Are rates on the Ten-Year Note finally bottoming? Quite possibly, according to technical indicators that we monitor closely. T-Notes touched a low last week of 1.47% after plummeting almost relentlessly from 3.49% last November. GDP was running at around 3% back then, and almost no one other than a few hardcore deflationists, your editor among them, saw rates on the Ten-Year falling below 2%. Now, however, given the look of the charts, it would be wise to prepare for a possible rate rebound, even if it proves to be temporary. By our runes, a bounce from these levels would be logical because last week's low occurred almost precisely at a Hidden Pivot target first aired here some time ago. It was one of a series of lows forecast by Rick's Picks in 2019. The chart shows how rates bounced last Thursday from within 0.02 points of the 1.47% target. The Hidden Pivot support whence the bounce occurred clearly worked, but that doesn't necessarily mean it will hold indefinitely. In fact, given the clarity of the pattern associated with the support, if TNX were to decisively breach it in the next few days, that would strongly imply rates are headed significantly lower in the weeks and months ahead. Belated Boldness Meanwhile, some of Wall Street's best and brightest, having missed the huge rally in Treasurys, which produced capital gains of 15% or more for the few who saw it coming, are now venturing boldly forth to proclaim it is over. Some Investors Are Betting the Flight to Bonds Is Overdone was how The Wall Street Journal headlined their belated change of heart. We're inclined to bet with them for the time being, albeit with less bravado, shorting Treasurys and going long on yields. But to repeat: If TNX, which tracks rates
A rally target at 1559.90 remains valid, but before the futures push toward it they must finish correcting the pattern shown. Sellers appear to be having difficulty pushing down to p=1510.00, the midpoint Hidden Pivot support, and that is mildly bullish. You can attempt bottom-fishing there with a stop-loss as tight as 1.00, or via any rABC pattern which emerges, but the trade is recommended only to scalpers familiar with this vehicle. A decisive breach of the support would likely continue down to at least p2=1495.70, or possible to d=1481.40.
The selloff from late July's record peaks seems likely to resume once the last short has been exhausted by wild, daily price swings. Any rally attempt feels doomed, if only because it has been so challenging to get short lately. Whether the broad averages will need to pop to new record highs or merely poke above last week's peaks in order to trap bulls should be settled by week's end. Whatever happens, we can be sure that the relentless onslaught of deeply troubling headlines is unlikely to cease as summer winds down. So oppressive has the news been that the alleged suicide of Jeffrey Epstein, pimp to America's rich and powerful, could almost seem like comic relief.
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"China really wants to make a deal," says President Trump, "but I'm not there yet." Ya gotta hand it to the guy, he can pile up manure until it smothers the opposition. Nothing about Xi Jinping says he's eager to meet Trump's terms on trade, not any more than Korean dictator Kim Jong-Un is eager to make peace. And yet, would you bet against Trump? He's got quite a winning streak going, even if half of America pretends not to notice. He's also got a gift for putting losing deals on hold (i.e., North Korea), perpetually in limbo so that they are not cluttering up the scoreboard. He has little to lose with this strategy and everything to gain if Mr. Kim should shock the world someday by pretending to come around. Trump's foes like to think he plays the fool to Putin. But even Putin, who plays a weak hand better than any global leader we can recall, must defer to the very uncertainty of Trump. What will he do next? What is he capable of doing? No one really knows, perhaps not even Trump himself. He has pushed the tariff war farther than anyone could have imagined. The real surprise is how much support he has picked up for keeping the pressure on China. We've known all along that China has lied, cheated and stolen its way to economic success. Now, however, this is all part of the official narrative, a fact to be reckoned with not only by the Maoists responsible for the New York Times, but also by Wall Street Journal editorialists who espouse free trade as a religion. About Those Bankruptcies.... It was easy to doubt the President's negotiating prowess when his book, The Art of the Deal, came out in 1987. Here's a guy
Pivoteers who are new to the Wednesday sessions may have felt like they were strapped into the cockpit of an F-22 Raptor at the end of our hour together. The information will come at you fast and furious, but nearly all of it bears directly on tradeable set-ups that you can do all day long with relatively little risk. Most of the trades are rABC’s, but a ‘mechanical’ entry off Amazon’s one-minute chart is worth the price of admission. Enjoy!
