Although Silver got hit hard last week when an abortive Reddit squeeze ran out of steam, the plunge does not look particularly fearsome on the longer-term charts. In fact, the April Comex contract would become an enticing if somewhat scary 'mechanical' buy if the pullback comes down to x= 23.11, the green line. I say scary because the implied entry risk, using a 21.92 stop-loss just beneath the pattern's point 'C' low, would be around $16,000 per contract. This set-up rates a 7.7 in my book, meaning I believe it has a 77% percent chance of producing a profit. Regardless, if and when the opportunity to jump aboard should arise, tune to the chat room for guidance tied to a risk-averse 'camouflage' set-up.
I've quickened the drumbeat over the last few weeks to warn that a bear market that will have been nearly 12 years in coming may finally have arrived. You should be holding put options, including some butterfly spreads, in any of numerous trading vehicles that recently topped very precisely at targets predicted here as long as two months ago. Two nearly perfect hits occurred, respectively, in IWM and the E-Mini Nasdaq. Concurrently, the E-mini S&Ps, the Dow Industrials and bellwether AAPL, have turned down sharply from midway between p2 and D. I did not view this seeming anomaly as putting them out of sync with the lunatic-powered indexes favored by portfolio managers (aka "the chimps"), since it is not unusual for long-term trends, even bull markets, to fall shy of 'D' targets. The Hidden Pivot Method cannot tell us with certainty when a bear market has begun; however, it has been quite impressive at nailing tops of lesser degree and at producing robust profits trading occasionally against the granddaddy of all bull markets. And now? A key rule of Hidden Pivot analysis is that if the dominant trend has shifted from bullish to bearish, stocks, ETFs, indexes and futures should begin to exceed their 'D' targets to the downside. Correspondingly, and with equal consistency in charts of all time frames, corrective abcd-type rallies should start to sputter out shy of their 'd' targets -- typically at p, the midpoint Hidden Pivot support. What to Look For These factors should be foremost in our minds as the E-Mini S&Ps (see chart inset) approach their first D target on the hourly chart since the selloff began last Tuesday. My expectation is that D=3664.75 will give way easily, but that even if not, the futures will close beneath it. If a bear market
The Cubes have rolled down from within an inch of a 331.87 Hidden Pivot target that has been in play theoretically since early October. It kept us on the right side of what may prove to be the last gasp of the bull mania begun in March. It also allowed us to acquire put options with great timing. Whichever puts you hold, including butterfly spreads that I'd suggested, you should cash out half your position if and when its value doubles. If the fledgling downtrend gets legs, we can roll positions as warranted. The multitude of possible point 'A' lows in the chart argues against certitude that the bull market top is in. However, the prospect in somewhat corroborated by the recent top in the E-Mini Nasdaq. I'd been drum-rolling a potential top at exactly 13,555 for quite a while, and this pivot came within 50 cents (three thousandths of one percent) of nailing the sharply etched top recorded last Monday. After diving hard for a day, the futures subsequently head-faked to 13,600 before taking an even bigger plunge. However, there can be little doubt that bulls were feeling the weight of the Hidden Pivot. Here's the chart, and although the point 'A' low is not as distinctive as I'd prefer, it has the advantage of being the only visible choice. FYI, the lesser downtrend begun last Wednesday projects, with so-so clarity, to 12712. No clear equivalent is evident for QQQ. _______ UPDATE (Feb 1, 9:08 p.m. EST): Su-prize su-prize. The futures have rallied sharply from a low at 12727 that missed my correction target by a tenth of one percent. Now, if it pushes above the record 13,599 achieved last week, that will be no reason to let down our guard. _______ UPDATE (Feb 2, 5:52 p.m.): Bears are
We hold put positions in several indexes that topped simultaneously at compelling Hidden Pivot targets. This one, however -- an ETF proxy for the Dow Industrials -- is somewhat out of sync, having failed to reach a clear 'hidden' resistance at D=323.59. The actual high at 312.71 is a little more than midway between p2 and D, and, as I've mentioned elsewhere, it would not be unusual or illogical for a major trend to fail where this one did. However, the chart still provides the strongest technical evidence we have to reserve at least some small doubt that the bull market top is in. Specifically, the decisiveness of the move past p=252.85 on the way up has raised the odds of a completion to D to around 75%. We'll give the benefit of the slight doubt to indices that have already reversed and sold down hard, but we should keep a close eye on this potential troublemaker nonetheless. _______ UPDATE (Feb 1, 9:25 p.m. EST): Bulls have a tough climb, given that the most recent down-leg exceeded a key 'external' low on the daily chart. This generated a bearish impulse leg that implies any rally that falls shy of 309.43 is merely corrective. ______ UPDATE (Feb 4, 9:20 p.m.): A fist-pump on the open bar pushed DIA above an internal and external peak, generating an impulse leg that will shortly propel this vehicle to new record highs. We shouldn't fight it, but neither should we trust it, especially with an unachieved target in the E-Mini S&Ps 67 points above, at 3938.25.
My outlook and trading advice for silver is more bullish than for gold at the moment due to the latter's punk performance on the hourly chart. I tend to treat each separately in such instances rather than have feelings about one vehicle corrupt the accuracy of my forecast for the other. In this case, Silver looks primed to drag Gold higher. How's that, you ask?? Well, the Reddit brats reportedly are intent on short-squeezing silver because they don't like the way DaScumballs who rule precious-metals markets often manipulate bullion quotes lower to cover short positions at bargain prices. We sincerely wish the brats all possible success in this worthy venture, but they ought to read Bunky Hunt's epitaph before they get carried away with themselves. Concerning Feb Gold, there is mild evidence to support the case for a fall to p=1811.60 of the pattern shown (using the circled peak as 'C'), or even to D=1745.80. The equivalent numbers for the April contract are p=1814.40, and D=1749.80. Looking at the charts in toto, though, it's clear that bears are not having any more success than bulls at profiting from bullion's ups and downs. Under the circumstances, I am making no recommendation, nor even ballyhooing a target. It could go either way, and I'm having difficulty caring which right now. _______ UPDATE (Feb 4, 9:16 p.m. EST): Here's the April chart, with a secondary (p2) HP support at 1782.10 that I didn't mention earlier. I proffer it now to those clinging to the hope that this unwarranted and gratuitous shakeout won't be quite as bad as it could get. ______ UPDATE (Feb 4, 9:25 p.m.): The little weasel plunged to 1784.60, an inch shy of the 1782.10 target flagged above, before rebounding moderately into the close. The rally will become more credible
Friday's psychotic leap stalled almost precisely at p=38,822 before reversing just as precipitously. This validates the pattern itself and its D=48,834 target, although we'll need to see a decisive push above p to make more upside to D an odds-on bet. Another useful inference is that if and when bulls hit 48,834, a pullback from it is likely to occur with similar precision. In any event, the reversal would be speculatively tradeable with either a tight stop-loss or an rABC set-up on a lesser chart. The relapse to the green line as the week ended just missed triggering a 'mechanical' buy because the rally that preceded it failed, if only by a hair, to touch p=38,822. That said, my gut instinct is that any longs initiated at the green long will not be stopped out below 'C' before becoming at least moderately profitable. By 'moderately', I mean that I cannot guarantee it will return to p, where a partial profit could be taken. Here's a comparable although not identical view of GBTC. _______ UPDATE (Feb 1, 9:42 p.m.): Friday's crazed leap failed by a hair to hit the red line, a midpoint pivot at 38822. A trend failure in this vehicle is rare, and it has negated a 'mechanical' buy trigger that would otherwise have occurred on Sunday's pullback to the green line (x=33816). The rally was impulsive nonetheless, having exceeded two external peaks on the daily chart. That's bullish, but if I am going to suggest any bottom-fishing it will be based on a legit 'mechanical' setup that is nowhere in sight at the moment. _______ UPDATE (Feb 4, 9:32 p.m.): This time buyers got even close to the 38,822 red line without touching it, peaking at 38,737. If BRTI falls again to the green line at 33816, treat
Silver continues to outperform gold in subtle technical ways that are encouraging. On Friday, for instance, the March contract blew past a midpoint Hidden Pivot associated with a D target at 30.10. This implies the target is probably no worse than a 60% shot to be achieved. It also makes a pullback to the green line (x=25.55) an enticing spot for a 'mechanical' bid with a stop-loss at 24.03. (It may be possible to pare the entry risk by as much 90% using an rABC set-up, so stay tuned.) We might not be gifted with a nasty correction to x; regardless, price action in the chart supports a more bullish bias than we've allowed since late December. ______ UPDATE (Feb 1, 11:45 a.m. EST): Wowee! The strongest leap in 11 years has pushed the futures past my target, somewhat exceeding a revised target at 30.18 that I posted in the chat room. The ferocity with which the rally has impaled p=28.30 of a larger pattern is quite bullish and has raised the odds of more upside to at least D=34.675 to around 75%. Here's the chart. _______ UPDATE (Feb 1, 9:31 p.m.): The pullback has further to go, presumably to at least 27.77, where it would fill a gap created by the powerful leap begun three days ago from 24.71. ____UPDATE (Feb 2, 6:08): The correction from the top of Monday's exuberant spike to 30.35 has been brutal, erasing nearly two thirds of the substantial gains achieved since last Wednesday. Even so, because the spike impaled the 28.30 midpoint pivot, odds are still good that the 34.675 target will eventually be achieved with or without the support of the Reddit crowd. _______ UPDATE (Feb 4, 9:46 p.m.): The futures would become a fetching 'mechanical' buy at x=25.11. I'd have to
