Gold has looked so awful lately that I've gone against my gut in drawing the mildly bullish chart shown in the inset. It is a slightly 'reversed" ABC pattern, with a point 'C' just a hair beneath late March's 1683.00 low. The pattern projects to 1916.20, which would represent a 7% gain from Friday's settlement price. A 'mechanical' buying opportunity on a pullback to x=1737.50 is strongly implied, and so that is what I will suggest, at least for now. The trade would take a stop-loss at 1677 , implying about $24,000 of initial risk on four contracts. Since that is way out of our league, we'll use a 'camouflage' set-up if and when the opportunity arrives. Our goal would be to cut the theoretical entry risk by about 85%, to around $3600. _______ UPDATE (Sep 16, 9:04): Gold is garbage once again, diving hellishly just to mau-mau bulls. Since sellers look like they're about to pulverize the green line, I'll suggest backing away from the rABC set-up suggested above. the trade would still enjoy good odds, but at a cost of possibly excruciating pain. Ace Pivoteers can attempt the trade nonetheless with a camouflage set-up pegged to a low near 1700, the sweet spot of the downtrend's discomfort zone. _______ UPDATE (Sep 21, 11:47 p.m.): So far, a bullish prediction made by 'Som' in the chat room is holding up. He called for an upturn after Sep 17, and that is in fact what has occurred. I am skeptical about how far the rally can go, but not so skeptical that I would forego an opportunity to make hay with it, trading with an aggressively bullish bias until weakness becomes evident. In the meantime I'll gladly vet any entry strategies broached in the chat room, so don't hesitate to
I still like the prospect of bottom-fishing if December Silver falls to the midpoint pivot at 23.05 shown in the chart (inset). The a-b segment of the rABC set-up is shorter than I'd prefer, but there are no visually evident 'artificial' segments I can recommend. If you are comfortable with reverse set-ups, you could locate point 'a' about halfway along the rally leg begun from the 23.815 low recorded on September 2. That would make the a-b segment about 60 cents, yielding about $1,500 of entry risk per contract. The shorter a-b would reduce that to around $1100. _______ UPDATE (Sep 16, 9:25 p.m. ET): If you followed my guidance, you hold two contracts with a cost basis of 22.87 and a small paper profit at the moment. The first trade got stopped out and is shown in this chart with 'c' located in its original spot. The second trade was triggered off the subsequent bar's 22.585 low, and half the position would have been exited at p=22.87. You're on your own for now -- I will be traveling on Friday -- but please let me know in the Trading Room if you hold a position and take a profit/loss.
I've been drum-rolling the 382.75 bull-market target for so long that I'm hardly surprised to see QQQ rolling down after making an actual high within a quark of it at 382.72. Nor will I be shocked if Friday's weakness turns into something truly hellish. From a prediction standpoint, the pattern stood to be a good and especially useful one because it is fairly gnarly, and therefore less visible to the herd; and because the droolers and algos who have finally caught on to the magic of ABCD patterns are unlikely to have used the idiosyncratic, one-off 'A' that is the Hidden Pivot Method's secret sauce. For now, let's simply watch and enjoy the show, keeping our fingers crossed that we are witnessing the massive coronary that alone can return the stock market to reality and a chance for better health. If you own put butterflies as advised, or naked puts from the top, cash out half as always if and when they double in price.
The downdraft in the final hour seriously damaged the bullish look of DIA's hourly chart, but it's still possible bears will turn gutless, as they usually do, as the week unfolds. There are so many potential point 'A' highs we could use to plot a 'Richie'-type turnaround, so we won't try. Instead, I'll suggest looking for a low down around 340 with which to set-up an rABC trade. This one's for experts only, since the white space encompassing the trade is as vast as the Pacific.
Earlier, I'd rejected the idea of bottom-fishing if IWM returns to 'x', since it would be the fifth time it's done so within the holding pattern begun in early March. However, there may be an opportunity to get long there nonetheless, provided we are not too ambitious on the exit, which would likely be well shy of the red line. It would follow an rABC entry risking perhaps two points initially. The exact amount will depend on how the other indices fare over the next week or so, since we wouldn't want to attempt the trade if it looks like we'll be catching the proverbial falling piano. _______ UPDATE (Sep 16, 9:38 p.m.): After triggering an rABC short off this textbook beauty, bears couldn't put IWM away. They'll have a second chance as the week ends, but if they fail they could find themselves on the ropes come Sunday night/Monday.
