Rick's Picks
Friday, February 4, 2005
For investors who'd rather be smart than lucky
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$403.20 Next Stop For April Gold
This is "take two" for today's essay, since, as two astute readers have pointed out to your red-faced editor, the March gold contract that I featured in my commentary does not exist. In fact, as the label in the upper left-hand corner of the graph makes clear, it was the February contract that I was analyzing. This revelation still leaves me shy of my analytical intentions, since trrading in Comex February gold contracts is kaput, having been superseded by the April contract.
The good news is that the April contract provides a bit more latitude for the bullish case. I'd said earlier that the "March" contract (hereafter referred to correctly as the February contract) would be vulnerable to a fall to at least 405.80 if it settled today, for a second consecutive time, beneath a midpoint hidden support at 417.20. However, so far the April contract has held above its midpoint pivot, 416.70, having gone no lower than 417.20. This means it is still in a good position to bounce, provided it doesn't slip below 416.70 for two straight days. If it does, though, brace for a fall to at least 403.20, the hidden-pivot target equivalent to the one at 405.80 that I gave for the February futures.
Here's a graph of the April with ABCD coordinates equivalent to the ones that I displayed here earlier for the February contract:
We can look for corroboration in the price action of the HUI Gold Bugs Index. Yesterday's carnage beat it down six points from the previous day's high - a little more than 3% -- but the HUI will need to fall just a bit farther to reach my minimum downside target at 196.57. However, even a slight breach of that support would imply further weakness to at least 192.42. My worst-case low over the next 3-5 weeks is 184.65, a target first broached here a month ago. I'd said at the time that it would take a two-day close below 198.84 to set the climactic fall in motion, and I'm going to stick with that projection for now. If the index can surpass 204.35 by Monday, however, it would earn the bull the benefit of the doubt, at least for a while.
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We Had Beazer's Number
Yesterday's jam session was quite productive and featured charts, analysis and real-time recommendations for more than a dozen stocks, commodities and index e-mini contracts. They included the mini-Dow, E-mini S&P, mini-Russell 2000, Comex gold, Fannie Mae, Valero Energy, Golden Star Resources, Northern Dynasty Minerals, Silver Standard Resources, July Unleaded Gas, Diamond Fields International, Sterling Mining, Durban Roodeport Deep and Beazer Homes USA. We took profits intraday on half of the Beazer shares we'd shorted two hours into the session. The ultra tight, 20-cent stop-loss proved more than adequate, since the actual high was only a dime above the 157.51 hidden pivot where we shorted the stock. For your perusal, I've left all of Thursday's forecasts and recommendations in the Intraday Trading Notes section, with just a few additions to Friday's list of Current Touts.
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Rick Ackerman
February 4, 2005
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
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