The news media went all-in over the weekend trying to explain the significance of the Gamestop saga, but because few traders were asked about it, there was little in this torrent of analysis to enlighten. Most of the reporters, talking heads and pundits focused on the obvious, sensationalizing a story about how the little guys have drawn first blood and are about to stick it to giant hedge funds by targeting their short positions. This kind of claptrap makes for salacious reading, but there's a much bigger story that has so far gone untouched. Before I explain, here's some point-and-counterpoint to get you past the disingenuous swill being dished out in the blogosphere and by the mainstream media: Popular Narrative: The Reddit/Robinhood mob (RRM) has declared war on hedge fund biggies, and so far the smart money has been getting its butt kicked. Reality: The damage so far is just a mosquito bite on the behind of hedge fund elephants like Steven A. Cohen, and the Reddit mob a five-year-old who has discovered where Daddy keep the matches. PopularNarrative: “We’re going after Citadel next!” Reality: Nice try, kids, but this kind of hubris is going to boomerang on you. As a rallying cry, it makes good headline fodder, since the name ‘Citadel’ conjures up the financial establishment’s most impregnable fortress. In the end, though, you can bet on Citadel & Friends to change the game so that the edge you pishers currently enjoy evaporates quickly, assuming it hasn’t already. Popular Narrative: "After Citadel, we're going to squeeze shorts in silver." Reality: We're actually rooting for you on this one, since precious-metals markets are manipulated by unmitigated scumbags. And, yes, your merely having announced last week that silver is in your cross hairs seems to have provided a little added boost
The bear market begun in 2009 may finally gave breathed its last! This seems at least plausible, given that a half-dozen vehicles that I track were at or very near potentially important Hidden Pivot resistance points. If The Top is in, it will require some adjustments in our thinking as we reverse the polarity of 'mechanical' trades, among others. This session focuses on such concerns and should be considered a must-view.
A little more than two decades ago, amidst the wild excesses of the dot-com boom, I wrote what turned out to be an epitaph for those heady times in the The San Francisco Examiner. It bore the headline Monsters from the Id Threaten the System, a metaphorical nightmare that I’ll explain shortly. Then as now, vast quantities of money driving stocks to absurd heights seemed practically limitless. ‘Easy Al’ Greenspan was in charge of the Fed, and the loose monetary policies he pursued reflected some of the crackpot ideas he evidently brought with him from Columbia University’s PhD program. A fat lot of good they did him; for on numerous occasions, Greenspan would laughably refer to inflated home prices as "wealth." He would also tout a supposed investment boom at a time when household savings growth was negative. As every freshman economics student knows, investment cannot exceed savings, and we cannot increase investment unless we cut back on current consumption. And yet, here we were, consuming and borrowing like crazy but still somehow "investing" in the future in defiance of immutable economic law. Bread and Circuses It would seem that most economists these days continue to believe fervently in Greenspan’s monetary Rube Goldberg contraption. Still worse, the charlatans at the central bank who keep it lubricated and running somehow command nearly universal respect. This should probably come as no surprise, given all the bread and circuses that money-from-trees has begotten us. Few seem concerned in any event that as stock market valuations have climbed to insane heights, global debt in its many shapes and forms is approaching two quadrillion dollars. Let me type that out for you: $2,000,000,000,000,000! Most of it is swirling around in derivatives markets that are notionally ten times the size of global trade in real goods