Weakness in the broad averages finally sapped Bertie's speculative juices, setting it on course for a corrective fall down to the 42,643 midpoint Hidden Pivot shown in the chart. The pattern may be a little obvious for a firm bid at the midpoint pivot, so we'll substitute what we used to call a 'counterintuitive' entry with an rABC that will serve the same function, albeit with greater precision. I can't recall the last time this vehicle corrected to a 'D' target, although we should be prepare for a plunge to p2=40,159 if p is easily breached. _______ UPDATE (Sep 14, 11:10 p.m.): Bertie's deep-pocket sponsors are playing hardball with cautious buyers. This time they didn't even let the dip get within $800 of my red-line bid. The tactic could impel more-urgent buying over the near term, but my hunch is that they are getting set up for a very nasty trap. In any event, we'll step away for now, since the bearish pattern's point 'C' high is about to get trashed.
The weekend brought an autumnal breeze to much of the Eastern Seaboard, and with it raised hopes in some quarters that seasonality will trigger a long overdue avalanche in the stock market. Even a few bulls are hoping for this, since only a rip-snorting stampede out of shares can disperse the potentially explosive, hydrogen-saturated layers of hubris that have accumulated over Wall Street since stocks bolted into the blue 18 months ago. The astounding rally during a global pandemic has made the rich effortlessly richer while doing little to help the broad middle class. It has also undeservedly burnished the reputation of portfolio managers who have done little more than throw Other People's Money at a relative handful of stocks. They've been winning like crazy for more than a decade, so who could blame them for believing their amazing run of luck will continue forever? Of course that's the way things always feel at important tops, even if the Wall Street Journal and other cheer-leaders for investors' salacious fantasies will try their hardest to explain why this time it really is different. Love that Kamala! Most of us know better and can smell a top that is becoming increasingly pungent with each fresh instance of unsettling, if not to say appalling, news. The President's steepening mental decline, for one. The New York Times, the Washington Post and even the Wall Street Journal will somehow find things to like about Kamala Harris when it's time to cheer her on, but there's no pretending she'll be any more effective than Biden. And there's the delta variant, a contagion so robust that it could conceivably put the world into a second lockdown that will make the first seem like a global street festival. You could always argue that the market has become completely
The algos and probably even a smattering of droolers have finally caught onto “our” ABC patterns, but too belatedly to make good money with them. This lessons shows how we are continuing to stay a couple of crucial steps ahead of the pack. One way is to look for ABC patterns so gnarly that we alone can see them The problem is, it’s getting to the point where the patterns have to be extremely gnarly to work. The opening minutes of this session show graphically exactly how gnarly.
A week of all-but-insufferable tedium produced no moves up or down sufficient to trigger the 'mechanical' trade we'd set out to do. Both possibilities remain viable nonetheless, but it may require a high state of alertness early in the session if this trade is going to work at all. Otherwise, we can remain fixated on the unambitious target at 4588.50 -- not only as a lodestar for long positions, but as a place to get short if we've made a few bucks on the way up. _______ UPDATE (Sep 8, 8:42 p.m.): We've seen some potentially serious weakness materialize over the last two days while waiting for what seemed like a juicy short at 4588.50. The target must be regarded nonetheless as a good bet to be reached, since every rally target we've used over the last decade has been achieved. Regardless, bulls have looked pretty sickly lately, failing to lift this gas-bag to new highs after getting stopped out four times on the hourly chart. This suggests that shorts ahead of the weekend will enjoyable a favorable breeze, at least for a while. ______ UPDATE (Sep 9, 9:39 p.m.): My post in the chat room early in today's session caught the day's gratuitous hump perfectly, although the warning elicited no discernible interest. If you've come to the room to trade and make money, then by all means please let me know -- and don't be shy.
Gold ground tediously higher last week, using a five-day consolidation at p=1816 to launch a relatively measly $18 rally on Friday. We'll continue to use the 1850.60 target shown (a slight adjustment from earlier) as a minimum upside projection, but don't look for the uptrend to blow it away, given the week-long dirge at the midpoint pivot. If gold shocks by doing just that, you can use the 1916.20 target of this bigger, rABC pattern to inform your trades. Since it is a reverse-bullish pattern, with 'C' below 'A', it should work nicely for 'mechanical' setups. ______ UPDATE (Sep 8, 8:01 a.m.): Far from shocking us with a strong follow-through rally, gold plummeted, as it so often does, for no good reason. Let's avert our eyes for the time being, lest we start to believe this frustrating price-action actually means something.
