Several subscribers who dropped by the Rick’s Picks chat room yesterday morning were looking for a promising spot to buy gold, which earlier in the day had taken a pretty nasty hit. My advice was to wait until gold itself has signaled the all-clear, an event which has yet to occur but which has been anxiously anticipated by gold bugs ever since bullion prices began a major correction in mid-May.  Unfortunately, even after diving $23 yesterday, December Gold looked more like a candidate for shorting than for bargain hunting. The futures barely bounced from their intraday lows near $621, and as the night session began they were timidly probing the upper limits of a $5 recovery range.

The good news, at least so far, is that there are no bearish price patterns on the daily chart (see above) nearly as powerful as the bullish one that culminated with a $691 peak in mid-July. This implies that the long-term bull is still dominant, even if docile for the time being. As I noted in the chat room, however, there is an immediate threat to the intermediate-term picture if the December contract were to fall just a little beneath yesterday’s bottom at $621. Specifically, a print below the $615 bottom made on July 24 would make any moderate rally thereafter a short sale, presumably for a plunge below $600. But for the bear to return forcefully, a decline exceeding 513.60 would be necessary. That would create a quite powerful bearish impulse leg by exceeding two internal lows ($615, recorded on July 25; and $587, recorded on June 14); and one external low ($513.70, from December 21, 2005. Bottom line: The long-term bull is not just intact but perfect healthy; however, the intermediate-term picture could change with just a little more weakness.

Meanwhile, I may have been too cautious bidding for some QQQQ October 39 puts yesterday. Stocks looked unimpressive for most of the day, and I declared myself a buyer of the puts in the chat room. At one point, there was just my 1.15 bid for a small quantity of QQQVMs, and 80,000 of them offered for 1.20. Alas, none came in for sale at my price, and I wasn’t about to pay up for them, not even a nickel. Perhaps I’ll get another chance when stocks open this morning. Bears of a similar mind might be encouraged by yesterday’s opening in the shares of Citigroup., If you want to see sleaze operating at its most brazen (assuming the chart data are correct), take a look at this picture: