Comex Silver has turned wishy-washy after a promising rally that lasted for nearly the entire month of April. The good news is that before buyers went into hibernation two weeks ago, they pushed the July contract slightly above an 'external peak at 26.755 recorded on March 18. That added promise to the 'reverse' C-D follow-through leg shown in the chart and turned the reverse pattern itself into a decent platform for getting long to a 28.945 target. One way to do this would be with a bid at x=25.075, the green line, with a stop-loss at 23.780 just below the green line. That would risk about $6,500 per contract, but in practice, to reduce that by as much as 95%, we would craft an entry trigger using 'camouflage' or a small-degree rABC. If you trade this vehicle and know your ABCs, be prepared to show your stuff in the chat room, where crowdsourcing is always welcome.
Gold has turned punk again, well shy of the 1880.10 midpoint pivot shown in the chart, but also of February 16's external peak at 1817.60. Exceeding this structural resistance might have offered encouragement; alas, the futures went no higher than 1798. Now, all that bulls have to hang onto is mid-April's successful stab at the green line, which triggered a highly theoretical buy signal. It also activated p=1880.10 as a minimum upside projection, but this goal looks distant, if not to say unattainable, in the context of the daily chart. Silver, as I keep remarking, looks better -- just not 'better enough' at the moment to drag gold higher through layers of resistance. Where are the robinhood and reddit kiddies when you need them? _______ UPDATE (May 7, 9:13 a.m. ET): With a couple of rare, back-to-back leaps, an energized gold has put my 1880.10 price objective within easy reach. It is a minimum target, but if buyers can impale it on first contact, that would shorten the odds of a further push to 2083.90, the 'D' target of a larger bullish pattern stretching back nearly a year. And if that Hidden Pivot resistance were to be smashed, we'd be talking -- theoretically -- as high as 2324.70, the 'D' of this pattern. Notice that a theoretical 'buy' signal predicated on that target was triggered at 1838.30,, ticks off the so-far top of today's surge.
First, let me titillate all of you die-hard permabears with a ray of hope: A potentially important top may have formed last week in, respectively, the E-Mini S&Ps and in IWM, a proxy for the Russell 2000. The former stalled inches from a 'Hidden Pivot' resistance at 4222.82, while the latter turned down precisely on schedule after tracing out the right shoulder of a nasty-looking head-and-shoulders pattern. I must caution you against making too much of this, however, since the stock market since 2009 has blasted free of a dozen similarly daunting predicaments, even achieving enormous gains during an economically devastating pandemic. Still, one can always hope that the time for a long overdue and presumably healthful correction has finally arrived. Just one additional note of caution: If stocks bull-doze their way higher next week, the S&Ps should be presumed headed to at least 4536, a level that would equate to a 3000-point Dow rally. Now on to something with more impact on our day-to-day lives: auto-warranty scams. This plague interrupts tens of million of us each day with robotic phone calls offering worthless car-service agreements. All of us have received scores if not hundreds of these nuisance calls over the years, sometimes two or three of them in a single day. Supposedly, if you follow the voice prompts, you can purchase an extended auto-service policy for $3,000 that will turn out to be useless when it comes time to file a claim. Big Money Despite this, the scam is obviously making some crooks a lot of money, since the calls -- billions of them -- just keep coming and coming and coming. Mine come mostly from spoofed Colorado numbers (where I lived for 20 years) and hit in the late afternoon or early evening. Although I use a call-blocker
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As picture-perfect as this bearish head-and-shoulders pattern is (see inset), a sharp feint higher over the next day or two would render it harmless. The hypothetical rally that I've sketched achieves 232.50 or so, which is what it would take to neutralize the pattern and put bulls back on the warpath. Bidding on Friday was undeniably spirited, implying that the institutional chimpanzees doing the buying have finally shifted back to 'value' from 'growth', just as they've been advertising they would for the last couple of weeks. Assuming they really mean it, IWM should have little trouble mustering the kind of rally that will turn bears who have enjoyed watching the H&S pattern take shape into short-covering madmen. _______ UPDATE (Apr 29, 10:03 p.m. ET): Just a few more bars higher or sideways will alter this bearish head-and-shoulders pattern sufficiently to negate its killer power. Time for it to put up or shut up.
I've identified bull market targets as high as 4905.75, but let's use the pattern shown for now, with a less ambitious objective at 4536.50, since the futures are a millimeter from a related, and potentially crucial, benchmark. They traded as high as 4187 on Friday, just 13 points from the secondary Hidden Pivot at 4200.44 shown in the chart. We shouldn't be surprised to see a tradeable pullback from it, but if buyers blow past or close above it for two straight days, that would put the 4536.50 target well in play. There is one other 'hidden' obstacle noted here earlier: 4222.82, the p2 pivot of the pattern associated with D=4905.75, but we'll ignore it for now to keep things simple. It may be possible to get short with risk tightly controlled on Monday or Tuesday using a small-degree 'reverse' ABC set-up, but let's play it by ear. Chat-roomers, stay tuned! _______ UPDATE (Apr 29, 10:13 p.m. ET): Failures precisely at the secondary pivot are especially concerning, so we'll be watching 4200.44 closely. Today's microscopic poke above the line was not enough for us to draw any conclusions, but bulls will need to power decisively above the line to avoid the suspicion of fatal weakness.
