We’ll use the pattern shown, with an 81.95 rally target, since it has already produced a picture-perfect 'mechanical buy at the green line and would signal yet another on a pullback to the red line (p=76.13, stop 74.19). There is nearly $2000 of entry risk per contract on this trade, so we'll need to use a 'camo' trigger to initiate it. That would entail switching to the five-minute chart or less if and when the Feb contract touches 76.13, then setting up a mico-abcd pattern with commensurate initial risk. Also, the D target at 81.95 is shortable with a tight stop-loss that can be fashioned from a small rABC (i.e., reverse) pattern.
In an economy that over decades has grown increasingly dependent on revved-up holiday sales, investors have responded by praying more fervently each year for a Santa rally. It's an odd metaphor, however, considering that Wall Street even at its seasonal cheeriest has a heart as cold and dark as volcanic glass. The Santa of investors' imaginations is assuredly not the fat, jolly one originally drawn by a Dutch artist Haddon Sundblom for the Coca-Cola company, but rather someone more like Fed Chairman Jerome Powell gone silly in a headdress of fluffy white dove feathers. Unfortunately, Powell has not left much room for silliness in this holiday season. Gone are the days when Neiman Marcus could get a rise by featuring his-and-hers Bentleys in their Christmas catalog. The typical American household is thinking about more practical presents in these recessionary times: PG&E gift certificates...bread machines and pasta makers...survivalist seed packets...battery chargers. More Turbulence The result for investors has been a balky stock-market shaped more by Scrooge than Santa. Even with bullish seasonality at maximum force last week, the Dow Industrials could muster only a 300-point gain. They closed on Friday at 33,203, down a thousand points since Thanksgiving. More turbulence seems likely in the final days of 2022. Perhaps the best we can hope for when the markets lurch into gear on January 3 is that stocks continue to drift through a circa 1914 minefield without triggering a nuclear war or the debt deflation we all know is coming. [What do the charts say? Click here for my latest interview with Howe Street's Jim Goddard. RA]
The dollar's timid rally last week increased the likelihood that it eventually will fall to the 100.18 target shown before it can turn around. That would equate to a 12.7% decline since DXY topped at 114.78 on September 28. The correction would be mild relative to the spectacular run-up that commenced from around 90 in mid-2021. Bullion investors should enjoy the favorable tailwind provided by a weak dollar while it lasts. It is also providing respite to Powell & Co. by alleviating deflationary pressures that eventually will asphyxiate consumer inflation and usher in a global economic depression.
Friday's dive stopped a hair shy of the 3848.00 midpoint support shown. Since the trouble began with the March contract's failure to get anywhere near the 4245 rally target I'd proffered, and because minor abcd downtrends subsequently have exceeded their 'd' targets, it seems clear that the bear market is about to return following a two-month hibernation. The 3848 Hidden Pivot was worth bottom-fishing, but because the futures went no lower than 3855, the trade I'd planned to do myself did not trigger. However, several chat-roomers caught the low and bottom-fished it profitably after a subscriber posted a chart showing a 3855 downside target. For now, for purposes of forecasting and trading, I am treating that number as erroneous even though it 'worked'. Regardless, it, too, puts the March contract in a perilous place. If selling resumes on Monday and produces a close below 3848, that would telegraph more downside to at least p2=3682.00. _______ UPDATE (Dec 21, 8:34 p.m.): A vicious short-squeeze, for sure, but I doubt the rally will get legs because of the way sellers crushed p=3849. At x=4014.63, it would trip a 'mechanical' short, stop 4181, but I'd suggest paper-trading unless you know how to cut the $33,200 theoretical entry risk on four contracts down to $1600 or less using a 'camouflage' trigger. ______ UPDATE (Dec 22, 12:06 p.m.): Now that's more like it! The futures are getting savagely pounded, a reality-based Santa Rally in reverse. Use the 3682.00 (p2) secondary Hidden Pivot shown in the chart (inset) as a minimum downside target for the holiday season, but keep in mind D=3516.00 as a worst-case projection for the near term. A cascade could make that happen sooner than most on Wall Street might imagine.
