The dollar's retracement from a 94.74 high recorded two weeks ago seemed healthy and normal until Friday's dive. Just a little more weakness on Monday or Tuesday would generate a bearish impulse on the daily chart if it penetrates the 92.70 low shown in the chart. Although this would not necessarily signal the start of a major new downtrend, it would imply that it could take time -- perhaps 6-10 weeks or even longer -- for the dollar to carve out a bottom capable of supporting the moon shot that eventually is coming. I see this as inevitable because a strong dollar is the one thing that almost no one wants. It would deaden stimulus, kill the profits of U.S. multinationals and catalyze the start of a ruinously deflationary squeeze on debtors. _______ UPDATE (Oct 13, 2:08 p.m.): Because the dollar has been falling for nearly three weeks, and because it has reversed from a too-obvious spot just above mid-September's consolidation lows, we'll be careful about turning bullish prematurely. Let's stipulate that the rally continue unpaused to at least 94.04 before we switch our bias. That would put p2=94.50 in play (60-minute, A=92.75 on 9/21), with additional potential to D=95.00 over the next 4-6 days. Here's the chart.
The two-day rally that ended the week had deceptive power, exceeding an 'internal' peak and two daunting 'externals' without drawing any deep breaths. It made our minimum upside target at p2=289.41 a shoe-in to be reached and shortened the odds of a further push to D=297.45. We're unlikely to see a pullback to p if DIA hits the secondary pivot at 289.41, but it would make for an enticing 'mechanical' buy if it occurs. However, it should be noted that exceeding the midpoint pivot took a long running start to achieve, and that's why we'll need to be alert to a possible trend failure above p2. _______ UPDATE (Oct 12, 6:31): Today's top just a millimeter from the 289.41 target was worth shorting with a tight stop-loss, as I noted in the chat room an hour before the bell. I'll establishing a tracking position if I hear from at least two subscribers who jumped on this one. For now, though, with DIA dormant a full point below the target, use a break-even stop-loss. _______ UPDATE (Oct 14, 7:56 p.m.): Feedback on the short was sketchy, so I haven't established a tracking position. You're on your own if you did the trade, but it is sufficiently profitable that you should have taken a partial gain by now. _______ UPDATE (Oct 15, 6:00 p.m.): If the upward momentum of today's reversal continues and DIA closes strong, it would imply that the 297.45 billboarded above will be reached.
Bulls have plenty more work to do if they want to turn Friday's strong rally into something meaningful. They had a running start from a strong overnight rally in physical that allowed GDX's handlers to open this vehicle on a large gap, and to rack up a stupendous gain of 5% on the day. The move was impulsive on the hourly chart, and that's encouraging. But the presumption of a bull market with a shot at 51.54 will depend on whether buyers can push this rally, without a visually significant pause, above a midpoint resistance at 44.31, and thence past an external peak at 43.60 recorded in mid-September. Here's a graph that shows it all. _______ UPDATE (Oct 14, 8:03 p.m.): Today's pop through p=40.89 portends more upside to D=42.31, although it could entail a struggle. We'll want to see GDX close for two consecutive day's above that Hidden Pivot, however, before we infer that more upside is likely to the 43.60 benchmark noted above. Here's the chart. _______ UPDATE (Oct 15, 6:02 p.m.): A struggle indeed! Hardly seems worth the stress.
With the election campaign headed down the stretch, investors are still betting Trump will win. The Dow Industrials have risen to within striking distance of February's 29,568 record. Does anyone think this could have occurred if Biden were a shoe-in, as the pollsters would have us believe? More likely is that the Dow would be trading 5000 points lower, on its way to 10,000, if the stock market caught even a whiff of a possible Biden/Harris victory. A few pundits have asserted that Biden is Wall Street's choice. This claim is so outrageous that no one in America, including Trump's foes, could possibly believe it. It holds up only if you think Biden's path to the White house is certain. Then it would be logical to infer the stock market is not merely comfortable with this outcome, but exuberant about it. In pushing the Wall Street-for-Biden narrative, the mainstream media have wishfully channeled Joseph Goebbels: Repeat a lie often enough and it becomes the truth. Not quite, though, since there is Fox news commentator Tucker Carlson to firmly set the record straight. His nightly show is not only the most-watched news program, it is the most-watched program in cable television. Americans Have Eyes Concerning the pollsters, we wonder whom they've been calling. Not us, for sure, nor anyone we know. But we do have more than a few left-leaning friends, including some Berkeley liberals, who will be surreptitiously voting for the incumbent. There are also nearly a half-million blacks, gays, trannies and Latinos who have left video testimonials to Trump on Facebook as part of the #WalkAway Campaign. But the vast majority of Trump supporters, including a significant number of swing voters who can't stand Trump personally, will be pulling the GOP lever on November 3 simply because they watch
AAPL looks like it will need to pull back to get a running start at $120, where supply is certain to be plentiful. Freaky Friday could provide an opportunity to do it the easy way - i.e., with short-covering on any kind of news that could be construed as bullish. But it's hard to imagine what that news might be, given that Biden has been climbing in the polls and stimulus talks are in a muddle. Fed chief Powell could venture forth and cough into a microphone, but he seems to save his bullets for moments when investors and the news media are stirred up to begin with. The Russell 2000 is where the excitement has been lately, alas. You could no more build an historic rally on this than you could a fabulous dinner featuring mashed potatoes, salisbury steak and jello.
