Join The Trading Room

Small Rally in Gold Clears the Way for Bulls

By Rick Ackerman Posted on January 12, 2012, 1:38 am EST Last Updated January 12, 2012, 3:00 pm EST

Comex Gold finished the day with a modest gain of $12, but not before busting through some daunting supply on the intraday charts.  Notice in the 240-minute bar chart below how the top of Wednesday’s rally exceeded three prior peaks.  According to our proprietary Hidden Pivot Method of technical analysis, bulls need only have punched through two such peaks to signal their readiness for a follow-through rally of as much as $30 over the next few days. In this case, however, they went one peak better, taking out the small “external” high recorded during mid-December’s steep selloff. That peak may not look very imposing, but its location along the wall of an Acapulco cliff dive implies that it took some extra oomph to get past it yesterday. The fact that buyers succeeded, if only by a couple of dollars, bodes well for the short-term, and traders should therefore view minor pullbacks of perhaps $4 to $6 as buying opportunities.  In the days ahead, Rick’s Picks will be monitoring price action closely intraday to identify “camouflage” entry spots that in theory can help lower the risk of initiating a trade.  If you’d like to follow along in real time, and to gain access to a 24/7 chat room that draws traders from all over, click here for a free trial to our service.

Gold’s performance yesterday was impressive for another reason that had little to do with the charts. Although strength in the U.S. dollar undoubtedly weighed heavily on bullion prices, as did the weakness in stocks, gold quotes soldiered higher. Lest we become emotionally involved if the rally continues, I’ll suggest using the 1681.70 peak shown in the chart as a benchmark for turning very bullish.  More specifically, if the ground between current levels and that external peak is traversed more or less effortlessly with no big pullbacks, it would strongly imply that the correction begun in September from $1925 is over.  Accordingly, we’ve set a screen alert there so that we’ll know exactly when it’s time to break out the bubbly.

***

(If you’d like to have these commentaries delivered free each day to your e-mail box, click here.)

  • Mark Uzick January 13, 2012, 10:14 am

    D.O.:
    While your knowledge of T.A. is more than mine, – and that’s not saying very much – I believe that you don’t really understand how to apply it.

    T.A. is supposed to be a tool that helps to reduce one’s risk, not a near infallible oracle of 99% certainty.

    Your hyperbole only serves to make you seem a fool. That’s why, even if you predict correctly, you’ll never earn any respect.

  • mava January 13, 2012, 5:08 am

    D.O.,

    I should have hired you to manage my money… NOT!
    I’ve been ready to load up on gold all this time you’ve been touting your imminent gold crash. And? Where is the bacon?

    Thanks, but no thanks! I’ll stick with RA.

    Rick, I think he is teasing you in order for you to get aggravated and post some of your stuff for free. Don’t feed the troll. Just don’t.

  • bc January 13, 2012, 12:20 am

    Put it on Trader Joe’s frozen microwave rice and throw the old rice out. Can’t eat yesterdays rice.

  • Robert January 12, 2012, 10:04 pm

    Well….. Today’s 30 year bond auction was a dud.

    60% of the entire issue had to be taken down by the Primary dealers using the Fed’s 2 week repo fund.

    If Silver is saying we’re going to war with Iran, then Brent Crude (Back below $100 last I checked) is saying “Don’t listen to Silver; listen to me…. everything’s just fiiiiiiiine”

    My leftover Chinese food, meanwhile, is just as delicious today as it was last night….

  • Rich January 12, 2012, 8:27 pm

    Is silver saying we are going to war with Iran?…

  • Cam Fitzgerald January 12, 2012, 8:03 pm

    Well it took a little over two weeks but I finally got a minor double bottom on the Euro yesterday. Just like clockwork it bounced a penny today. And with a near record number of Euro shorts placed it is clear to me that this one is ripe for the picking. Da Boyz no doubt spotted it already. The dollar is about to fall again and gold will rise nicely. Have a good weekend!

    • mario cavolo January 13, 2012, 3:04 pm

      I love your arrogance know it all thinking Cam, especially when its completely incorrect, like at this very moment…Cheers, Mario

  • Divergent Opinion January 12, 2012, 5:55 pm

    (1045am et, gold at approx $1655)

    RA, once again, similarly to 4 other times over the last 8 months, your day’s article ‘gold call,’ is illtimed.

    I am previously batting 4 for 4 in going against your daily ‘gold calls’ on this board, and I am about to go 5 for 5.

    yes, I concur, IF gold goes above $1681, yes, there will be a rally ahead for gold price, I agree.

    HOWEVER, the chances of gold going over $1681 now, are EXTREMELY small.

    As a matter of fact, I interpret the recent ‘breakout’ over the $1640 printed in Dec., exactly OPPOSITE than you do, for I was actually waiting for it, as this ‘breakout’ above $1640 was NECESSARY to fulfill the ew abc, and now that it’s complete, gold price is now fully ready to break down BIGtime again. (All that it is waiting for, believe it or not, is the delusional lastgasp spx churning at this current top (in the 1290s area) to end, primary equities index which also for several strong technical and sentiment reasons, is also probably only MINUTES away from turning down BIGtime, in synch with gold’s fall.)

    I will list some of the primary points why $1680 gold presents FORMIDABLE resistance, and which has about 99% chance of NOT being broken, for years to come.

    1. Very exactly created, SHARPLY down trendline, touching all 3 2011 tops (each top, obviously, being a lower top)—trendline which, right now, coincidentally, is at approx. $1680.

    2. the 50dma has also been falling sharply for approx. 3 months now (for first time in 2 years), and also, coincidentally, is at approx. $1680 right now.