The Diamonds spent the week lollygagging, making no progress toward a 345.33 target aired here earlier. It remains valid nonetheless, and is an odds-on bet to be reached because of the way the C-D leg of the rally gapped through the 332.98 midpoint Hidden Pivot. A corresponding target sits at 34,549 for the Dow Industrials, but we'll focus on this ETF vehicle in order to get short with little risk. We can do this in two ways: an odd-lot sale triggered via a small-degree 'rABC' pattern; or the purchase of put options if and when 345.33 is very closely approached (i.e., within less than 0.50 points). For now, trade with a bullish bias, since 345.33 is our minimum upside objective for the near term. ______ UPDATE (Apr 30): Yet another week of tedious sideways scuddling left the analysis and outlook above unchanged. ______ UPDATE (May 4, 5:18 p.m. ET): With the Nasdaq and small caps getting socked, DaBoyz eked out a slight gain on the day in the Dow. This would seem to suggest that their oh-so-clever clever one-trick-pony -- i.e., rotating money into the flavor-of-the-day/week/month -- is working. However, they will not be out of the woods and will remain in jeopardy until such time as all of the broad averages are moving higher synchronously. Under the circumstances, we should be alert to the possibility of a bull trap rally narrowed to the Dow alone..
The 355.05 bull-market target broached here earlier remans viable, notwithstanding a two week hiatus for flower-sniffing that has stalled the Cubes at the pattern's secondary pivot, 340.66. The April 5 gap through p=326.27 on first contact tells us that the target is all but certain to be achieved, presumably with an energetic leap from consolidation. You can short there, tightly stopped, but more aggressively if you've made a few bucks on the way up. Well-out-of-the-money put options with 3-4 weeks left on them are recommended, but don't stick with them if QQQ closes for two straight days above 355.05 or trades intraday above 357.50. _______ UPDATE (Apr 30): Another week of flower-sniffing has left the bullish picture unchanged. For the moment, it outweighs a concerning technical picture that has been developing in IWM and the E-Mini S&Ps. _______ UPDATE (May 4, 5:32 p.m. ET): Hard selling drove the Cubes down to the red line (326.27), triggering a 'mechanical' buy. This is riskier than bidding at the green line, so I did not recommend the trade. Even so, my gut feeling is that the trade will be profitable. That implies that QQQ will rally to at least 340.66, where a partial profit would be taken, before falling to the 316.67 stop-loss. If this paper trade were to get stopped out, it would suggest that potentially fatal weakness had crept into the long-term bull market. This means any next leg up, even if it reaches the 355.05 target, could be the bull's last gasp.
Bitcoin has tripped the second major buy signal in a month with a drop to the green line (inset). It is also on a lesser buy signal from Friday that is tied the hourly chart. Taken together, two simultaneous 'buy' signals might sound bullish, but in this case the yellow flag is out, since BRTI failed to reach the D target at 72,148 on the first signal. The second is worth about a 6.6 on my rating scale, implying that I give this vehicle a 66% chance of reaching D. Are those odds good enough to risk more than $7000 per round lot? I think not, although I'd give a rally from the green line to the red one a 78% chance. That would imply risking $1 to make $1 -- not exactly a formula for trading success. A better approach would be to limit the entry risk by creating a tradeable pattern of minute degree (aka 'camouflage'). I looked at one such pattern on Friday in the chat room and will do so again if there is interest, so stay alert if you care. ______ UPDATE (Apr 27, 10:33 p.m. ET): BRTI is creeping up on p=57,595, where yet another 'mechanical' buy can be half- or fully covered, this time for a profit of up to $30,000 on four lots. (As far as I'm aware, 'Trader Mike' is the only subscriber who's routinely doing these big-picture 'mechanical' trades.)
The encouraging look of Silver's chart may be all that is keeping Gold from doing what it does best every now and then -- i.e., ripping those who love it most a new orifice. The pattern shown gives silver bulls running room up to as high as 29.00 over the next 3-4 weeks. It also looks well formed for purposes of initiating 'mechanical' buys along the way. I've sketched a hypothetical example of a trade we should jump on if the May futures gift us with a pullback to the green line (x=25.05). The position would require a stop-loss at 23.73, implying initial risk of about $6,600 per contract. We'd need to cut that down to $600 or less to make it worth our while, so please join the crowdsourcing effort in the chat room at the appropriate time if you're keen to play. ______ UPDATE (Apr 29, 10:26 p.m.): Silver has been barely strong enough to keep its snout above water, never mind pull gold higher. It needs to launch a flight of fancy, and soon.
