Rallies are reaching major and minor Hidden Pivot targets consistently and precisely, but without pausing for long before ascending to the next. The pattern shown, with a 3769.00 target, is intended to stretch the bullish imagination, especially if you think the threat of a global depression is bad for stocks. I've used the monthly chart because the weekly and daily bars yield too many possible point 'A' lows to enable a confident target projection. If the futures hit 3769, the Dow would be trading for around 31,000, about 2,300 points above current levels. How likely is the S&P target to be reached? I'd say there's at least a 75% chance, given the way buyers impaled the secondary pivot, p2=3370.25, last week. If there is first a plunge to the 2971 midpoint pivot, although that might seem like the end of the world, the chart says it would offer a great 'mechanical' buying opportunity. Although we're unlikely to see such weakness, it's potentially useful to know that a seeming avalanche would likely be merely corrective rather than the start of a bear market. Everybody has been expecting one, but that's one of the reasons stocks just keep moving higher. We'll look for trading opportunities on the lesser charts in the meantime, maintaining a bullish bias unless corrective patterns on the daily chart start exceeding midpoint pivots and d targets. Please note that the Hidden Pivot levels in the chart will not be as precisely tradeable as usual, since the chart is a composite that uses A,B and C coordinates from contracts of various months and years. However, the 'composite target' should be sufficiently accurate to allow us to stay confidently with the trend until the futures are very close to a potential major top. _______ UPDATE (Aug 31, 4:43 p.m. ET):
AAPL still looks like a lead-pipe cinch to achieve the 537.50 rally target shown in the chart. Whether it takes a few days or a couple of weeks, the broad averages will be moving higher simultaneously, because that's how the game works. The stock will open Monday trading for around $125, since it is splitting four-for-one. The reason for the adjustment is that some big shareholders want out, and the only way they can accomplish this is by lowering the price to attract millions of new greater fools. The Robinhood crowd, for one, but also every small investor who has dreamed of owning a few shares of the institutional world's most cherished stock. At $125 per share, it's not cheap. But the price is low enough that even a millennial living in his parents' basement can probably scrape together enough cash to purchase a round lot. There are surely enough odd-lotters to take hundreds of a billions of dollars worth of stock off the hands of pros who recognize how absurdly overvalued AAPL is. We get a sense of just how many small-timers are out there to bail them out whenever a PowerBall jackpot hits nine figures. Imagine how large the lotto jackpots would be if, instead of buying $5-$10 worth of lottery tickets, the rubes spent $3,000-$5,000 as they absolutely will on Apple shares. Do the math, That's what portfolio managers are counting on, since they know AAPL offers extremely poor value at these levels. For trading purposes, you should stay close to the chat room if you're keen to play. The stock would trigger a 'mechanical' buy if it fell to 488.97. However, the implied stop-loss at 470.12 would risk nearly $1,700 per round lot -- far more than our usual gambit. But it will always be possible
Buyers brushed aside a secondary pivot at 285.16, turning it into an apparent support by week's end. The clear implication is that DIA will achieve the 297.18 target, putting the cash Dow just below 30,000. I wouldn't count on round-number resistance to halt the stampede for long, especially since the bull market projection I've flagged for the E-Mini S&Ps elsewhere on this page would equate to around Dow 31,000. DIA's ascent, although not quite as steep as the Nasdaq 100's, has provided no opportunities to get long 'mechanically' on the daily chart, although there have been several set-ups on the lesser charts. They cannot usually be foreseen a day in advance, however, so we'll have to continue looking for them intraday. Meanwhile, I would not suggest buying naked call options merely because this vehicle is a lead-pipe cinch to reach the rally target. Instead, focus on butterfly spreads centered on or very near the target. The Sep 18 296/298/300 'fly would be a great buy for 0.10-0.15, since it has the potential to return perhaps 1.50-1.80 with DIA trading near the target between Sep 16-18. You might also consider calendar spreading the 300 strike. The Sep 25/Sep 11 for 0.60 would yield excellent odds, since it could widen to as much as 3.00. _______ UPDATE (Sep 2, 9:29 p.m.): The trade ideas suggested above have already produced significant gains, but because they attracted no discussion whatsoever, I have no way of knowing whether dozens of subscribers are keen to jump on put options when DIA hits 297.18, which it will. _______ UPDATE (Sep 3, 10:06 p.m.): Today's big selloff did not significantly alter the odds of DIA achieving the 297.18 target, although a further drop exceeding 275.87 would.
The bull market in tech shares has been trashing Hidden Pivot obstacles with the greatest of ease, so here's a chart that takes a more expansive view. If the rally maintains its steep pitch, the uppermost of the targets, 317.48, should be at least two weeks in coming. There's always the chance it will not be reached at all, since September is a notoriously bearish month, but we'll take the targets one at a time in any event. If intervening corrections on the lesser charts start to exceed their midpoint supports and 'd' targets, we can shift our perspective accordingly. But there is no reason to presume that seasonal bearishness that has obtained over the last hundred years will affect this nutty rally any more than a dozen other time-honored cyclical and technical indicators. For the moment, we'll stay focused on the 297.17 target immediately in prospect. Its easy breach would portend more upside to the next, 305.12. _______ UPDATE (Sep 3, 10:20 p.m.): It could take a week or two for the Cubes to shake off today's body blow, but the plunge paradoxically triggered a mildly enticing 'mechanical' buy at p=284.40, stop 273.37. If the trade gets stopped out and QQQ falls to the green line, that would trip another 'mechanical' buy more promising than the first. Here's the chart.
