I’ve laid out some very precise benchmarks for gold for the next day or two. Specifically, bulls will need to extend Tuesday’s rally by at least another $10 in order to imply they are game for more. For what it’s worth, GDX, the Gold Miners ETF, looks somewhat stronger and should have no trouble achieving a 24.46 target that lies about 5% above current levels.
Gold’s Vital SignsPosted Tuesday, January 17 1 comment
$GCG17 – February Gold (Last:1214.70)Posted January 17, 2017, 10:54 pm
Within the next day or two we should have more evidence to tell us whether the rally begun in late December is the real deal. If bulls have any moxie, they’ll push this vehicle above the 1223.50 peak (see inset) without much ado. Still better would be an unpaused thrust exceeding the second, 1236.10. Our rule for bull markets is that each completed upthrust should pierce an old high or a layer of supply. The effect is to refresh the bullish energy of the daily and intraday charts. That’s the least we should expect of a rally if we are to presume it has sufficient energy to continue. Another point to consider: Although the futures have tripped a theoretical buy signal tied to a 1445.90 target that sits well above these levels, imagining gold at those heights is not what should inform our trading right now. That would amount to reckless optimism; our strategy should be skeptical and cautious. Practically speaking, it suggests we will need to wait for a mechanical buy signal on a pullback to the green line before we jump in. Even then, the $8000 per contract initial risk this would imply impels us to substitute a ‘camouflage’ entry strategy once the signal is given. However we might proceed, theoretical entry risk should be held to no more than $100-$150 per contract.
ESH17 – March E-Mini S&P (Last:2264.00)Posted January 17, 2017, 9:21 pm
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$AMZN – Amazon (Last:813.64)Posted January 12, 2017, 8:18 pm
Amazon’s impressive leap on Thursday left it within easy distance of an 819.90 target first broached here a month ago with the stock trading around 760. If it pushes past this Hidden Pivot resistance with little effort, or closes above the pivot for two consecutive days, an even more ambitious target at 885.19 would become my minimum upside projection. Over the past year, I’ve offered numerous rally targets because there are at least a half-dozen ABC uptrends in different time frames simultaneously pushing AMZN higher. The one at 885.19 bears close watching, however, because it is so near a target of lesser degree at 875.20. The implication is that the stock could make its bull market top within that 10-point range, presumably at one number or the other. It also gives the target range enough ‘magnetic pull’ to get the stock there relatively quickly, meaning within two to three weeks. Because Amazon is arguably the most important stock market bellwether of them all, my bullish forecast implies that the broad averages have at least one more strong upthrust left in them before we might see the re-emergence of the bear after nearly seven years of hibernation. If bulls surprise by obliterating the 885.19 resistance on first contact, they would still face one more hurdle in the form of a midpoint Hidden Pivot at 896.71. Above that number, however, it would be clear sailing all the way to 1018.31 — a 25% move. If the Dow and the S&P 500 were to rally proportionately, the former, currently trading for around 19,891, would hit 24,863; and the latter, currently at 2270, would top out at 2837.
$SIH17 – March Silver (Last:17.305)Posted January 5, 2017, 10:32 pm
Newly energized buyers made further progress toward the 16.785 target first broached here two days ago, coming within 2.5 cents of it at the intraday high. It remains valid, but the important concern at the moment is how easily buyers can get past it, if indeed they do. If the rally were to continue, exceeding ‘external’ peaks #1 and #2 (see inset) without a visually distinctive pullback along the way, that would increase the likelihood that a major, bullish trend change is under way. Incidentally, the Silver Miners ETF (SIL) has already achieved this, so I will be adding it to the list of touts, and providing coverage in the chat room, for traders who prefer using equity vehicles. _______ UPDATE (Jan 10, 7:53 p.m. EST): This morning’s opening-bar surge easily reached our target, then overshot it by 17 cents. This is bullish, of course, but it would have been significantly moreso if the rally gone just another inch, surpassing the 17.000 ‘external’ peak, before buyers took a breather. If they can accomplish this today, however, it would all but clinch a further push above mid-December’s peaks near 17.300. _______ UPDATE (Jan 12, 10:30 p.m.): It has taken ten days for the futures to recoup what they lost in mere hours on December 15. Even so, the March contract has yet to exceed any peaks on the daily chart. That would occur with a print at 17.295, but if bulls can’t deliver this result soon, they’re going to be feeling the weight of skepticism next week. _______ UPDATE (January 17, 11:12 p.m.): Today’s surge left the futures a nickel shy of our 17.295 benchmark. Let’s see what happens now. ______ UPDATE (Jan 18, 11:03 a.m.): Today’s move is VERY encouraging. The seemingly modest spear comprising the last two hourly bars has taken out not only December’s peaks, but also another full-fledged ‘external’ peak at 17.330 from 11/15. The futures may stall here, however, since there’s a pretty compelling target at 17.370 (60-min, A=16.260 on 1/5)
DJIA – Dow Industrial Average (Last:19843)Posted December 18, 2016, 6:03 pm
The 19727 target we were using to stay on the right side of the rampaging bull has gotten trashed, suggesting buyers are in need of no rest, even after climbing 2550 points from the election night low. A run-up to 20,000 seemed in-the-bag when 19727 got taken out a week ago, but here’s something more ambitious to contemplate: 21,101, the rally target of the pattern shown. Judging from the ease with which the Dow blew past the 19492 midpoint pivot, odds of a further run-up to 21,101 in the first quarter of 2017 look quite good — about 75% in my estimation. The chart also implies that a pullback to the red line would be a ‘mechanical’ buy if it were to occur four to six weeks from now.
