The Dollar Index is closing on a long-term trendline that bears watching. It's been six years since the dollar last fell to the line, implying this technical tool is not sufficiently well-developed to give us a confident basis for predicting a major reversal. But if one does occur it would mark an approximately 12% correction from the 103.82 high recorded in January 2017. An intervening rally in the 2018-20 period topped at the height of March madness before institutional investors settled on the rote themes that have dominated since then. Looking just ahead, if DXY were to connect with the trendline by late August, the touch-and-go landing we are looking for would occur at around 91.78. We'll use this as a downside target for now, since it looks more promising than any Hidden Pivot support I could offer you. It would be more than a little useful to get this prediction right, since a trend change in the dollar would likely reverse all of the trends that have become entrenched over the last five months, including the bullish ones in gold, silver, the stock market, crude oil and copper. _______ UPDATE (Aug 18, 6:15 p.m.): The dollar looks horrible, but it will look even worse if it takes out the trendline noted above. It comes in around 91.74 this week. _______ UPDATE (Aug 20, 6:33 p.m. ET): A promising rally turned flaccid on day two, although not before poking above some minor peaks from earlier in the week to create a bullish impulse leg on the hourly chart. DXY would need to hit 94.21 to suggest something serious is happening.
The December contract, so light and frolicsome recently, turned leaden on Friday with the futures about $17 below a promising looking rally target at 2107.10. We can focus on the lesser charts to tell us whether the weakness is likely to develop into something serious. As things stand, the bounce from the intraday low at 2024.80 triggered a 'mechanical' short at 2040.50, stop 2051.10. I didn't mention this in the chat room, however, because it was late in the day and because the buying looked pretty spirited. Now, a print exceeding c=2051.00 on Sunday night would stop out the theoretical short -- exactly what we should want to happen if we are going to continue to trade with a bullish bias. The 2107.10 target will remain viable in theory unless 1927.50 is breached to the downside, but as a practical matter it would start to dim below 2000. _______ UPDATE (Aug 10, 9:04 p.m. ET): Night owls can try bottom-fishing at the 2010.60 target shown in this chart. An rABC pattern where a= 2027.80 on the hourly chart (8/10, 3:00 p.m. ET), is the best way to keep entry risk under tight control, but if you are unfamiliar with the tactic, use a simple, 2010.10 stop-loss. The futures looked sickly in after-hours trading, so plan on taking at least a partial profit if the trade goes your way modestly. _______ UPDATE (Aug 11, 8:48 a.m.): Gold got hit hard overnight with selling that is continuing this morning. The December contract looks bound for 1954.60, a Hidden Pivot target shown in this chart, but if it gives way, the slide could continue to as low as 1937.40 (b=1991.40).
GDX's plunge deepened on Friday, but subscribers were able to sidestep the so-far 8% dive using a longstanding rally target at 45.71 that caught the tip of last week's spike within 7 cents. We should view this reversal with more than the usual amount of caution, since the high failed by 19 cents to surpass a small but technically significant 'external' peak at 45.96 recorded back in early 2013. To be sure, it would take a print down at 40.20 to even hint of trouble on the daily chart, and we will treat this weakness in the meantime as a buying opportunity. But our bids will be less aggressive than usual, and we may even attempt to get short if a compelling opportunity should arise. Stay tuned meanwhile to the chat room, where crowdsourcing in this vehicle has served us well. _______ UPDATE (Aug 11, 8:35 p.m. ET): You don't have to be a chartist to see that GDX has farther to fall before it can find good traction. This chart shows two logical places for the correction to bottom: at 36.84, re[resenting a 0.618 retracement of the rally begun from 31.32 in mid-June; and 34.93, equating to a 75% correction. There will be opportunities to trade both sides of the market on the way down, so stay tuned to the chat room for real-time, crowdsourced guidance. ______ UPDATE (Aug 17, 7:0 p.m.): The escape from last week's bog has been more decisive than I'd expected, but I'm not entirely persuaded it's for keeps. Let's see if the stock can impale the 43.17 midpoint pivot shown in this chart. If so, it'll be presumptively on its way to D=44.39. _______ UPDATE (Aug 18, 6:19 p.m.): An extremely nasty spike, as gratuitous as they come, failed by 30 cents to hit
Tech got clobbered for a rare change Friday, but you can see for yourself (inset) that this did not significantly change the bullish look of the Nasdaq 100's intraday charts. In fact, if the Cubes were to fall to p=267.34, the midpoint Hidden Pivot, that would generate a mildly enticing 'mechanical' buy, stop 262.00. I am not recommending call options for this play, however, since the green line where the bid would be placed is not a support, nor could it be expected to reverse the downtrend in the precise, precipitous manner we are used to seeing at the three Hidden Pivot levels -- p, p2 and D. The 283.35 target will remain theoretically viable as long as C=251.32 is not violated to the downside. _______ UPDATE (Aug 10, 9:18 p.m. ET): The trade triggered around 11:00 a.m. and went into-the-black shortly thereafter, eventually achieving a recovery high at 270.90. Since no subscribers mentioned it, I have not established a tracking position. The p&l record for these mechanical set-ups is all on the record, with time stamps, and can speak for itself, but I am puzzled as to why they are attracting so few followers. In the interest of growing your confidence, I'll ask you to comb through past touts and chat room posts in search of 'mechanical' trades that did NOT work. I may be wrong about this, but I can recall only one in the last several weeks that produced a loss. _______ UPDATE (Aug 11, 8:40 p.m.): My post in the chat room a few days ago caught SQQQ's low near the bottom of what is turning out to be a significant rally. If you got long in this ultra-short vehicle, please let me know in the chat room so that I can determine whether to establish a tracking
