Gold

The futures were in a promising rally Monday night -- so promising, in fact, that we can put aside for now the 1257.70 correction target I'd identified earlier.  The impulsive a-b rally has surpassed no fewer than five prior peaks (see inset), but if it pulls back now without having gone much higher than the so far top at 1284.60, the next leg up could conceivably set up a 'camouflage' buying opportunity. My advice, referencing the 60-minute chart, would be to either let the first entry signal pass before you jump aboard; or to use a 'timed buy-stop' to initiate, whether via camouflage or not.

The bearish pattern shown makes clear where December Gold is headed, and the weight of it looks too great to suggest that any other outcome is possible.  With the stock market eking out new record highs each day, interest in bullion is on the wane.  However, although gold (and silver) may act dispirited, there is little technical evidence of an impending rout. For that reason, I would encourage you to bottom-fish aggressively at the 1257.70 target, albeit with a very tight stop-loss.

Consider the big picture shown in the inset before you ascribe any significance to Friday's $22 plunge.  Someone mentioned in the chat room that a big seller had dropped 5000 contracts into weak hands, but I pointed  out that the bigger the seller on a given day, the less significant the transaction.  The reason is that few who sell gold futures in such size as 5000 contracts are doing so unhedged, very probably perfectly so, and that it is why it is futile to try to read meaning into such transactions.  For those inclined to worry anyway, the chart shows gold to be smack dab in the middle of a trading range stretching back to 2013.  Moreover, there are  no fewer than three big, uptrending ABC patterns driving the futures at the moment. It would take an uncorrected swoon breaching the two labeled lows to turn the daily chart bearish. _______ UPDATE (August 18, 9:28 a.m. EDT):  This morning's selloff has bounced from just below the 1297.00 midpoint support of A=1321.80 (8/14) on the hourly chart.  This means that any lower will send the futures down to D=1282.60. ________ UPDATE (August 21, 11:05 a.m.):  Gold seems incapable of rallying on days when stocks are moving higher, especially when the latter are pushing further into record territory. This morning's selloff suggests bullion buyers are just too dispirited to resist the pull of gravity.  With respect to the December contract, use a 1257.8o correction target, but expect still lower prices if it's breached by more than a few ticks.

If the snoozefest of the last three days ever ends, the futures could be bound most immediately for the 1341.00 Hidden Pivot rally target shown. That's assuming the next thrust is not lower, of course, but odds would appear to favor bulls at the moment, since the impulsive rally begun a little more than a week ago has not been countermanded by a downthrust exceeding any significant prior lows. In the meantime, the futures are on a buy signal that should be used cautiously -- which is to say, in conjunction with a very small, uptrending ABC pattern that has commensurately very small entry risk. As always, a decisive push past the midpoint resistance (red line) would make more upside to the target an odds-on bet. _______ UPDATE:  Zzzzzzzzz. No change. _______ UPDATE (August 15, 9:51 a.m. EDT): "Bowels move!" as the old joke goes. This morning's stupid, presumably gratuitous dive has had little impact on the still-bullish hourly chart, let alone the daily.  Even so, I need to float this worst-case low, short-term: 1278.00.

Gold's stall almost precisely at the 1325.00 midpoint Hidden Pivot shown implies it will go to at least 1368.90 once past it. Since there will be three bullish ABC patterns driving the rally at that point, you should use an entry signal generated by the small pattern to get long -- preferably via camouflage, since the initial risk otherwise would be at least $5 (from A) and as much as $10 (from A2).  For night owls, I'll make an additional suggestion: Get long at the 1299.00 D target, on the 15-minute chart, of a= 1320.50 ( August 8 at 6:45 a.m.); b= 1305.70 at 8:45 a.m.) Some very precise bounces so far from p=1306.40 suggest the futures will fall to exactly 1299.00 if p is decisively breached. _______ UPDATE (August 12, 10:30 a.m.):  Gold has rallied moderately, albeit from a 1306.80 low that negated the bottom-fishing tactic suggested above. Next stop on the way up should be 1327.00, but if the futures blow past it, expect 1341.00. These targets come, respectively, from A and A2 in the chart.

Yesterday's follow-through rally was modest but encouraging, since it exceeded an important 'external' peak, refreshing the bullish energy of the intraday charts. Traders should notice that the rally also generated an A-B impulse leg that could lend itself to a camouflage-style long entry.  There's no point 'C' low to the pattern yet, but night owls should watch for one to develop, since it may yield a precise signal for this vehicle's liftoff from the launching pad.  It would be quite bullish if a rally settles above the 1325.00 midpoint pivot, since that would indicate more upside to 1368.90 over the near term.

Yesterday's downtrend held above the 1286.20 midpoint Hidden Pivot shown, but if it gives way look for the selling to persist at least until 1274.00 is reached.  I'd recommended a tightly stopped long from 1286.30 in the chat room yesterday, and although the pivot on which the recommendation was based remains viable, bottom-fishing there will not be so attractive this morning. Any slippage below the pivot would favor a bearish bias, but you can also bid 1274.20, stop 1273.80, ahead of a possible bounce.  Alternatively, it would take a push above 1295.70 to energize bulls.  Thereupon, a 1304.40 short-term rally target would be in play.  ______ UPDATE (10:20 a.m.): For once, it is bullion that leads the lunatic fringe, up $23.70 at the moment. The rally tripped the 1309.80 'buy' signal, on the 60-minute chart, of A=1259.60 on 6/17. Will it get to p=1331.75, let alone to D=1375.70? Place your bets, folks!

Friday's upturn came from a 1281.00 low that was well above the worst-case bottom at 1274.50 that I'd projected.  This is incipiently bullish, the moreso because the rally was impulsive on the hourly chart. It would have been still more encouraging if it had surpassed the 1298.80 peak shown as well, but bulls certainly deserve the benefit of the doubt for now.  Night owls can bet on a follow-through, but it may not be easy, since the initial thrust will have attracted more attention than we should like.  Other traders could affect the next move in several foreseeable ways: 1) by gapping higher Sunday night so that there's little opportunity to get aboard; or, 2) by ratcheting lower to create a series of point 'C' lows that  bamboozle and vex bulls by stopping them out before the next leg up. The first scenario would  hold the more bullish implication going forward, but a slow takeoff should not be construed as meaning that bulls are not raring to go.

The 1274.20 target shown was first signaled on July 18 when December Gold dipped beneath the green line (aka point 'x'). It may be too obvious and well-advertised to work with perfect precision, but it's unlikely that the futures will be able to avoid a tradable upturn from somewhere very near it.  Its value has mainly been in keeping us on the right side of July's tortuous downtrend despite a couple of $25 head-fake rallies.