    3. the 200dma has been broken upslightly by yesterday’s up c-leg action, but, it was also broken the same way by the a-leg action in Dec., and it was instantly slapped back the next day. I strongly opine that the same thing will happen again, and gold price is VERY soon to be slapped right back UNDER its 200dma where it BELONGS, in a DEflationary world.

    4. But most important of all, if you look at the 2011 chart ever since the mania blowoff alltime top at $1923, you will note that the repeated churning ACTIVITY between the $1660-$1680 area, is CRUCIAL resistance/support area for the gold price, and that now it presents MAJOR resistance, from any further upward penetration.

    5. Therefore, the convergence of ALL these 4 powerful resistances, plus the abc ew completed pattern confirmation, strongly enforces that there will NOT be ANY further upward price action, than say, $1675 at most. (personally, I think the peak in the low $1660’s earlier today was probably the top, as the rejection from there was swift).

    6. In my further final target opinion, when the spx FINALLY breaks down strongly (imminently, ANY minute now), my first target for the spx is 1000 approx, and for gold $1350 approx.

    • Rick Ackerman January 12, 2012, 11:25 pm

      If you were a paid subscriber to Rick’s Picks rather than a lurker, you could judge for yourself how accurate and finely shaded my forecasts for gold have been over the last decade. It might take you a day or two of careful searching in the archive to find two or three significant misses during that time, if there were indeed that many.

      You’ve spent 479 words telling me why I’m wrong. I like to keep my technical analysis simple and will stand by today’s 108-word forecast for March Gold. I don’t usually publish things publicly that are behind the subscriber wall, but your presumptuousness demands it, as does your ignorance of my technical methods and their very precise nuance. Here’s the tout:

      As detailed in today’s commentary, gold’s modest rally yesterday was more encouraging than it may have looked, surpassing no fewer than three prior peaks on the intraday charts. The key to the intermediate term, however, is the rally’s ability to vault past yet another peak at 1681.70 before buyers take a serious breather. All key price points are shown in the chart, the same one I’ve used in my commentary. Night owls looking for a way to get long risking relatively little will need to drill down to the 10-minute chart, where at this very moment a very nice camo pattern has tripped an entry signal at 1644.50.

    • Alvaro de Orleans-Borbon January 13, 2012, 2:31 pm

      Above, D.O. has outlined strong points that merit attention — the reader will have then to act according to his conclusions — but I am grateful that this forum is so eclectic, the availability of opposing perspectives adds great value to the reader!

      I consider myself neither pro- or anti-deflation, but I must remind that the destruction of financial assets that is currently going on is a “central banker’s dream”, because it allows him to serve his owner with a far more robust seignorage in real, not nominal terms: the central bank is thus able to expand (actually, replace) the monetary base so as to replace the (bad, “toxic”, whatever) destroyed financial assets without causing a corresponding inflation.

      The process seems to be always the same: create a big debt whose proceeds makes enough poeple happy, make it bigger until it cannot be repaid, tell the unfortunate holders of (Argentinian, Greek etc. bonds) that their livelihood is gone, then expand the monetary base accordingly.

      Only, this time teh excercise may have been done with a bit too much enthusiasm, and the central bankers know well that a really bad deflation is politically more dangerous than inflation at almost any level — which may cause a re-flationary overraction that may ultimately ignite the “EXTREMELY small chance of gold going over 1681” quoted above by D.O.

      We’ll see, but for the time being I vote for D.O.’s scenario.

  • Robert January 12, 2012, 6:37 am

    Where is that Divergent Opinion character?

    YAY Gold Bulls! Cement-heads of the world unite!

    {snicker}

    HL, One of the PM stocks often followed by Rick and others here, got bashed in the face today for -22% as the Feds shut down their Lucky Friday mine until some safety concerns can be rectified.

    Did anyone see this little Gem?

    http://www.zerohedge.com/news/birinyis-ruler-predicts-end-stock-market-trading-volume-hit-zero-year-end

    Right on track for our date with Mayan destiny.

    • Robert January 12, 2012, 6:54 am

      Oh, and lest anyone think I am honestly cheering this rally for any legitimate reason, let it be known here and for all eternity that I am NOT presently an active participant in the PM markets- I am holding several core PM related positions that are up 100’s of percent, as well as a small AGQ position that I took on in November that is snoozing right along…

      The only thing I’ve been buying lately is Chinese food and fishing gear.

    • Benjamin January 12, 2012, 8:58 am

      Hey Robert… Not sure if you saw, but I read your response to my post yesterday and posted a response to that. Thanks for the explanation (re: swaps)!

      “The only thing I’ve been buying lately is Chinese food and fishing gear.”

      Fishing gear… is that code for gold panning gear? 🙂

    • Robert January 12, 2012, 5:38 pm

      Yeah I saw… go back and read my final post at the bottom of the thread, and watch the video- it’s a RIOT.

      Gold panning gear? No way. If I had a metal detector I’d be out trying to find meteorites with it.

  • bob weiss January 12, 2012, 6:09 am

    Roosevelt’s 2nd Bill of Rights 1944

    http://www.youtube.com/watch?v=3EZ5bx9AyI4

    Details:

    http://www.fdrheritage.org/bill_of_rights.htm

  • Benjamin January 12, 2012, 4:55 am

    My two cents: Seems to me that any hopes gold bears may have had of a further correction, were dashed very early in the month. I wouldn’t fret over missing the boat, though. The gold price looks like it’ll resume it’s steady-ish rise, which was disrupted around mid 2011 by the upside explosion.


Exit From This Page Back to Trades