My hardcore deflationist point of view has saddled me with a bullish bias whenever I ponder a T-bond chart. Although this allowed me to catch the October 2023 bottom just off the low, it also caused me to see the nearly two-year dirge that has occurred since as base-building for a long bull market. I don't doubt that it's coming, presumably in conjunction with the next recession. But TLT's chart suggests it could take many months before TLT rises and inversely correlated yields begin to fall. In the meantime, look for TLT to scuddle sideways, with a gentle bias to the downside that would correspond to merely somewhat higher long-term rates. Altering our expectations in this way can help diminish the distraction of believing Trump can do something about it -- i.e., about high levels of debt that are crushing America's middle class. He can't, and his expansionist, credit-driven economic policies will only exacerbate the bearish trend in bonds. Suppose the small rise in their price over the last two years has completely discounted the global appeal of Trump's bold leadership. In that case, it's hard to imagine a bullish surge in T-bonds when the President's inflationary policies produce the opposite of instant economic miracles: stagflation.
You can feel the ponderous weight of supply in the daily chart (see inset). Although the pattern lacks the symmetry of a textbook head-and-shoulders formation, there are enough similarities to infer that bulls are headed for a fall. Friday's nasty bounce, a short-squeeze assisted by an army of by-the-dip dipsticks, left bears bleeding on the ropes. But because they are still breathing, expect a buoyant opening Sunday followed by a mild upward drift. DaBoyz will extract as much mileage from this non-bullish buying to reach the green line, where a conventional 'buy' signal would trigger. It's hardly a stretch to think the squeeze could continue to p=6812.50, and so we shouldn't underestimate the ability of DaBoyz to do whatever it takes to make that happen. If they should succeed at the unthinkable and achieve new record highs, we will want to get short up there aggressively,
Friday's carnage left the futures on track for a likely relapse to the 3976.20 target shown in the chart. A bullish alternative would start with a rally exceeding Friday's intraday high at 4215.10. New record highs would become an odds-on bet at that height. Because the reverse pattern yielding the 3976.20 target, a Hidden Pivot support, is not obvious, bottom-fishing there is recommended. I'd suggest using a 'camo' trigger from a lesser intraday chart to do this, however, since there are several prior lows to the left that are likely to attract competition from overly eager buyers, some of whom are as clever as we are.
Friday's bombed-out low pierced the red line (p=50.28) by enough to make any upward progress to the green line (x=52.35) a tempting 'mechanical' short sale. That implies that once the fledgling downtrend gets rolling, it will fall to at least p2=48.22 in search of a foothold. Since we always want to allow for an alternative outcome, the most bullish possibility would be a rally exceeding 53.375, Friday's intraday high before the futures began to plummet. It could begin from any low that doesn't exceed the secondary Hidden Pivot support at 48.22.
GDXJ looked impressive last week, showing resilience and pluck when quotes for physical were getting crushed. In fact, the ETF ended the week on a 'mechanical' buy signal at 94.08 that was more than $3 in the black. I didn't explicitly recommend the trade, but if you got aboard on your own initiative, the first by-the-book profit-taking opportunity would come at p=100.80. Regardless, a close above that Hidden Pivot would shorten the odds of the trend continuing to p2=107.51, or even to a new record high at 114.22.
We've vested our confidence in a 91,358 correction target that was signaled more than a month ago, when Bitcoin fell from a record 126,296 on Oct 6 to a sell signal at 117,561 a few days later. This week's update features an alternative at 89,864 that is nearly as likely to arrest the damage, at least for a while, as the higher number. As a practical matter, we can attempt tightly stopped bottom-fishing at either using a 'trigger' pattern extracted from a lesser chart. I expect a tradable bounce to come from within 0.2% of these Hidden Pivot supports, enabling us to hold entry risk down to perhaps $100-$200. Tune to the chat room for guidance if the opportunity gets close.
The ‘affordability' issue percolated to the top of the news last week, but in a peculiar way. On the right, the debate was not about whether things in general are becoming less affordable for most Americans, as they unmistakably are, but whether the left has blown the issue far out of proportion to create a wave of discontent ahead of next November's general election. The discussion was catalyzed by abysmal consumer sentiment numbers that registered lows not seen since the Great Depression. Trump courted controversy over this in an interview with Fox’s Laura Ingraham. The economy is going great guns, he declaimed, and what’s the problem? He then stepped into quicksand by owning an issue far more real than political. Although he didn't say these words exactly, what America heard was: "I'm going to give you affordability like you won't believe." This is a promise he cannot possibly keep, and his stumble on this key issue eventually will be seen as the beginning of the end for boom times on Wall Street and the Everything Bubble. In stark actuality, for fully half of America, the Second Great Depression has already begun. As my colleague Charles Hugh-Smith notes, the rich have grown increasingly wealthy from a price bubble in real estate and financial assets while barely noticing the descent of the bottom 50% into penury. “While the top 10% busy themselves with using AI to improve work flow, obsessing over geopolitics and the decay of their perks of their Titanium credit card, other Americans are concerned with finding a second or third side-hustle as the soaring costs of utilities, rent, auto insurance and repairs, childcare and healthcare are forcing choices nobody wants to make: What [necessities to forgo.]” The Best of Times? Trump risks failure by amping up his spiel about
It's a stretch to compare Magritte's famous painting to Microsoft's chart, but here goes. The Belgian artist's point was that you could not stuff a two-dimensional representation of a pipe with real tobacco. Should we therefore try to divine Microsoft's future just because its stock chart features an in-your-face double top? I read it as bullish because it's too obvious to be bearish. So, how should we trade it? A reverse-pattern, long-term rendition of the chart will simplify this task. It is saying the stock will become a back-up-the-truck buy when it falls a further 13% to 431.89. I will also assume, speculatively at the moment, that a breach of the midpoint Hidden Pivot support (p=493.67) is very likely. When it happens, that will cue up p2=462.78 as our minimum downside objective. Worst case for the intermediate term: 431.89, the 'D' target. We can infer that the stock market's performance will mirror MSFT's. That means, although a sharp drop lies ahead for the broad averages, it won't necessarily signal the end of the nearly 17-year-old bull market.
Bears looked pathetic on Friday when they failed to crush the opposition following hard selling overnight. Even so, I continue to believe that stocks have entered a bear market. This implies that a 7057.50 target drum-rolled here earlier will not be reached. I am not chiseling this forecast in stone, however, and I'd suggest using the details of my 15:07 post in the chat room to follow the play-by-play yourself. The critical thing to notice about Friday's bounce is that it came from below the 'd target of the pattern shown in the chart (inset). The overshoot may not look like much, but it is significant in the context of an aging bull market that until now has produced weak corrective ABCDs. To determine how significant, keep a close eye on two 'hidden' impediments above: 6786 and 6918. The provenance of both is explained in my chat room post.
I don't usually post charts that display more than a single ABCD pattern, but the one shown gives a clear picture of how very unclear gold traders and investors are at the moment. Neither the large bearish pattern nor the small bullish one produced a decisive move through p, muddying the question of whether the next significant move will be up or down. Bears have a slight edge, I'd say, but it's based on technical trivia that's not worth explaining. For now, the worst-case target if the futures break down is still 3802.60, representing a 5% drop on top of the 8.5% loss since October 20, when Gold recorded an all-time high at 4398. ______ UPDATE (Nov 10, 12:47 p.m. EST): The futures have broken out above late October's peaks. Trust this rally when it pushes above more important peaks ranging up to 4175.00 recorded between Oct 22-26.