I'm using a modest rally target for now because the impulse leg shown in the chart is suspect, having failed to exceed the 'external' peak at 28.790. Bulls should have little trouble achieving D=28.925 nonetheless, but this Hidden Pivot resistance should not be considered reliable for getting short with the usual precision if at all. Assuming the futures push past it as I expect, the 30.670 target shown in this chart would be in play. In the unlikely event that the futures pull back first to the green line (x=25.518), that would trip a 'mechanical' buy, stop 23.795. Otherwise, we'll look for entry set-ups in charts of lesser degree as the December contract makes its way higher.
December Gold has struggled quietly since tripping a theoretical buy signal at 1941.30 more than two weeks ago. The 2142.40 target still looks likely to be reached, but the presumptive consolidation has grown more than a little tedious. Bears could not have gotten much satisfaction either, since, except for a savage pounding they administered the second week of August, the futures have refused to give up any ground. Regardless, the December contract still needs to close above p=2008.30 for two consecutive days, or trade above 2030 (or so) intraday, to make a run-up to the target an odds-on bet. The gratuitous swings are tradeable in the meantime, but only with diligent attention intraday.
The burden of proof rests with bulls for the time being, since the rally from Aug 11-18 failed to surpass a distinctive 'external' peak at 44.18 (see inset). If the corresponding ABC downtrend were to play out, a touch at 42.48 would trigger a 'mechanical' short with a 37.64 price objective. This is blandly objective analysis, but I must tell you that I'm not thrilled with the prospect of shorting GDX, given the difficulties sellers have had pushing gold lower over the last two weeks. I'll recommend watching from the sidelines for a couple of days, although there are always ways to trade the lesser charts with risk well controlled. I have crowdsourced this task but will join in the discussion if the interest is there. ______ UPDATE (Sep 3, 10:27 p.m.) The paper-trade short has gone as much as $205 in-the-black and is still profitable, predicated on a 37.64 target. Two successively higher Friday closes would turn stochastic indicators on the weekly chart bullish. ______ UPDATE (Sep 5): The short position is showing a theoretical gain of around $650 on four round lots. I'll suggest a 41.81 stop-loss for now, o-c-o with an order to cover the position four cents above the 37.64 target. ______ UPDATE (Sep 9, 11:48 p.m.): My bad, since half of the short position should have been covered last week at p=40.87. The trade produced a $244 theoretical profit nonetheless. I am taking a vacation from GDX for a while, since it is too much trouble to track -- the most annoying vehicle on the list. I will wade into the discussion nonetheless if subscribers show active interest in this vehicle in the Trading Room.
Thursday's psychotic price action showed what's on the tiny, fevered brains of traders as they continue to drive the broad averages to ridiculous heights. Supposedly, the wack-jobs wanted Powell to say more than he did in his keynote address Thursday morning at the Jackson Hole conference. Here's the Fed chairman in his own words. Judge for yourself whether a more measured response on Wall Street might have been appropriate: “Our longer-run goal continues to be an inflation rate of 2 percent … Our new statement indicates that we will seek to achieve inflation that averages 2 percent over time. Therefore, following periods when inflation has been running below 2 percent, appropriate monetary policy will likely aim to achieve inflation moderately above 2 percent for some time.” This is about as dog-bites-man as Fed announcements get, and so we should probably factor out the highs and lows Powell's words produced on the intraday charts when we calculate targets for the near-to-intermediate-term. They will be rally targets, to be sure, since there is no evidence that Fed policy, such as it is, has caused investors more than a few nanosecconds of concern.
Bullion bulls should be enjoying the show even though silver and gold futures have gone nowhere for the last couple of weeks. Comex Gold has been pounding on a midpoint Hidden Pivot support of intermediate degree almost daily, and although the futures have traded slightly beneath the support a couple of times, most of the action has been above it. Silver has been even more recalcitrant, defying bears to push it down to a midpoint pivot at 25.66 (shown in chart above). So far this week, the September Comex contract has traded no lower than 26.09. Although both silver and gold could breach their respective midpoint supports and fall, respectively, to as low as 1837 and 22.75, this appears unlikely at the moment. In fact, bears could keel over from exhaustion if they are not able to breach the midpoint pivots by Friday. If that happens, it would clear the way for a strong rally Sunday night. Although there is always the chance of a rout such as occurred for a single, ugly day two weeks ago, these episodes are becoming increasingly rare and fleeting. There are obviously enough buyers around to push back hard on days when bears don't have help from some source, or combination of sources, that ignorantly treats bullion like brick dust. _______ UPDATE (Aug 26, 10:29 p.m.): A 1907.50 correction target sent out to subscribers Tuesday night came within 90 cents of nailing the low of Wednesday's $55 moonshot. Many subscribers reported getting in near the bottom, so I've updated with fresh guidance and targets. The Silver tout has been updated as well, so check it out!
An obsessive focus on AAPL has paid off for us by taking the guesswork out of the stock market's rally. As long as Apple shares are moving higher, so will the broad averages. And as long as we have price targets we are confident in, we can trade with an aggressively bullish bias no matter how strong our skepticism. There are good reasons to be skeptical, too, not least of which is that AAPL's price has doubled since March with no corresponding expectation of an increase in earnings. The shares have benefited in particular from the fact that every fund manager who wants to keep his job is heavily weighted in the Cupertino firm because the stock has never let them down. It is the biggest crowd-pleaser of them all, adding $40 billion in 'wealth' to the financial system with each $1 gain. More than any other stock, it allows city, state and county pension funds to pretend they are healthy. And so it keeps going up because, well, because it has to. How long can bulls keep it up? Until it hits 537.23, at least, according to our technical runes. That's exactly $33.44 above Monday's closing price, and we'll be bullish as all get-out until it gets there. After that? We'll let the charts speak for themselves.
