-- Posted Tuesday, 14 March 2006 | Digg This Article | Source: GoldSeek.com

Rick’s Picks

Tuesday, March 14, 2005

For investors who’d rather be smart than lucky 

Last weekend’s hidden-pivot seminar drew some goldbugs, and so we naturally lingered for a while on the chart below, which shows the Comex April contract. It is more bullish than I had originally realized, notwithstanding the fact that gold bulls have been getting hammered for the last five weeks. What led me to this conclusion? Well, in the first place, the bearish impulse legs have been relatively feeble. Let me explain. All major trends begin with an “impulse leg,” and the more powerful the impulse, the more long-lasting the new trend is likely to be. 

Typically, a major trend-change announces itself by blowing past two or three prior highs/lows without a pause. According to my hidden-pivot method, to qualify as an impulse leg a rally/decline must surpass at least two prior peaks/bottoms. On the chart below, the first bearish impulse leg (in red, labeled #1) met the minimum requirement by surpassing a series of four minor lows. But notice how it stopped short of passing the more formidable low marked at point X. It took a second feint south (line #2) to achieve that, but by that time the bear had already hinted that his growl was more fearsome than his bite.

If there was any doubt about this, most of the decline was recouped by the bullish impulse leg that followed (shown in blue), which slightly exceeded the peak labeled #2, as required. That gave way to another bearish impulse leg, but like the first it was a pisher. If might have been worth worrying about if it had breached the low at point Y. It didn’t, however, and that’s why goldbugs should be as confident as ever as this correction peters out in the days ahead and the bull takes charge once again.  

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Information and commentary contained herein comes from sources believed to be reliable, but this cannot be guaranteed. Past performance should not be construed as an indicator of future results, so let the buyer beware. Rick's Picks does not provide investment advice to individuals, nor act as an investment advisor, nor individually advocate the purchase or sale of any security or investment. From time to time, its editor may hold positions in issues referred to in this service, and he may alter or augment them at any time. Investments recommended herein should be made only after consulting with your investment advisor, and only after reviewing the prospectus or financial statements of the company. Rick's Picks reserves the right to use e-mail endorsements and/or profit claims from its subscribers for marketing purposes. All names will be kept anonymous and only subscribers’ initials will be used unless express written permission has been granted to the contrary. All Contents © 2005, Rick Ackerman. All Rights Reserved. www.rickackerman.com 

-- Posted Tuesday, 14 March 2006 | Digg This Article | Source: GoldSeek.com

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