Following a sharp run-up to new record highs earlier in the week, October Gold has begun a retracement that looks likely to continue down to at least 3522.40 [corrected], the midpoint Hidden Pivot support of the pattern shown; or to as low as 3433.90 if any lower. The pivot is a logical spot to attempt bottom-fishing with a tight stop loss. Specifically, you should use a reverse-pattern trigger interval (TI) of 3.0 points or less on the 15-minute chart if the futures fall into the range 3521.20=3522.50. If you are unfamiliar with this tactic, you should use your own method of risk management to limit entry exposure to no more than $150 per contract. _______ UPDATE (Sep 5, 4:04 p.m. EDT): The futures dipped no lower than 3544 before taking off again like a bat out of hell. This left our niggardly bid choking on dust, but not without heightening our awareness that getting aboard to augment long positions will require more aggressive bidding. In the meantime, you should use 3719.70 as a minimum upside projection for the near term. A pullback to 3448.90, however unlikely, can be bought 'mechanically' with a stop-loss at 3358.60.
There was plenty of lunatic energy at day's end, implying p2=6556 will be easily achieved (see inset chart). I stop short of rating D=6620.25 a done deal, however, and an even more important Hidden Pivot target at 6749.00 is still no better than a 50% bet to be achieved. It's not that I'm turning more bearish, just extremely cautious. The only thing the stock market has going for it is that the economy is weakening, providing an excuse for the Fed to ease. This is a pathetic way to run an economy, but it could conceivably drag out the bull market for long enough to enable stocks to benefit from something even more pathetic -- i.e., Santa Claus. Wall Street surely believes in him, even if kids no longer do.
The recent surge missed my 86.41 rally target by 1.64, but the chart leaves little doubt it will be reached eventually. As much is clear in the ease with which buyers penetrated the midpoint Hidden Pivot resistance at 75.16 the first time they encountered it. Now, if this vehicle should relapse sharply, touching p=75.16, that would trigger a 'mechanical' buy at the red line, stop 71.41. Failing that, it could still offer excellent tightly stopped bottom-fishing opportunities at either 81.40, or at 78.10 if any lower (60m, a= 70.53 on July 22).
I've set a bullish tripwire at 510.50, somewhat above current levels, to tell us whether MSFT is about to embark on a major leg up. If so, the stock market would likely follow, since Microsoft remains a key bellwether. This does not negate a 493.67 correction target where I'd intended to bottom-fish aggressively. But I'm not married to either scenario and would prefer to simply let the stock tell us how it's feeling rather than pretend we have a crystal ball. If MSFT climbs toward new highs, don't expect the ascent to be smooth. That's because the slimeballs who manipulate the stock trapped too many bulls (and short-covering bears) with July 31's lunatic leap to 555.
It was nearly three years ago that TLT tripped a sell signal tied to a Hidden Pivot target at 80.84. This ETF proxy for T-Bonds was trading just above 102 at the time, and few could have imagined then that such a grim outlook was justified. The thumbnail chart shows an even darker possibility based on a long-term bottom at 74.38. But the graph also allows for a possible turn from p2=81.20, somewhat above our longstanding target at 80.84. This is what I believe will occur, since a further fall to 74.38, implying correspondingly higher long-term rates, would choke off expansionary pressures long before TLT could plunge to such depths. For now, though, you can use 81.20 as a minimum downside objective.
In the chat room just now, a subscriber queried me about Silver's chances of reaching $50 an ounce. I responded as follows: The long-term pattern is too obvious to deliver precision, but even lousy patterns can work in two ways: 1) generating profitable 'mechanical' entries; and 2) revealing trend strength at the midpoint. In this case, the monthly chart has provided no pullbacks sufficient to trigger a 'mechanical' bid, and that is bullish. But the year-long struggle at p=32.350 is a somewhat bearish offset. On balance, I'd say the odds of reaching the 53.06 target are about 60%. If the bull trend is going to fail, however, p2=42.705 would be a logical place for it to happen
MSFT edged slightly closer to the 493.67 midpoint support featured here last week. It is my minimum downside objective, but also an excellent spot to attempt tightly scripted bottom-fishing. I've redacted the full pattern, since I'm getting tired of seeing appealing rABCs get front-run. Others are bound to discover this one, since it is hardly obscure. But it is sufficiently compelling to work, so stay with it.
Bitcoin has been a reliable indicator for the manic, speculative energy of this never-ending bull market, so its unusual weakness recently should be a concern on Wall Street. The pattern shown strongly implies that the selloff is headed down to at least 104,733. On this chart, price action already tripped a winning 'mechanical' short at 111, 293, which suggests the odds of a similarly tradable low occurring at the 104,733 target will be favorable. Please note that an alternative Hidden Pivot target at 105,548 could also engender a tradable bounce. You can try bottom-fishing in either place with a tight stop-loss fashioned from a small-chart trigger, or via your own method.
Bulls blew past a longstanding rally target at 78.28 last week with such brio that I've shifted my sights to a new objective at 86.41. GDXJ looks all but certain to get there, given that its ascent impaled p=75.16 on first contact. The pattern is somewhat unusual because of the subdivided A-B leg, but the midpoint Hidden Pivot (p) should prove reliable nonetheless for projecting an easy move to the corresponding 'D target. Once the rally hits p2=80.78, a relapse to the red line, however unlikely in a move this strong, would trigger a 'mechanical' buy at p=75.16. The stop-loss would be at 71.41.
The struggle to surpass a stubborn midpoint Hidden Pivot at 6494.25 has consumed bulls for more than two weeks and made a follow-through to D=6749.00 less than the usual sure thing. However, we are obliged to give the uptrend the benefit of the doubt, since it has routinely swept aside every technical resistance it has encountered over the last 16 years. This particular pattern has already rewarded 'mechanical' buyers at the green line (x=6366.88) with a quick, fat profit of nearly $15,00o per contract. It would be no detriment to the chart's bullish look if that were to happen again, yielding what I would ordinarily call 'sloppy seconds'. Alternatively, a breakdown below C=6239.50 would probably signal the beginning of the end. However, the sideways hesitation at these heights does not look sufficiently dramatic to cap the most spectacular bull market in history. Wouldn't you agree?