I was prepared to lead this week's commentary with an emphatically bullish forecast for the dollar, which seems to have few friends these days. Alas, even though a major tone change is coming, it will be at least a few more weeks if not longer before this occurs, since the stock market looks as revved up as ever. Shares in a dozen or so mega-cap multinationals have been investors' main alternative to the dollar, and the trends that have dominated each in recent months are equally senseless and overdone. The Dollar Index no more deserves to be trading in the dismal low-90s than Apple's shares deserve to be valued at nearly $2 trillion. The inevitable reversal of these trends threatens to lay bare the Fed's crackpot scheme to revive global prosperity with little more than monetary keystrokes, blandly reassuring press releases and some nutty policy mumbo-jumbo that could never have passed muster five years ago, let alone during times when the collective economic wisdom of Paul Volcker, Kurt Richebächer, Herb Stein et al. held sway. These days, the halfwits who invent the news know little of these men, only of Jerome Powell & Co., and the banksters' improbable success at triggering a huge stock-market rally with the global economy poised on the edge of an abyss. True Believers My incipient bullishness on the dollar was inspired by some subtle vibes from the financial penumbra, including word that Morgan Stanley had exited a short position in the dollar after concluding it was at its most oversold in 40 years. Ordinarily I pay little attention to what the firms are doing, since they are quasi-criminal operators who make their money front-running customers whom they goad into stampedes. How else would Chipotle, which traded for $415 in March, find plenty of eager buyers
[This went out via email at 6:01 p.m. Wednesday night with December Gold trading $20 lower. Owing to a problem with WordPress, however, it did not get published in the list of touts at that time. RA] I've swapped out the October chart for December, since that's where the action is. The 2107.10 target is $16 higher than the old one, but the implications are the same. Given the steepness of the impulse leg that unfolded during the last two weeks of July, a pullback to p=2017.60 would set up an enticing 'mechanical' buy, stop 1987.70. Since Mr. Market is unlikely to gift us with such a juicy opportunity, we'll need to pay close attention to smaller entry patterns at these levels, particularly rABCs on charts of 15-minute degree or less. There is one such set-up at the rightmost edge of the chart shown, with an 'A' low at 2044.40 (9:00 a.m.). Entry would have come at 2046.40, stop 2941.80. ______ UPDATE (Aug 7, 8:34 a.m. ET): The futures have turned heavy, their progress toward the 2107.10 target stymied Thursday evening at 2089. I am no longer recommending a straight 'mechanical' buy on a pullback to 2017.60, since the 'D' target was nearly achieved. However, because it remains valid in theory, we still have a bull trade ahead of us, presumably with risk under tighter control than a 'mechanical' entry would allow.
Even on days like Wednesday, when stocks seemed to be merely marking time, the Dow tacked on another 373 points. This is particularly disconcerting with the U.S. sinking into Lockdown 2.0 and signs all around that the pandemic is not even remotely about to abate. Count me skeptical as far as pending news about an effective vaccine. If someone had told me when I was five years old and in the throes of a bad chest cold that there would be no symptomatic relief for this when I reached 70, I'd never have believed them. Many with herpes sores from the 1980s probably feel the same way. How could there not be a cure by now? Alas, viruses are tough little mothers. Concerning the stock market, which is being driven by a combination of mass hysteria and Other People's Money, the Dow Industrials are at a critical juncture, trading just a millimeter beneath the 27,238 target shown. It is a midpoint Hidden Pivot, and if buyers can pop the Indoos 30-40 points past it intraday, or close above it for two consecutive days, that would signal another leg up to at least 28436 (the pink line, a 'secondary pivot), or to 29,633 if any higher. My bet is on the bulls, since madness of the kind we are witnessing these days does not shrink from the challenge of, technically speaking, gnawing through 10 feet of concrete. _______ UPDATE (Aug 6, 10:31 pm.): Buyers not only bulled their way past the 27,238 'hidden' resistance noted above, they closed the Indoos near the high of the day, 27,394. I doubt they'll be able to surpass the 27,580 'internal' peak recorded on June 8 without a pullback and a running start, but if they do, you can bet on minimum upside thereafter to
I've swapped out the October chart for December, since that's where the action is. The 2107.10 target is $16 higher than the old one, but the implications are the same. Given the steepness of the impulse leg that unfolded during the last two weeks of July, a pullback to p=2017.60 would set up an enticing 'mechanical' buy, stop 1987.70. Since Mr. Market is unlikely to gift us with such a juicy opportunity, we'll need to pay close attention to smaller entry patterns at these levels, particularly rABCs on charts of 15-minute degree or less. There is one such set-up at the rightmost edge of the chart shown, with an 'A' low at 2044.40 (9:00 a.m.). Entry would have come at 2046.40, stop 2941.80.
The 3357.00 rally target identified here earlier remains valid as a minimum upside objective for the next day or two, a lodestar for a trip to the 3392.75 target of a larger pattern that was also noted here. The only surprise is that the futures spent all day and most of the previous night flouncing around within an excruciating, 10-point range, the better to fray the nerves of bulls and bears alike who may have been overprepared for 'something' happen. Because pullbacks this week have been timid, there have been no opportunities to get aboard using a 'mechanical' set-up, a tactic designed especially for taming and exploiting violent swings.
Not every Wednesday tutorial session produces interesting or worthwhile results, this one being a prime example. If there is any benefit in listening to this recording, it will come from experiencing in real time an unavoidable fact of trading - i.e., that we all have a bad day now and then. The good news is that even the bad days needn't be painfully costly, since it's possible to control entry risk tightly regardless of whether our trading 'temperature' is hot, cool or lukewarm.
