August Crude ended the week tap dancing on a crucial support at 68.75. That's the midpoint Hidden Pivot of a pattern projecting to as low as 59.35. The pattern looked like a bearish head-and-shoulders formation a week ago, but last week's 19% slide turned the immediate picture even more bearish. Now, if the futures close below the red line for two consecutive days, it will significantly shorten the odds of a further slide to at least p2=64.05, or even to 59.35.
Stocks fell hard on Tuesday when crazed traders pretended briefly to care about oil prices and the Middle East, but otherwise the broad averages gave ground only grudgingly as the week wore on. This was hardly a picture of strength, however, and so we should wait to see how sellers interact with the 7247.26 'D' correction target shown in the graph before inferring that a significant trend change has occurred. A rally to the green line (x=7548.38) in the meantime would trigger a 'mechanical' short, but I recommend the trade only if initiated with a 'camouflage' setup. The tactic is explained in detail in the Hidden Pivot course that I've made available free to subscribers.
Friday's vague crosscurrents allowed MSFT's handlers to seize the advantage with a short-squeeze reversal that caught bears unawares. The bullish pattern shown gives this con-job wide berth, since DaBoyz can be expected to pull out all the stops to recoup the hundreds of billions of dollars' worth of gaseous 'wealth effect' the stock shed as it slid 25% from a record 466 peak in early June. A key test awaits when the push hits p=383.36, the midpoint Hidden Pivot resistance. An easy and decisive move past it would imply more upside to the pattern's D target at 417.51.
Bulls will need to push this brick up to the green line (x=4173.40) to earn the benefit of the doubt. That would trigger a 'conventional' buy signal with immediate potential to hit the midpoint Hidden Pivot resistance (p) at 4371.30. The two-day rally that ended the week was a feeble start, but buyers could be emboldened if the dollar index's so-far moderate downturn from an important Hidden Pivot rally target at 101.78 gains momentum.
I doubt that Silver can turn up without first visiting the 63.86 secondary Hidden Pivot of the conventional pattern shown. We'll make it our minimum downside objective, but let's keep an open mind about the potential of this bounce. The first resistance comes in at 60.723, but an easy move through it would imply more upside is likely to as high as 65.750 over the near term.
Sellers pummeled GDXJ down to the 95.07 secondary pivot for the second time in two weeks, but I wouldn't get my hopes too high that it will survive another test. Even so, this proxy for gold exploration companies looks primed to continue up to at least 107.00, the midpoint Hidden Pivot resistance of a small pattern begun from 94.33 on June 10, or even to 118.93 if the bounce gets legs. But if and when it sputters out, the next leg down could reach 81.94, the worst-case target for the pattern shown.
The textbook-perfect pattern shown promises to deliver at least a temporary low at 4.35%, the D target shown. That would represent a 7% decrease in yields on the Ten-Year Note since they peaked at 4.69% on June 19. A weak bounce would open the door to even lower rates, with mid-April's 4.22% serving as a benchmark and potential support.
I'm taking an extended break from the daunting challenge of predicting the stock market's behavior each week as though it were correlated rationally and logically with events in the real world. My weekly commentaries will resume when I am feeling better up to the task. In the meantime, if you need a regular dose of Rick's Picks, don't pass up a free opportunity to use and enjoy all of the site's amenities, including the Trading Room, the heart and soul of my service. Its purpose is to help investors make money, a goal it achieves so consistently that gifted traders from around the world like to hang out there. The photo above shows Venezuela's Angel Falls, the world's highest waterfall and a good metaphor for my outlook on the stock market. Finally, here's a link to my latest rant at This Week in Money on June 18. [Note: This link will change to present fresh material every other week.]
The futures spent the last two sessions head-butting a modest midpoint Hidden Pivot resistance at 7582. You might think the failure to break through was a sign of weakness, but the opposite is true. Considering that no one but Trump and Vance is impressed with the cease-fire plan, and that the Fed is waxing hawkish, the lackluster performance of the S&P must be viewed as a volcano gathering subterranean force. The index hardly pulled back at all, and so we should expect it to launch anew on Monday, assuming Wall Street is not too hungover from Juneteenth craziness. Look for the E-Minis to ascend to D=7692.00, a sufficiently 'D' target to show tradeable stopping power. A dip first to the green line from above Thursday's highs, however unlikely, would trigger a tempting 'mechanical' buy, so be ready if you know how to handle it with a small-pattern (i.e., 'camo') trigger. _______ UPDATE (Jun 22, 11:27): Cancel the trade (or exit it now for a nice profit if you got long at the green line). Mr Market is doing his utmost to screw with our heads, first by dropping ES to within a single point of the green line at 1:00 a.m. before popping off a 71-point rally. He then plunged ES to the green line EXACTLY before embarking on the current, so-far 23-point, rally. Since no subscriber mentioned any of this in the chat room, I will assume everyone either slept through it or ignored the opportunity. _______ UPDATE (Jun 23, 12:21 p.m.): It's too early to say the bear market has finally begun, especially since the worst case I can offer for the moment is the 7266.00 target of this pattern. The futures are all but certain to get there, but sellers will have to demolish the Hidden Pivot support
An unorthodox target I'd drawn near 380 failed to contain the selling, so I've switched to a conventional pattern that projects significantly lower, to 339.27. My expectations are bullish for the market as a whole when stocks start to trade on Sunday, and I don't expect MSFT to go its own way. However, the stock's decisive breach of the midpoint support (p=402.80) suggests it is likely to eventually reach the target. The implication is that MSFT and the broad average could head higher over the next few days, but the rally won't get very far. We can adjust our expectations as more evidence becomes available.
