Gold and silver showed some spunk yesterday, extending for a third day their steepest rally in nearly ten weeks. Relative to Friday’s gut-churning lows, August Gold was up $40 yesterday while July Silver has risen $2.22. The latter was the better performer percentage-wise, gaining 6.6% compared to gold’s still-impressive 2.7%. Does this portend an end, at last, to the tiresome correction from early May’s summit? We’ll likely know soon, since both metals are an easy rally’s distance from achieving crucial benchmarks identified by Hidden Pivot analysis. (Want the precise, proprietary numbers? Click here for a free trial-subscription, including access to a chat room that hums with trading activity 24/7.) If our benchmarks are hit, it would generate bullish “impulse legs” on the respective hourly charts of both gold and silver, increasing the likelihood of a sustained move higher.
We should note, however, that false starts have plagued bullion since they put in correction lows, respectively, on May 5 and May 12. Those lows came within a whisker of “midpoint pivots” we’d flagged here in timely fashion. A basic tenet of the Hidden Pivot Method is that corrections in bull markets typically fail to reach the ‘d’ targets of abcd downtrends (see chart above). Bullion’s price action since early May has precisely conformed to this rule, although the lengthiness of the correction is starting to induce the sort of tedium that can send futures quotes soaring or plummeting on a given day for no particular reason. One might infer that bullion traders have grown so bored and frustrated that they will do the kinds of crazy things we all do when tedium tries to wriggle through the narrows of life’s Bollinger Bands. However, there’s a problem with that theory, since it is not humans who are
doing most of the trading, but algorithm-driven machines. Have the machines, too, become bored to distraction? In a way, yes, since they are forced to launch buy and sell programs into an airless vacuum of indifference. Since the Crash of ’87, evidence has grown that thinking machines are capable of acting as crazy as crazed humans. It remains for them, in the annals of stock market behavior, to experience the kind of neural breakdown that would land a human in the mental ward.
-- Posted Wednesday, 6 July 2011 | Digg This Article | Source: GoldSeek.com
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