Rick’s Picks
Monday, May 22, 2006
For investors who’d rather be smart than lucky
Gold took a savage pounding on Friday, and although prices finished off their lows, more selling appeared likely next week. By my runes, the June Comex contract “should have” found support at 663.50, a well defined hidden pivot. Instead, the first time the futures encountered that number, on Friday morning, they smashed through it immediately. All subsequent rally attempts failed to push more than a point or so above the pivot, suggesting it had become resistance from the moment it was violated.
These hidden pivots are not chopped liver, as I like to say, and when a stock or commodity fails to bounce from them, it is usually a very reliable indicator that the downtrend will continue. That said, I have no more downside pivots to offer at the moment for June Gold, which finished the week at 657.00, up somewhat from an intraday low of 651.00. However, there are two precise numbers that can serve to guide us nonetheless. The first, at 636.00, would be an exact, 50 percent retracement of the rally begun from $540 in early March. The second, at 613.00, would represent a 0.618 retracement of the same bull leg. My hunch is that the pullback will continue at least to the first before the correction has run its course, and to the second if 636.00 is exceeded by more than $1 or so.
However, I would be impelled to reconsider my short-term bearishness if June Gold were to rally sharply enough to create a bullish impulse leg on the 15-minute chart. As of Friday’s close, it would have taken a 689.00 print to do so, since a healthy impulse leg must exceed at least two prior peaks to qualify as such. Alternatively, using a hair-trigger based on the 3-minute chart would lower that threshold to 671.10, although the signal would not be quite as reliable. One more thing: For the latter signal to be valid, the rally segment between peaks #1 and #2 would need occur without a pause of more than a single bar – that is, it would have to occur in one straight shot, no pullbacks.
***
Learn My Secrets
Would you like to be able to forecast trends and price reversals as accurately and confidently as Rick’s Picks? Have you tried other trading systems, only to find them too complicated or otherwise unhelpful? Then don’t miss my Hidden Pivot Seminar this autumn in New York City. Plans are firming for a weekend session in early October, so please let me know via e-mail if you think you might attend. This will be a no-frills version of the course that I gave in Denver, offered at a significant saving over the original price.
There will probably be just one more session offered after that on the West Coast, but that would be the last for a long while. The course includes post-grad mentoring via a chat group that some of my former students have set up. If you’ve been impressed with the accuracy of my forecasts, this is an opportunity you cannot afford to pass up. Let me hear from you soon, since seat space is limited.
***
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 © 2006, Rick Ackerman. All Rights Reserved. www.rickackerman.com
