TLT, an ETF proxy for the long bond, is headed down to at least 95.85, a 5% fall from these levels. That would imply that rates on the 30-year are about to rise from a current 3.84% to 3.91%. However, my long-term forecast calls for a 5% rate on the Long Bond and 4.9% on the Note, so TLT presumably has a long way to before it hits bottom. Most immediately, though, look for more slippage to the 97.72 target shown in this chart. It is all but certain to be hit, but it can also be used to bottom-fish with a tight rABC trigger. _____ UPDATE (Oct 18, 8:52 p.m.): TLT's dip beneath the 97.72 target precipitated an outpouring of interest in the chat room that I would never have imagined existed. This latest show of weakness has not much depleted our supply of downside targets, the next of which lies at 95.85 (as noted above). That Hidden Pivot support isn't likely to last long either, since rates on the 30-Year have a long way to go before they reach my target at 4.9%.
The sound of one hand clapping was all that bulls deserved at last week's high. Although the exhaustion spike on Tuesday exceeded a challenging 'external' peak, buyers elected not to take on a second that lay just inches above it. We'll give them the benefit of the doubt nonetheless, since the two-week surge begun from 25.80 was nominally impulsive on the daily chart, and because the surge featured some deftly engineered short-squeeze gaps on the way up. For now, let's kick back and observe price action on the lesser charts. If Friday's sell-off continues, exceeding 29.71 (15-min, a=32.35 on 10/4), that would imply bears are in charge, at least for the near term. ______ UPDATE (Oct 14): GDXJ is close to creating yet another gratuitous hump on the intraday charts, presumably bound for a test of late September's 25.80 low. If you trade this vehicle, here's a chart with a 26.83 target
Gold has impaled a significant midpoint Hidden Pivot resistance at 1686.50 with this morning's strong upthrust, clearing an easy path for more upside to D=1750.70. This tout updates an earlier one that displayed the wrong chart, but it also has given me an opportunity to acknowledge the very bullish price action witnessed in the last two hours. The pattern will yield excellent odds for bottom-fishing any swoons with a 'mechanical' bid, but if the opportunity fails to develop we can still buy on the way up using other tactics (which could conceivably include a small-pattern 'mechanical' entry).
The December contract is headed lower than the 3488.00 target shown, but it still looks like an opportune spot to try bottom-fishing, given the precise bounce from p=3916.88. Sliding the pattern's point 'A' high up to either of two alternatives shown in the chart yields additional downside targets at, respectively, 3401.75 and 3362.00, That last Hidden Pivot support is my worst case for October. However, there is little likelihood the Mother of All Bears will not take a breather at one of those levels, notwithstanding the fact that my expectation is for the S&Ps eventually to fall far beneath the pandemic low at 2174.00. That would represent a further slide of 40% on top of the 25% that has already occurred, but I doubt the bear market will be so kind, since it will be correcting a 30-year spreed of malinvestment. _______ UPDATE (Oct 3, 6:18 p.m.); The 3712 peak of today's powerful short squeeze precisely achieved the D target of this reverse pattern before the futures eased into the close. If they push above the peak tonight or tomorrow, that would activate this bigger reverse pattern, with a 3846.75 target. Notice that its Hidden Pivot midpoint resistance is coincident with the smaller pattern's p. That implies double resistance, and any decisive push past it should be assumed strong enough to reach p2=3778.00 at least. The pattern looks well-suited for profitable 'mechanical' buy set-ups. _______ UPDATE (Oct 7, 9:11 a.m.): Houston we have a problem. The prop-desk drama queens have pancaked index futures ahead of the bell on absolutely meaningless news that the economy added 263,000 "jobs". The fact that this has occurred after the December contract missed achieving my 3846.75 target by 26 points, or 0.6%, is a sign that the bear market is about to resume with full fury.
