With the broad averages in an extremely tedious slog sideways since mid-December, it has been very difficult to get short. A nettlesome problem is that even relatively feeble head-fakes are pushing into record-high territory. We got short anyway on Friday, taking a small speculative position in DIA puts. This is a post-inauguration play if you will, even if nothing of substance will have changed come Monday morning. It would not be unusual for fund managers, who are paid to throw Other People’s Money at stocks, to experience one of their wonted, psychotic mood swings next week — if for no other reason than that Trump has replaced Obama. This is going to be a very big deal eventually, since our new president has made some grandiose promises. But if chimp-brained money managers intend on taking shares much higher without further reflection — especially with an almost certain housing bust looming — then they are even stupider and more reckless than we might have imagined.
Betting Against ChimpanzeesPosted Sunday, January 22 0 comments
$GDX – Gold Miners ETF (Last:23.11)Posted January 22, 2017, 6:02 pm
$GCG17 – February Gold (Last:1204.90)Posted January 22, 2017, 6:01 pm
February Gold did everything we asked of it on Friday, clearing the way for a push to the 1226.90 target given here earlier. As always, a move that easily exceeds the target, in this case by perhaps $2-$3, would affirm the robustness of the rally and the likelihood that it will continue. The short-term outlook would brighten even more if bulls can surpass mid-November’s 1236.10 ‘external’ peak (see inset), especially if they achieve this feat without taking a noticeable breather. The futures finished toward the middle of their range on Friday, suggesting that buyers were not exactly chomping at the bit. My hunch is that a slow start Sunday night would be more constructive than a leap that could attract unwanted multitudes of profit-takers.
$+DIA – Dow Industrials ETF (Last:197.96)Posted January 22, 2017, 6:01 pm
$SIH17 – March Silver (Last:17.115)Posted January 22, 2017, 6:00 pm
Silver futures sold off hard Wednesday after peaking around mid-session, but not before generating the most promising bullish impulse leg that we’ve seen in a long while. Notice in the chart that the modest rally, which lasted for just a couple of hours, exceeded two prior peaks stretching all the way back to mid-November. This implies that there’s some real power pushing silver higher, notwithstanding the whipsaw price action that concluded the day. It also implies that any weakness in the days or even weeks ahead is corrective and therefore a potential buying opportunity. We’ll be looking to use the lows labeled in green to create trade set-ups that can significantly reduce entry risk. Stay tuned to the chat room for further guidance in real time. If you don’t subscribe, click here for instant access and a free two-week trial to the room, to Rick’s daily trading ‘touts’, and to all features of the service. _______ UPDATE (Jan 19, 10:05 p.m.): Late this evening, the futures were scaling the wall they created earlier in the day one craggy handhold at a time. The effort has produced a bullish impulse leg on the lesser charts that should be good for another four cents of upside to a minor target at 17.100. Once above it they’ll be an even-odds bet to hit 17.175. However, if they can close above that number to end the week, we might look forward to more of the same when trading resumes Sunday night. _______ UPDATE (Jan 21, 1:55 p.m.): The active rally pattern, with a minor target at 17.505, is shown here. Friday’s push through the red line, a midpoint Hidden Pivot, should suffice to power this vehicle to at least 17.505 Sunday night or Monday. A move through that resistance, especially if it takes out the two external peaks from, respectively, Nov 13 and 14, would be very bullish.
$ESH17 – March E-Mini S&P (Last:2266.50)Posted January 17, 2017, 9:21 pm
$AMZN – Amazon (Last:807.33)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._______ UPDATE (Jan 18, 10:04 p.m.): The stock has pulled back $18 so far after marginally exceeding our ‘easy’ target at 819.00. The final stage of the upthrust did not exceed any prior peaks — that would have required another $10 of upside — so I have turned cautious for now.
$DJIA – Dow Industrial Average (Last:19805)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. ______ UPDATE (Jan 18): I’ve refreshed the chart to show how the Indoos are rolling over after having smashed through the midpoint Hidden Pivot resistance. A pullback to the red line would be a ‘mechanical’ buy in theory, but a further 600-point fall to the green line would be a less risky place to try it. For now, though, getting short looks like a better bet.
$TYX.X – 30-Year T-Bond Rate (Last:3.032%)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. _______ UPDATE (Jan 19, 10:17 p.m.): Bulls have gotten second wind, turning the ratcheting downtrend of the last three weeks into a impulsive upthrust that is likely tol get legs if it can surpass the 31.29 peak from January 3.
$DXY – NYBOT Dollar Index (Last:101.26)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. ________ UPDATE (Jan 18, 10:23 p.m.): This afternoon’s ratcheting short squeeze was bullishly impulsive on the hourly chart and would invalidate the 99.50 target given above with just a little more upside. The rally need only exceed 101.73, the point ‘C’ high of the downtrend to put bulls back in the driver’s seat..
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The Good News, and the Bad…
Straddling the Inauguration
Gold’s Vital Signs
GM’s Chart Suggests U.S. Economy Will Keep on Truckin’
Just Another Friday?
With DEFCON 3 Imminent, We Remain Bullish
Why Inflation Is Unlikely to Return
Bulling-Up on Bullion
DJIA Closing on an Important Target
Is the Surge in Long-Term Rates Over?