Silver has spent the last two weeks creating disappointment, since all the sturm und drang at what might have been a consolidation level turned out to have been distribution. Still more dispiriting was bulls' failure to take on the 27.29 high from March 11. The flaccid performance suggests the current retracement will have farther to go, although I wouldn't lay odds that it will exceed the 'external' low at 20.12 recorded on March 10, let alone C=17.90. The first bottom-fishing opportunity we might see could come at 21.46. That is the D' target on the weekly chart of the reverse pattern using A=25.10 from Feb 3.
GDXJ missed triggering a 'mechanical' buy last week by just 21 cents, but if it follows through to the downside and hits the green line (x=35.59), the trade would be a 'go'. From that point forward you could get long on a buy-stop following any rally of $1.12. That's how much entry risk you'd be taking per share, but it would be predicated on a potential profit of as much $2.75 per share. You could cut that down to as little as 0.34 per share by triggering yourself into the trade on a rally of at least 35 cents from C or lower, and although taking that approach looks like it has a good chance of producing a profit, it would not necessarily get you to the 45.56 target of the big pattern.
I've struggled to feign interest in crude, since it is hostage to geopolitical forces that taken together do not add up to anything whose meaning could be distilled for predictive purposes. There is scant interest in the chat room in trading this vehicle, although sometimes a subscriber will mention having used an ETF to leverage my targets. There's one at 56.90 that holds little practical value at the moment. Two 'mechanical' shorts performed well in recent months, but it is only on the weekly chart where the pain and sweat required to have made money on these swings is somewhat obscured. I'll keep it on the list because oil is the most important commodity of them all, but you'll need to nudge me if you have a trading idea you'd like vetted.
Microsoft's bullish rampage last week added to already strong evidence that the stock market is headed to new records highs. The shares of the software leviathan's shares not only jackhammered through granite resistance in the form of the midpoint 'Hidden Pivot' shown in the chart, they ended the week decisively above it. This technical telltale is almost never wrong, as Rick's Picks subscribers could attest. When a stock fist-pumps through the midpoint 'Hidden Pivot' and then stays above it for even a short while, the rally is all but certain to reach the 'D' target -- in this case 430.58. That would equate to a 30% rally from current levels, putting MSFT 80 points above the old all-time high at 349. If the Dow Industrials were to achieve a relatively modest gain of 20% over the same period, they would be trading just shy of 40,000 -- substantially above the record 36,952 achieved in the early days of 2022. Previously, I wrote that similar wilding sprees in Chipotle and AAPL were pointing to the same outcome: new all-time highs for the broad averages. With a third world-beater joining the list, an enticing bet on new all-time highs has become even juicier. This is despite the fact that the radically inverted yield curve the financial system just weathered has never been wrong in predicting a recession. Factor in a collapse in commercial real estate that appears inevitable, as well as a wave of bank failures that even Janet Yellen is expecting, and it would seem that stocks are facing a perfect storm of deflationary forces. So how come your editor, a hard-core bear's bear, thinks stocks are just now lifting from the launching pad? Very simply, because the market is a rabid beast, inured to all logic, common sense and caution.
The futures ended the week a hair shy of the 4244.00 'internal peak' recorded on February 3. Hold the applause if buyers should surpass it this week, however, since the 4382.75 peak from August 19 is the one that matters. A rally exceeding it would generate a bullish impulse leg of weekly-chart degree, putting in jeopardy the hopes and dreams of those who think an old-fashioned economic depression would be just the thing to asphyxiate the trivial concerns of wokeness, tame rampant paganism in America, rebuke a hopelessly corrupt political system and provide a reality check for an economic system that runs on debt and helium. Stay tuned to the Trading Room for white-hot trading tips while we're waiting. _____ UPDATE (May 24, 8:54 p.m.): The 'white-hot tip' mentioned above popped up serendipitously during this morning's tutorial session for advanced Pivoteers. It helped us fine-tune a textbook 'mechanical' buy after the futures finished mau-mauing bulls with what we will assume for now was a gratuitous dive. The rally target is the 4287.75 D pivot of this pattern, but we'll sit back for now and let bulls prove their case. ______ UPDATE (May 25, 9:59 a.m.): The selloff that has caused last night's short-squeeze to detumesce is not going anywhere, since the peak of the overnight rally exceeded yesterday's high by two ticks. That makes it impulsive, so expect a rebound. Also, I have corrected the chart accompanying the previous update.
The rally of the last two weeks has gotten past four small 'external' peaks without taking a breather, so this could be the start of a sustained move. There hasn't been one since earlier this year, but this one looks capable of reaching a minimum 105.85. That's the 'D' target of a reverse pattern begun from 100.82 on February 2. As always, an easy move through a D Hidden Pivot would suggest bulls are not yet finished. Potential thereupon would be to 110.95 (daily chart, A=104.64 on August 10). Gold bulls should take note, since an extended rally in the dollar would put downward pressure on bullion.
Last week's waft maxed out the pattern shown, nearly touching a potentially important D target at 176.52. The actual high at 176.39 fell just 13 cents shy. We bought some 2 June 165 puts at or very near the low of the day just in case, but don't get your hopes too high. Because the pattern has taken more than four months to play out, we might expect a pullback of at least a few weeks' duration to give buyers a rest. However, they will be tempted in any event to push past the resistance in order to to take on three formidable 'external' peaks recorded, respectively, at 176.15, 179.81, and 182.94, the all-time high notched in January 2022. Anything above that would still beckon caution, since there is a Hidden Pivot resistance to overcome at 184.96 with some stopping power. What a head-fake that would be! The stock will be easily shortable if it moves into the midst of the prior peaks listed above. Since subscribers seem not to trade the stock, you'll need to nudge me in the chat room for timely guidance. Meanwhile, offer half of the puts to close for twice what you paid for them. ______ |UPDATE (May 23, 6:28 p.m.): The puts doubled to 0.57 today as the stock's downtrend lengthened, so you should have cashed out half of the position to leave you with no skin in the game. There was a raucous cavalcade of buyers in the chat room on Friday when the 0.28 bid I'd advised caught the lowest price ever paid for the 2 June 165 puts. Today, however, only one subscriber seemed to have noticed that the puts were on the move. I suggested keeping 25% of the position for a bigger win than you might currently imagine is
June Gold would become a tempting 'mechanical' buy on a pullback to the green line (x=1816.60). Failing that, we might expect the futures to continue to jack bulls and bears alike with the kind of skittishness that makes trading such a challenge. For all the histrionics we endured last week, settlement was little changed from the week before. Other than an uncompelling voodoo number around 1930, there is not much to recommend for trading purposes as the new week begins.
Although I've flagged a potential bottom-fishing trade in June Gold using 'mechanical' levels, July Silver would become a fetching 'mechanical' short if buyers push it up to the green line (x=25.19) this week. The implied entry risk of $6200 per contract would warrant a trick-shot entry using a small reverse pattern, but that shouldn't present a problem for seasoned Pivoteers. Worst case over the next 2–3 weeks would be 21.460, although I doubt sellers have the moxie to accomplish something so dastardly.
GDXJ looks like it will continue to grope its way lower to reflect softening quotes for bullion futures. If the bloodletting should reach the green line (x=35.58), however, it would trigger a 'mechanical' buy that we should not pass up. Corrections that traverse Hidden Levels from above p2 down to x often yield profitable 'mechanical' entries at the low, even if the anticipated bounce does not always achieve the D target. If bulls were going to find traction somewhere above x, it would have happened with last Thursday's dip to D=37.73 of a corrective pattern begun on April 13 from 43.89. Alas, the support was breached, suggesting there is more downside to endure.