How refreshing to see the Masters of the Universe choking on Apple shares Friday after efforts to hold the stock aloft until the bell collapsed. The stock finished on the low of the day, presumably bound for a test of June's watershed bottom at 129.04. Expect a tradeable bounce on the way down from the 136.06 Hidden Pivot target shown in the chart. The stock's vertical ascent from mid-June to mid-August never spread to the broad averages. That had been DaBoyz' intention, and it appeared they might succeed when AAPL got within 3.7% of new record highs on August 17. Alas, sustaining altitude until hoards of other stocks caught up proved too challenging, and AAPL began to roll down like an aerobatic plane in a hammerhead stall, Earlier, I described in detail how the stock's canny sponsors levitated it without risking much. This occurred mostly via short-squeeze rallies in thin, overnight markets, and with gap-up openings that allowed instantaneous leaps of $2-$4 on zero cash outlays. This trick will not work nearly as well now because perceptions concerning the company's prospects have darkened with the onset of recession in Europe, a key market. The U.S. consumer economy is close behind, and the one-two whammy is certain to depress sales of the pricey iPhone. Rick's Picks will continue to track AAPL closely and trade it aggressively in both directions. Get AAPL right and you get the stock market right. We've been doing it with consistent precision, so stay tuned. _______ UPDATE (Oct 3, 6:30 p.m.): The algos and hubcap thieves who work the night shift must be tuned to Rick's Picks, since they front-ran my 136.06 target by 34 cents. Ordinarily I would not assume they are on a target of mine like fleas, but in this case the pattern seemed
Last Wednesday, gold embarked on yet another rally that seems bound to disappoint. This one was a 60-pointer, and it came nearly precisely from the D target of the bearish pattern shown in the inset. An attempt to follow through bogged down at week's end, leaving the futures with no net gain over the initial, impulsive thrust. That said, we'll give bulls the benefit of the doubt nonetheless, predicated on a thrust through the 1686.50 midpoint Hidden Pivot of this pattern, which projects to as high as 1750.70. Thereafter, a pullback to the green line from our sweet spot between p and p2 should be bought 'mechanically' provided you know how to hold the entry risk down to less than $250 per contract. In the unexpected event that the rally exceeds D=1750.70, that would be the most bullish sign we've seen in a long while. It would bring into play a larger reverse pattern (a=1802.10 on 2/3/22) that projects to at least 1766.90, or 1911.50 at the outside. The foregoing notwithstanding, my gut feeling is that gold is about to relapse, eclipsing last week's low at 1622.20. Not far below it is a voodoo number where I'd try bottom-fishing, but I'll say no more about it until such time as the futures get there.
Bears appear to be struggling, so I've raised the downside target to a less challenging level by lowering the point 'A' high. The new target is 16.96, but there is no compelling reason to think it is likely to be achieved. We won't give up on it officially until such time as a rally exceeds C=21.02, but in the meantime consider the pattern spent for purposes of 'mechanical' set-ups, presumably on the sell side. _______ UPDATE (Oct 3, 6:38 p.m.): Today's sharp upthrust has brightened the outlook for at least the near term. The bullish reverse pattern shown here is a visual oddity, but price action over the last three weeks at p=20.08 implies that the 22.615 rally target is all but certain to be achieved -- probably precisely enough to warrant shorting there.
Last week's decisive breach of a midpoint support at 103.59 on the weekly chart implies that bulls have yet more pain to endure. TLT looks primed to fall all the way to D=86.48. The odds of this shortened when the breach was followed by a Friday close beneath the 'p' Hidden Pivot support. The abysmal target is congruent with my 4.9% forecast for rates on the 10-Year, which ended the week at 3.8%. A rally to the green line (112.14) might be seen by some as a hopeful sign, but from a Hidden Pivot perspective it would be a great opportunity to get short 'mechanically, stop 120.70. (Note: I am not featuring the 30-Year here because it has inverted relative to the 10-Year.)
November Crude is taking its time achieving a bearish Hidden Pivot target at 73.70 that has been a month in coming. Upward stabs have been brutal on shorts, making a sell-and-hold strategy impractical and unwise in retrospect. The downtrend has nonetheless triggered two mechanical shorts on feints higher if you count the one at the red line that was signaled last Wednesday. We don't typically initiate shorts at p, only at x, but this one would have taken a stop-loss at 84.33 if we had. That would have put at risk a third of what we stood to gain if CLX completes the pattern. It is sufficiently gnarly to imply that bottom-fishing at 73.70 with a tight stop-loss would enjoy attractive odds. _____ UPDATE (Oct 3, 6:50 p.m.): Tracking this dervish is mentally depleting, but we’ll still want to paper-trade the 'mechanical' short that would trigger if and when it hits X=85.65. I'd rate the trade a '5' -- a 50% chance to profit, and therefore not very enticing.
GDXJ bounced sharply last week off the target of a bearish pattern tracing back to April, so I am giving bulls the benefit of the doubt in this week's update. Because the fledgling rally has not yet created an ABCD pattern yet with a D target, we must use a reverse pattern to estimate the potential of the move. The rABC formation shown, with a 32.18 target, is the most ambitious available on the daily chart. I am comfortable using it, however, because Friday's upthrust blew decisively past p=28.99 and then closed above it. This all but guarantees the uptrend will continue to at least D=32.18. Note that a pullback to the green line would trigger an appealing 'mechanical' buy, stop 25.79. If the reversal went on to exceed two external peaks en route to the target, that would refresh the impulsiveness of the chart. As always, if a trend leg were to easily penetrate a D target, we would infer that a larger pattern is in play. ________ UPDATE (Oct 4, 11:42 p.m.): GDXJ slightly exceeded the 32.18 rally target I'd 'guaranteed' Sunday evening, retraced slightly, then pushed above an external peak at 32.20 before settling back a little. This is bullish price action but would become even moreso if the rally continues, exceeding yet one more 'external' peak at 32.75 within the next day or two.
