Ten mincing steps higher, one or two devastating steps back. That's the way gold rolls. It is such as nasty little sonofabitch that we can only infer Mr Market is intent on terminally discouraging every last bull before he lets it fly. The chart shown is short-term bearish, although not horrifically so. It suggests the futures are on their way down to at least 2017.50 most immediately. There's a chance it could catch a bounce at p2=2028.50, in which case you'll want to use a tight trigger interval of perhaps 2 points for bottom-fishing. Make sure it's tied visually to a clear 'a-b' leg on the 30-minute chart or less. There is also voodoo number just above p2 that I will leave to be discovered and used by hawk-eyed Pivoteers.
The futures are on a reverse-pattern buy signal triggered nearly three weeks ago at the green line (x=23.06). They haven't done much since, other than disappoint, but the signal remains valid nonetheless until such time as the March contract drops below C=22.04. My gut feeling is that the trade will work, delivering at least a one-level ride to p=22.08. However, I'd be tempted to try again with a tighter reverse pattern if sellers should stop out C. A voodoo number sits about 30 points below it and could be useful for those inclined to trade this vehicle and who are familiar with voodoo set-ups.
The pattern shown may not be pretty, but it is textbook-perfect for bottom-fishing. I hesitated to spotlight so promising a Hidden Pivot, since doing so is likely to impact its usefulness, but here it is anyway. The 32.05 low from October 10 could interfere, but possibly in a good way, since GDXJ would have to break down below it to actually set up a reverse=pattern buy. I will not mention this further in the chat room, nor even provide the target in this tout, but you can see for yourself where it lies, and you can use it to get long with risk very tightly managed. A trigger interval of 21 cents looks about right for the job.
However high stocks climb, there will always be an earnest, bespectacled egghead on Wall Street ready to tell us why shares are likely to keep on rising. Here's Yung-Yu Ma, chief Investment officer for a firm called BMO Wealth Management and a finance professor at Lehigh University: “A better economy, healthy profits and lower inflation,” he avers, are what have powered the stock market to its fourteenth gain in the last 15 weeks (a feat last accomplished 52 years ago), Better, healthier and lower than what? one might ask. If Mr. Yung is comparing the U.S. economy to that of Venezuela or West Virginia, then he is more or less correct: We are living in a relative economic paradise. But at what cost? It has taken $2.5 trillion in fiscal stimulus to keep the U.S. out of statistical recession. This sum unfortunately has not slowed the commercial real estate market's inexorable drift toward collapse. The coming plunge is certain to be steep, since more than $1 trillion in commercial mortgage loans will have to be refinanced over the next two years, at significantly higher rates and with property values already eroding dramatically. To add force to the incipient downturn, layoffs are growing not just among world-beaters like Amazon and UPS, but in Silicon Valley. It is hardly reassuring that an ostensible offset -- a supposed 353,000 jobs created in January -- came mainly from a sector that produces exactly nothing: government. Permabulls Nervous Small wonder, then, that the stock market's unjustified rise should have begun to worry even permabulls. Like the rest of us, they understand that the revelry has to end sometime, probably sooner rather than later. It is foreseeable that a top in the market will bring these illusory boom times to a halt, pushing the economy --
The futures were not supposed to blow past a target as clear and compelling as the one at 4950.00 shown in the chart. Yes, the pattern is too obvious to work precisely. But still. Regardless, we must now infer not only that at least somewhat higher prices impend, but that the ballyhooed one at 430.58 in MSFT may not show the stopping power I've given you to expect. Either that, or the 5059.75 target of the more expansive pattern shown here is in play. It will not work precisely because this is a continuous chart, but the target should be good enough for government work, meaning we can improvise a short up there if necessary, about 10-15 point higher on the March contract.
The criminally engineered, $8 shakedown on the opening bell Friday missed my 176.93 target by a hair, setting up a possible short-term bottom. If so, AAPL looks like it will ripen for 'mechanically' shorting at the green line (x=191.04), even if a subsequent relapse only delivers a one-level profit. In retrospect, my decision to switch to MSFT as our one-size-fits-all bellwether appears to have been sound. The stock has clearly lost its mojo, even if it still moves with the heft of a blue whale.
TLT's nasty plunge on Friday created an ostensibly bearish island-gap reversal, but my hunch is that it will shrug it off. The pattern shown offers the possibility of a high-odds mechanical buy at the green line (x=94.86). That implies that after it touches x=94.86, it will rally to at least p=96.61 without dropping below C=93.11. I may put out guidance for trading this one, so stay tuned to the chat room and your email 'Notifications' if you want to stay apprised. _______ UPDATE (Feb 11): TLT took a weak bounce from the green line, turning what had looked like an appealing 'mechanical' buying opportunity into dross. The trade, which I did not advise, has yet to be stopped out, but that's what it might take to lighten the load sufficiently for a decent rally. The buy trigger off the new low beneath 93.10 would be 1.15 points. or 0.13 points if you want to risk getting too frazzled to squeeze off the shot. Here's the chart.
For the deepest, most liquid trading vehicle on earth, the dollar has been getting precious little respect. The chart shows how it has been buffeted around, getting sand kicked in its face by the BRICs, Davos, Iran and who-know-who else. All that aside, the pattern shown has sufficient clarity to tell use whether DXY will remain a 98-pound weakling for yet a while longer, or instead embark on a recovery tour to the 108.38 target of this pattern. If so, a crucial test awaits at 104.50, which is a double resistance, the respective p and D Hidden Pivots of the two charts featured in this tout. _______ UPDATE (Feb 6, 1:05 p.m.): Rallies yesterday and today created two peaks that exceeded the double Hidden Pivot resistance by just a dime. My hunch is that the overshoot, tiny as it was, will suffice to keep the uptrend alive. However, we'll need to see how strong the minor abcd corrective patterns are before we can judge more confidently whether a significant rally is under way. Whatever the case, it would become a 'mechanical' buy on a pullback to x=102.56.
Gold is technically in a bullish phase, having completed a correction down to the 201.40 target of the reverse pattern shown. The initial move off the low was sufficiently robust to affirm the bullish picture. However, price action since has been feeble, presumably because the steep, month-long rally from October's 1861 low needs more time to consolidate before the futures embark on another powerful run-up. We can only bide our time while bullion dithers, since trading the relatively small oscillations is hard work. I will signal nonetheless if an exceptional opportunity (i.e., a potentially important low) should develop.
Last week's rally to the green line (x=23.15) generated an enticing signal to get 'mechanically' short, but it went unanswered because silver hasn't exactly been a hot discussion topic in the chat rooms. 'Spartacus' offered a link to an ostensibly bullish chart, but only tentatively so. The chart shown in the inset had more immediate consequences, but it remains to be seen whether the so-far one-level move finds its way down to the 'D' target at 21.45. I doubt it, but a further fall to at least p2=22.02 is neither illogical nor unlikely.
