Still Fishin’…

Gold caught a favorable breeze on Friday for a change, but if you’re a long-term investor, I’d suggest enjoying the countertrend while it lasts. The initial breach of the 4372 midpoint Hidden Pivot support was sufficiently clear to imply that the 3800.60 target will be reached. It could turn out even worse, actually, since a bear-market low at 3606.40 is technically possible if you slide the pattern’s point ‘A’ high up to the record (one-off) at 5493, recorded on March 2. And don’t get too excited if this bounce continues all the way up to the green line (x=4617.00), since that would trigger an appealing short (stop 4954.00).

Sellers struggled harder in GDXJ to break down the midpoint support (p=110.36)  than in either Silver or Gold futures. That makes its chart more bullish, but not much. We should therefore infer that the bear market will resume, and that GDXJ will eventually fall to D=84.17 once this bounce is over. Of  course, let’s also allow for the possibility that the rally is for real by stipulating that a move exceeding May 29’s peak of 120.05 would put bulls solidly back in charge after spending more than three months in purgatory.

Yields on the Ten-Year Note have fallen sharply since getting within pitching wedge distance of the 4.75% target shown. It’s too early to say with confidence whether this is the beginning of a significant downtrend or just a correction that will eventually give way to a new upward surge. My strong gut feeling is the latter, but we may soon get to test that prediction if TNX continues down the green line (X=48.18. That would trigger a ‘mechanical’ buy signal with subsequent potential to reach p=44.90 or higher, an event that cannot but give us a definitive picture of trend strength.

I’ve flagged Hidden Pivot targets as low as 51.60, which would become no worse than an even bet following two consecutive monthly closes below 85.54 (basis the NYMEX August contract). This picture shows how an interim low near 75 hardly seems far-fetched, even for someone not adept at reading charts. Although I usually tune out head-and-shoulder patterns because they are nearly everywhere one chooses to see them, this one is so pretty that it literally points the way down to a basing target near the April 17 low where the pattern began.  This implies that any rally should be shorted, presumably at a midpoint Hidden Pivot resistance. That actually occurred  Friday morning at an 85.22 pivot whose provenance is proprietary.  The theoretical trade ended the day significantly in the black, but it would be validated if the end-of-day weakness we saw continues down to 77.60, the ‘D’ target of a minor pattern on the hourly chart.