$TYX.X – 30-Year T-Bond Rate (Last:2.927%)Posted December 13, 2016, 9:59 pm
Yields on the 30-year T-Bond have taken a huge leap since bottoming in July at 2.106%. They hit 3.196% on Monday, slightly breaching the red line, a midpoint Hidden Pivot resistance at 3.163%. Now, if TYX were to close for two consecutive days above the line, I’d infer that T-Bond yields are a good bet to reach 3.409% before the surge ends. Alternatively, it would take a drop below 2.917% to suggest that the rise in rates had run its course. At 3.409%, yields would be up by 62%, since summer. Presumably, that would choke off the housing market, which in turn would cause long-term rates to fall. A complex feedback loop, to be sure — especially if counteracted somewhat by a U.S. economy freed of the crushing regulatory environment that has metastasized under Obama. Since the dynamic interaction of these forces cannot be predicted with any great confidence, you can count on me to stick strictly with the charts as 2017 unfolds. My gut feeling is that interest-sensitive trading vehicles, including copper, have already discounted more inflation than is possible over the next several years. In any case, we are about to find out. _______ UPDATE (Jan 3, 10:28 p.m.): I’ve refreshed the chart to show not only that the 3.409% target for interest rates on T-Bonds is still viable, but that this vehicle is close to signaling a ‘mechanical’ buy at the green line. I am not recommending the trade, however, because the recent highs near 3.120% failed to exceed a distinctive ‘external’ peak at 3.241% that was recorded back in July 2015. This doesn’t necessarily mean that the upward correction in interest rates has run its course, but it does argue for caution in taking the other side of the bet. _______ UPDATE (Jan 5, 9:59 p.m.): The interest rate has fallen sharply in recent days, easily breaching the 2.986% target of a downtrend begun in mid-December. This strongly suggests that the 2.917% rate at which this vehicle consolidated ahead of 2016’s push to a 3.197% peak will be breached, opening a path to 2.8% or lower. _______ UPDATE (Jan 12, 10:37 a.m.): The imputed interest rate on the long bond has bounced this morning from p=2.906% precisely (A=31.29 on 1/3). A decisive breach of that midpoint Hidden Pivot would imply more slippage to 2.813%. _______ UPDATE (Jan 17, 11:17 p.m.): Friday’s hiccup has slightly lowered the downside target to 2.792% (see inset), my minimum objective for the near term if p=2.906 is decisively breached. If the target fails to engender a bounce, 2.767% would be the next stop.
DXY – NYBOT Dollar Index (Last:100.49)Posted December 4, 2016, 6:04 pm
When you look at the accompanying chart of the U.S. Dollar Index, do you see an ominous head & shoulders pattern? If so, you’ve probably got plenty of company, including dollar bears and chartists who see bogus H&S patterns everywhere they look. I mention this because those dollar bears have ratcheted up the hubris in recent weeks for the usual stupid reasons: collusion by America’s enemies to usurp the dollar’s unshakable global hegemony; an imminent outbreak of inflation; an overdue bear market; seignorage envy. The usual claptrap. When I look at the chart, however, I see a rally so powerful that it not only blew past centennial resistance and a daunting Hidden Pivot at 100.55, it is now tap dancing on those erstwhile obstacles as though intending to launch powerfully anew. Don’t get me wrong, the dollar could still pull back, perhaps sharply, before it embarks on a renewed tear toward targets as high as 120 that I’ve broached here, and in countless interviews, before. From my technical perspective, insatiable dollar buyers from around the world have made chop suey out of an erstwhile granite ceiling. So color me bullish — and a deflationist until the cows come home. ______ UPDATE (Jan 5, 11:03 p.m. ET): The dollar has come down hard this week, but the selloff has done little technical damage so far to the daily chart. However, a fall exceeding 100.73 would turn the chart impulsively bearish and trigger a yellow flag. ________ UPDATE (Jan 12, 10:36 p.m.): It’s tempting to ignore the fact that the little sonofabitch printed 100.72 (!) at the intraday low. Still, an impulse leg is an impulse leg, and we’ll have to treat it as such for purposes of targeting. First, though, let’s see how far this bounce from a crystal-clear target at 100.81 goes (60-min, A=103.44 on Jan 3). _______ UPDATE (Jan 17, 11:33 p.m.): The dollar appears bound for the 99.50 target shown. Moreover, it would become a ‘mechanical’ short if the so-far weak rally touches the red line at 100.62.
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