Thursday's rally was not nearly strong enough to achieve escape velocity from a consolidation pattern the futures had traced out over the last week. If DaBoyz are unable to goose the stock higher as the week draws to a close, look for a pullback to start Sunday night. AAPL's punk performance has kept the lunatic stocks relatively subdued, and the iPhone maker's shares looks like they are about to roll over. If so, that will bring the Nasdaq 100 down hard, perhaps to test support at C=11,197 of the bullish pattern shown in the chart. ______ UPDATE (Oct 12, 6:43 p.m.): The maniacs who power this hoax were so revved up yesterday, and the p2 rally target at 12,271 so obvious, that I can only counsel caution when the futures get there. Short the pivot if you are familiar with 'reverse ABC' set-ups and can handle one on the 3-minute chart, or if you've made a few bucks on the way up. If bulls impale p2, and especially if they close above it for two straight days, consider D=12,808 a done deal. ______ UPDATE (Oct 13, 2:26 p.m.): The advice sent out last night proved prescient with respect to the rally's failure, but getting short as I'd suggested would have been challenging. Here's why: The futures missed touching p2 by a whisker, and although this would not have prevented one from initiating the trade with an rABC set-up, the entry trigger occurred more than two hours before the opening bell. Oh well. Here's the graph. The futures look like they have farther to fall. _______ UPDATE (Oct 14, 8:08 p.m.): Here's an 11,781 downside target you can use if sellers dominate for a third straight day. Your clue of more weakness to come would follow a decisive penetration of p=11,907.
AAPL has spent the last six days meandering below an external peak at 118.20 that it has yet to exceed. A fleeting pop above it would negate the bearish implications, but until that happens the sideways price action should be regarded as distributive. That means the midpoint pivot at 110.18 is still our minimum downside objective if the stock turns weak, and that it can be bottom-fished with a tight stop-loss if the opportunity arises. A further implication is that with no legitimate, bullish impulse legs on the hourly chart, no upside target can be projected with confidence or precision.
The December contract is all but certain to achieve the 3481.75 target (see inset), but it remains to be seen whether it can blow past it. You can try shorting there with a tight stop if you've made a few bucks on the way up or if you know how to use an rABC set-up to trigger the trade. 'Mechanical' set-ups have been working consistently, as you may have noticed, although the one that caught the low tied to Trump's recent flip-flop on a stimulus package was a bit hairier than we'd have preferred. If the futures settle above 3481.75 for two consecutive days or achieve 3488 intraday, they'll be signaling more upside to the p2 and D pivots of a larger pattern shown here. The respective resistances lie at 3488.44 and 3585.25.
Let's see if The Bull Market That Wouldn't Die can shrug this one off. Trump postponed stimulus talks until at least after the election, causing a 600-point reversal in the Dow Industrials. With no stimulus in sight, all of those would-be dollars from the sky won't get spent by holiday shoppers. They are usually unstoppable themselves, although 2020 has seemed likely to produce, from the standpoint of retailers, a k-shaped Christmas. That's when pandemic-proof upper-middle-class shoppers go all-in on Patek Philippe wristwatches and goose-down comforters while most Americans have to settle for Kohl's gift cards. If stocks plunge in October, that could flatten the shopping curve somewhat, ringing in the New Year with an L-shaped recovery. _______ UPDATE (Oct 7, 11:41 p.m.): I am on the road until late Thursday but will be monitoring chat room discussion as time permits.
Trump's decision to table stimulus talk knocked stocks for a loop and will likely keep pressure on the market at a time when seasonality would be working against it to begin with. We'll have a better idea of whether the insanely ebullient mood on Wall Street has dimmed once we've seen how the pattern shown in the chart plays out. It is a pretty good specimen of 'mechanical' buy, meaning anyone who got long at the green line on Tuesday afternoon should make money via a snap-back rally to at least p=3369.50. If the trade instead gets stopped out at 3291.25, that would imply the structure of The Rally That Wouldn't Die may have been compromised. If so, the futures will soon find themselves groping for traction all the way down to 3200, where important lows were carved out two weeks ago.