In this week's Morning Line commentary, I explained why AAPL's dismal trajectory is about to worsen with a 10% plunge that will sink the stock market as well. More immediately, we are going to see a test of the 130.92 Hidden Pivot target shown in the chart (inset). There is additional, structural support from a key low at 129.69 recorded back in June, so don't expect the stock to break down straightaway. Like many stocks, AAPL is falling after having failed to achieve a clear rally target of daily chart degree. If this ostensible correction overshoots its 'd' target, that would affirm the likelihood that the bear market is back in force after hibernating since October. _______ UPDATE (Dec 21, 8:46 p.m.): My downside target at 130.92 caught the low of a so-far $7 bounce from 129.89. Let's see how well DaBoyz exploit this opportunity, which was ordained by cyclical forces beyond their (and our) understanding. A small reverse pattern (a=140.00 on 12/7 'daily') says AAPL will get to at least 139.85, and that a pullback to 132.37 could be bought 'mechanically' with a stop at 129.87. _______ UPDATE (Dec 22, 8:40 p.m.): See my 13:22 chat room post for an explicitly detailed bottom-fishing gambit using expiring at-the-money calls. If you have enabled 'Notifications' on your account dashboard, you would have received a timely email concerning this trade.
TLT turned leaden last week, failing to capitalize on two conventional 'buy' signals at the green line. The still-bullish pattern shown seems likely to be negated this week with a move or feint beneath C=106.28, but I doubt this would mark the beginning of a significant downturn. TLT should still be viewed nevertheless as in a bear rally with potential to 116.71 or even 124.99 over the next 6-10 weeks (rABC on daily, where a=139.01 on 3/18/20). ______ UPDATE (Dec 21, 8:30 p.m.): I've shifted to a somewhat larger 'reverse' pattern, since the rally target of the smaller one was slightly exceeded. The pattern is unorthodox, but it's all we've got for now. Its usefulness will be tested if TLT drops to the green line (x=96.79), triggering a 'mechanical' buy signal (stop 91.84).
Nearly three weeks of consolidation may have doused the flames from November's volcanic eruption, but the labored ups and downs over that period haven't diminished the odds that the next bull leg will hit 1907.10. The target, a Hidden Pivot resistance of daily-chart degree, is shown in the inset. It became no worse than an even-odds bet to be reached last week when the futures briefly poked above the midpoint resistance (p) at 1820.30. They subsequently missed triggering a mechanical buy at the green line (x-1776.90), but the trade will still be viable when trading resumes Sunday evening. With implied entry risk of around $17,000 on four contracts, this one is for subscribers who know how to cut that to $1500 or less using 'camouflage'. The green line should not be construed as a support or a target; it is just a reference point we use to do certain types of trades. _______ UPDATE (Dec 23): The 'mechanical' buy at 1776.90 noted above is still valid and carries the same caveats. _______ UPDATE (Dec 27, 10:27 p.m.): The C-D leg has become so labored and punitive that I am no longer recommending a 'mechanical' buy on a pullback to x. The 1907.10 target remains theoretically viable nonetheless.
There is more enthusiasm pushing silver than gold, although both are likely to hit their respective 'D' targets more or less simultaneously. (March Silver's lies at 24.95.) That makes a 'mechanical' buy at the red line (p=22.86) somewhat riskier, since the required stop-loss at 22.16 might tempt silver's handlers to drift their way down to it if gold's sluggish behavior continues. A scarier plunge to the green line (x=21.83) would paradoxically offer a better 'mechanical' buying opportunity, but we should plan on initiating the trade with a 'camouflage' trigger so that the implied entry risk, which would exceed $20,000 on four contracts, is not so terrifying. _______ UPDATE (Dec 23): The futures made a marginal new high last week that fell 42 cents short of my 24.94 target. It remains valid nonetheless and can be played via a 'mechanical' buy at the red line (22.86), stop 22.17. Nudge me in the chat room for real-tie guidance that can help cut entry risk by 90% or more.
Crude's fright-mask squeeze last week would have made a tempting short if it had reached the green line (x=79.44). Alas, buyers quit at 77.75, sending the futures into a $3 dive on Friday to 74.29. The 67.74 downside target remains valid, and so our trading bias should be bearish as a new week begins. Nudge me in the chat room if another fake rally hits x=79.44, and I may be able to provide timely guidance.______ UPDATE (Dec 22, 9:00 a.m.): See my posts in the chat room earlier this morning regarding timely and real-time trading opportunities in the February contract.
The bigger the picture, the less glamorous bitcoin seems. Each time it embarks on yet another doomed rally, we are reminded that the supposedly smart money is just as trapped as the hoi polloi. This bitcoin proxy, which reflects best bids and offers in real time across whatever crypto markets still exist, appears bound lower to at least 11,484. Bitcoin long ago stopped leading the flow of speculative money and now lags it, a lowly slave to the stock market's ups and downs within the context of the bear market begun last January. If Bertie were to rally to the green line (x=21,774), that would be a gift to bears who'd rather short into strength than weakness.
