Rick's Picks
Monday, December 6, 2004
For investors who'd rather be smart than lucky

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Major Targets Loom
For $, Euro & Gold
Gold is in a critical window right now, testing the resistance of two hidden pivots that are solid enough, in theory, to end the bull cycle begun in July 2003 from around $350. I mentioned one of those targets in Friday's analysis - 458.10, basis the February COMEX contract - but there is an alternative objective at 463.10 (see chart below) that will probably be reached now that the first has been exceeded by 70 cents (a relatively significant margin in this context). As the futures make their way toward this number, we should expect the December euro to approach an analogous target at 139.05, and the Dollar Index another at 77.60. The confluence of these targets is too striking to ignore. In percentage terms, the implied moves amount to a 4.2% decline in the dollar, a 3.3% rally in the euro, and a 1.3% rally in gold. These numbers differ, but not by so much as to rule out the possibility that all three targets will be achieved more or less simultaneously.

Very probably, it will be further weakness in the dollar that catalyzes the tectonic movement implied by my forecast. Several subscribers have written to "warn" me against digging in right now as a dollar bear. They make the not unreasonable point that every speculator on earth is already short the dollar and it therefore has no place to go but up. While my brain and heart agree with this reasoning entirely, they are wrong so often that I have come to rely almost entirely on my charts when forecasting potentially important turns.

And that is why I am sticking with the 77.60 target for the Dollar Index. It is the clearest hidden pivot of the three and therefore as good a place as any for the dollar to change direction. The pivot serves another purpose as well - as an indicator of trend strength. I cannot guarantee the dollar will turn at 77.60, but I can assure you that if it does not, it is in BIG trouble (and that gold, incidentally, will be headed straightaway to the $485 target proffered here earlier). The hidden pivot itself is not chopped liver, as I like to say, and if it offers little or no support when called upon, it is not because the pivot does not exist or because I have miscalculated its location; rather, it means that the bear is more powerful than most of us had hitherto imagined.

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Rick Ackerman

December 6, 2004

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 © 2004, Rick Ackerman. All Rights Reserved. www.rickackerman.com