We've been using 4.82% as a minimum upside projection, but it's time to shift the target to the 5.09% Hidden Pivot shown in the chart (see inset). The erratic ascent of long-term rates has been making headlines lately, but Rick's Picks subscribers have been expecting them to hit 5% for nearly a year. The crazed bull market has acted as though it doesn't care, but it soon will—or rather, must—demonstrating its concern with a stunning decline. Nothing spells big trouble for the U.S. economy like 7% mortgage rates that coincide with the highest home prices in history. The Ten-Year Note hasn't been at 5% since the Great Financial Crash of 2008-09. Although the crash itself caused rates to recede quickly to 4%, we may not be so "lucky" this time. If you haven't done so already, time is growing short to secure your assets—and your household—against a catastrophic event that will rebuke financial excesses that have been piling up over decades.
Crude has pulled back sharply three times since its moon shot to 120 last March. The first two times, the subsequent rallies died precisely at their respective Hidden Pivot midpoints. If the third pullback to early July's 67.04 low produces the same result, which is what I expect, the current rally will sputter out at exactly 99.34, a Hidden Pivot midpoint just like the others. The only other scenario worth pondering at the moment would be for buyers to rip through 99.34 with such ferocity as to practically guarantee more upside to the 131.63 target. It's possible, but only if something truly horrendous occurs to curtail the global supply of oil. Take the odds on that outcome only if you can get at least 10-to-1. Finally, if the uptrend exceeds p=99.34 without impaling it, that could mean there will be yet another leg up following a deep retracement, possibly into the 50s.
Seven weeks have gone by without a new high, each coaxing more traders into the bear camp. That's why this distribution has been so tedious: getting short has grown more appealing by the day. The result is that the broad averages have become more diabolically evasive, particularly for those trying to get short. And yet, we knew all along that Mr Market would provide no easy opportunities. Friday's whimpering climax looked like one, though -- at least for anyone bold enough to endure waiting for whatever news hits us on Sunday. My hunch is that anyone who got short at or near Friday's 7496.50 high will be in good shape. That implies this vehicle is on its way down to at least 7357, where an important low occurred exactly one month ago; and thence to the 7261.75 target of the pattern shown. There will probably be a strong bounce from there, and although it must be shorted, there is no reason to think this will be easy.
The stock was an inch shy of triggering a buy signal on Friday, but I have presented a picture that is moderately bearish so that it is congruent with my pessimistic outlook for the E-Mini S&Ps. If the stock instead rallies to start the week, you can get short belatedly at the green line (x=392.85), using a stop-loss at 406.00. My downside target will remain 353.44 unless 406.00 is touched first. If the stock falls straightaway to the pink line (p2=366.58), stay tuned, since it might open an opportunity to get short at the red line (p=379.72) with a generous stop.
I've set a high bar at 4403.70 to signal the possible end of a bear market that began in January, when the August contract hit a record 5700. Otherwise, we should expect the weakness to continue at least until the 3793.40 target shown in the inset is achieved. There are two more Hidden Pivot supports you should be aware of, since either is capable of reversing the trend at least temporarily: 3822.70, the target of a smaller pattern that was featured here last week; and 3603.40, a worst-case projection derived from sliding 'A' up to the 5513.00 'marquee' high recorded on March 2. Of the three possibilities, I favor 3793.40, which is why I have boldfaced it. The other two will work for careful bottom-fishing, however.
I've used an unconventional 'A' high to project D=43.155 as a possible low for the bear market, but sliding it up to the 124.250 high recorded in January would yield a somewhat lower target at 39.730. Either could end the horrific slide that has wiped away 55% of silver's valuation, and 30% of gold's, since they topped in late January. I doubt that p2 (respectively 56.755 or 54.186) will ultimately arrest Silver's slide, even though this 'hidden' support has put the futures in a go-nowhere dither for the last month. I should note that the two patterns have worked well for trading purposes, setting up a profitable short at the green line and another after Silver returned to the green line after a savage dip to 62.280 on March 23 low. This suggest they will both work for bottom-fishing. When you plot the gold:silver ratio on a Hidden Pivot chart, it shows the ratio, currently 69, peaking at p=89. If Silver were to fall to 43.155, that would imply a low in gold at 3840, which is close to two targets I've flagged in the gold tout above. We won't try to synch up all of the permutations, but the forecast of an 89 high for gold:silver should be held well in mind, since, as far as I'm aware, no other guru has attempted to predict its swings. Although it's possible they lack the tools, I am confident in the Hidden Pivot Method's ability to get it precisely right.
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Although buyers did not quite impale the midpoint Hidden Pivot at 79.37 on first contact, they broke free of its gravitational pull with sufficient force on Friday to all but ensure more upside to at least p2=85.53, or more likely to the d target at 91.69. Traders, and even the hacks who invent 'the news,' have learned by now to tune out any suggestion emanating from on high that crude oil markets will return to normal any time soon. The August contract will offer an enticing short at the target, but it should be traded from the long side until the target is reached. Does that imply some breakthrough in the war is at hand? We may have an answer before August.
The bull is taking its time consolidating for an upthrust to the 4.82% target shown in the chart. The process could include a dip to x=4.48% that would trigger a theoretical buy signal. Although we do not actually trade this vehicle, such a signal could be easily leveraged using TLT or T-Bond futures. But it is more the implications that interest us, since higher rates will tend to make nearly every economic challenge each of us faces more difficult to cope with. Gold will remain under pressure, and many tens of trillions of dollars of debt reckoned in dollars will grow more costly for borrowers to service. Imports would be cheaper, but the relief that would bring to beleaguered consumers would be negligible compared to so many other factors that have been making life increasingly expensive. Our new Fed chairman thinks inflation might be moderating, but he knows a good deal less about this than a housewife tending to the needs of a family with children.
The futures ended the week on a tempting buy signal that was best ignored, since it is impossible to predict on a Friday what fresh hell Sunday's news might bring. The headlines were decidedly bearish in producing Thursday's overnight cascade: crude prices were up nearly 4%, Xi Jinping was boasting of China's supposed answer to Anthropic, and a SpaceX rocket ship failed to get airborne. Stocks did not so much shrug off this news as leverage it to spring a weak bear trap. The short-covering Whoopee Cushion that resulted culminated in the buying temptation noted above. Now, the futures will either leap to the 7573.50 target, or at least to p=7523.25; or more likely in my view, stop out the trade and continue down to late-June's lows near 7350. Stay tuned to the chat room for ringside commentary as events reveal the nature and purpose of Mister Market's deceptions.