Earlier this week, Rick's Picks created a 'Big Trouble Index' (BTI) to track a bearish bet that looks like it can't lose. I was having trouble getting to sleep, concerned that Hong Kong would be invaded and erupt in flames overnight, sending stocks around the world into a catastrophic plunge. I still believe this is possible, but I also believe that a dozen other events, some of them black swans whose details lie beyond imagining, could cause such a crash. A short squeeze on the dollar, for instance. This has never occurred, and it may sound like an odd way for a decade of global prosperity to end. But I regard it as inevitable and believe it could happen literally at any time, even before the next sunrise. It could be triggered by something as seemingly minor as the failure of a small bank that happens to be a cog in the quadrillion dollar derivatives market. It would not be the first time the problems of a tiny bank threatened the stability of the global banking system, as the Cypriot financial crisis did in 2012-13. Track It Yourself In any event, more palpable concerns such as the tariff war, the quickening implosion of Europe's economy and Beijing's threats against Hong Kong, are already causing large amounts of capital to seek the safety of gold and U.S. Treasury paper. I hesitate to say that both are no-brainer investments right now simply because in the guru business, expressions of certitude are just asking for trouble. But I am strongly convinced nonetheless that a small investment in bullion and Treasury debt, along with a short position in U.S. stocks, will grow very significantly over the remainder of the year and in 2020. You can track it as follows, based on prices that obtained
A trader who knew what Trump was going to say next about tariffs could make more money in a few months than Trump himself is worth. Do the math if you don't believe it. When China devalued the yuan on August 5, Trump fired back with a threat to broaden tariffs to cover virtually all Chinese goods. The E-Mini S&Ps promptly fell from 3020 to 2755, racking up a gain of as much as $13,000 per contract. If you'd shorted fifty of them in a $350,000 account and covered near the low, your four-day profit would have been around $650,000. On to your next score! You parlay your winnings on Trump's next tweet, buying 400 contracts this morning, just before his trade reps announced that tariffs on two key items, laptops and cellphones, would be delayed until December. The E-Mini S&Ps popped for 77 points in a little more than an hour, making you a quick $1.5 million. No Way to Lose Now you've grown your stake to $2.1 million in just one week! At that rate, doubling your bet every time you tap into Trump's brain, you would be a billionaire by mid-October. And remember, you could not lose. That's because the algorithms that drive the markets are programmed to go all-in at the speed of light whenever there is a whiff of "good" tariff news, and to dump stocks willy-nilly if a Trump tweet on trade is even mildly disappointing. If you want to play it safe, you could bet only on impending dovish tweets, since they trigger the most urgent kind of buying: short-covering. Why wait for stocks to fall over three or four days on bearish news when you can make as much in an hour off a bear panic? Reading Trump's mind would surely beat
Bulls easily exceeded the 17.020 pivot we'd been using as a rally target, so I've redrawn the pattern to produce a new one at 17.545. Given the high quality of the pattern, it should show potentially tradeable stopping power. You can use a corresponding target in SIL to get short via an ETF, but I would suggest a very tight stop-loss regardless of what vehicle you choose. The pivot demands our attention, since it is such a logical spot for a correction. _______ UPDATE (Aug 13, 8:03 a.m.): Today's roller-coaster ride peaked a nickel from the 17.545 target given above. It remains valid in theory, but in practice we'll put it aside and focus on the retracement. If the 16.510 low of the swoon holds, the next rally could hit 17.970 (60-min, A=15.070 on 7/12. _______UPDATE (Aug 14, 9:45 p.m.): So far so good. Not only have the futures rallied sharply from the 16.510 low, they are moving tonight above the 17.240 midpoint resistance associated with the 17.970 target. _______ UPDATE (Aug 17, 2:45 p.m.): Although I am removing this tout form the home page, I will track Silver futures on request in the Trading Room.
