00 buy signal at 2:00 a.m. The first thrust went precisely to p=1208.40, the a subsequent pullback provided running room to the 1217.30 D target.  Keep in mind that this was a 'camouflage' trade with much more potential -- to 1265.70, actually. That's the D target, on the 30-minute chart, of A=1141.70 (11/30); B= 1221.00  (12/1); and C= 1186.40 (12/5).

In after-hours trading Tuesday night, the February contract was poised for a $10 tumble to the 1184.40 target shown. This is by no means ordained, however, and we could still be pleasantly surprised if the futures should reverse course at the 1193.90 midpoint support (see inset), then power above 1203.40 to generate a fresh, bullish impulse leg on the hourly chart.  Night owls can try shorting a breakdown below minor 'structural' support at 1193.40, and/or bottom-fishing at 1184.40, stop 1183.90. _______ UPDATE (10:38 a.m. EST): And pleasantly surprised we were, the futures having rebounded after going no lower overnight than 1193.50.  They are currently trading 1210.90, 'actualizing' a promising, bullish impulse leg for a shot at 1244.40 if p=1217.90 gives way. _______ UPDATE (December 7, 10:55 p.m.):  The futures looked bound for at least 1178.70, but if that Hidden PIvot support is breached by more than 1.00 point, look for more slippage to a minimum 1173.70

It's encouraging that DaBoyz exploited a news headline yesterday -- in this case, the results of Switzerland's negative vote on gold -- to drive bullion down to bargain levels. We'd become so used to distributive rallies that when accumulation on weakness occurs, as it clearly did yesterday, it comes as a pleasant surprise. It's true that the steepness of the rally was due in part to the running of stops beneath some key lows made in mid-November before the futures took off. But that would have accounted for perhaps only $20-$30 of a move that went $80 before showing signs of fatigue. The March contract has pulled back by about $18 so far Monday night, but we should look for a follow-through on Tuesday to carry above the 1236.00 'external' peak shown if bulls are warming up for a sustained surge.

The chart shows the crushing weight of the downtrend that has unfolded since October 21. At the moment, the selling is being impelled by news that Swiss voters rejected a measure that would have required the country's central bank to hold a portion of its assets in gold. The futures were on a weak bounce Sunday night off a so-far low at 1141.70, but the penetration thus far of the midpoint Hidden Pivot support at 1145.00 is already sufficient for us to infer that more weakness to at least 1082.40 impends.  By implication, a rally from around 112o would be 'mechanically' shortable, although 'camouflage' shorts got a green light on Friday via a signal at 1176.30. A rebound exceeding 1167.90 would reverse the short-term weakness, but traders should be wary of any uptrending abcd pattern that falters at the Hidden Pivot midpoint of its c-d leg. _______ UPDATE (9:15 a.m.): The futures rebounded sharply overnight, turning a selloff into a swoon, albeit a very nasty one.  Now, use this true, bullish impulse leg from the 60-minute chart not only to get long, but to gauge the mettle of buyers: a=1167.50 at 8:00 a.m.; b=?.

Yesterday's sleep-inducing dirge changed nothing in the technical picture. A 1232.00 rally target will remain valid as long as the futures don't dip below 1173.90 first. The target would become an odds-on bet if and when this vehicle pushes decisively past the midpoint resistance at 1203.00. Traders can use the 'camouflage" technique to get long at any time, but a mechanical opportunity to do so could present itself with a push into the range 1210-1220 followed by a pullback to the 1203.00 pivot. Stay tuned to the chat room if this scenario develops, since I may be able to provide explicit instructions at that time.

The rally pattern shown should be etched into your brains by now, since progress toward its 1232.00 target has been glacial.  Assuming the futures eventually get there, my hunch is that it will require a pullback to the red line (1203.00) from somewhere between 1210 and 1220 to get sufficient running room for the final ascent.  Although there is not much excitement in this prospect, there are potential gains for anyone patient enough to monitor tradable ABC patterns on the very lesser charts. _______ UPDATE (2:05 p.m. EST): I expect a dull week, but if December Gold rolls down from here without having exceeded 1207.60 to the upside, a 'midpoint Hidden Pivot' support at 1145.00 would come into play analytically. Its easy breach would portend yet more downside over the near term to at least 1114.60.  Regardless, 1145.00 can, and should, be bottom-fished with a stop-loss as tight as you can abide.