GDXJ has traversed the 'reverse' pattern shown with such caution that many bulls must be wondering when the obligatory air-pocket-from-hell is coming. It's been a while since a rally in any gold vehicle achieved a 'D' target, even a relatively modest one like the 35.99 Hidden Pivot resistance shown in the chart (inset). Rest assured, the target will be achieved, even if Mr. Market seems to delight in busting the chops of gold bulls whenever they wax -- here's that fatal word again -- hopeful. In this case, although the pop through 'p' took two tries, the latter was sufficiently decisive to imply that bulls were in charge, even if a little shaky. Our concern in any event is not whether D will be reached, but whether this proxy for exploration companies can fist-pump its way past it, especially on the first attempt.
The rally from mid-June's 108 low would appear to have sputtered out in a bad place, just shy of the 121.68 'D' target shown in the chart. The target remains viable nonetheless, and there are reasons why we should give it the benefit of the doubt. The most important is that the last portion of the upthrust exceeded an 'external' peak at 119.74 recorded in May, generating a robust impulse leg of daily-chart degree. Also, when TLT popped through the midpoint support at 116.87 after a week of trying, it built a base for a presumptive thrust to D. Last week's close beneath the 'launching pad' was not exactly a sign of robust health, but I see it as exhaustion selling related to the way in which the charlatans who run the central bank mismanaged our expectations' last week. The official story that the economy is doing okay and reality have moved widely apart, but the recession is real and will continue to exert downward pressure on yields. They are already high enough to snuff the economy worse than in 1973-74. Falling energy prices will help to somewhat mitigate the effect, but they will not reverse it. TLT in any event would trigger a 'mechanical' buy if the pullback hits x=114.46. _______ UPDATE (Aug 11, 5:15 p.m.): The savage intensity of the selling has diminished my enthusiasm for a 'mechanical' buy that triggered today at x=114.49. Another factor that put me off is the weak, meandering impulse leg. Let's spectate for now.
It's been a particularly tough slog for Bertie these last couple of months. Those who have been praying for a big short squeeze to lighten their losses are many. Quite a few were trapped at much higher prices, including some of the biggest crypto bettors in the world. Prayerful losers constitute heavy layers of supply that didn't exist in bitcoin's early days. Supply is particularly daunting along the final few, crushing bars of bitcoin's collapse last spring. Two months of heavy lifting since then have succeeded in hoisting this vehicle only to the midpoint of the last bar (see inset), which saw BRTI free-fall from $32k to below $19k. If and when it rises to the 25,634 low from the swift and devastating down-leg ended in mid-May, buyers may begin to feel like Sisyphus as they shoulder into it for an indefinite period. Why bitcoin should have any value at all was always a fair question. But $69,000 per copy? I asked this question of many experts, some who'd made fortunes on the way up, but I never got a good answer. It came out of nowhere and is not money by any stretch of the imagination, just a secure means of recording transactions.
[The following went out last month to clients of my friend Doug Behnfield, a wealth management advisor and senior vice president at Morgan Stanley in Boulder CO. Like your editor, he is skeptical that consumer inflation can persist for long with the U.S. economy in recession and a bear market in progress. Deflation is coming, he says, along with a further decline in stocks of at least 20% from early July's lows. Doug has been recommending long-dated Treasurys both as a defensive investment and for potential long-term capital gains from falling interest rates. RA] On January 11, 1987, the Denver Broncos played their last playoff game of the season at the Cleveland Browns. It was rainy and muddy. With 5 minutes left to play, the Broncos had the ball on the two-yard line after a muffed kickoff return and the score was 13-20, Cleveland. Legend has it that as the huddle was called on the two, ProBowler and offensive lineman Keith Bishop said to the team; “We got ‘em right where we want ‘em!” Through a series of runs and passes, sacks and scrambles, John Elway led his team 98 yards to score a touch-down to tie the game. The Denver Broncos won in overtime and went on to the championship game. The first half of 2022 is characterized by a bear market in stocks with the S&P 500 down 20.58% and the NASDAQ down 29.51%. While shorter maturity bonds were down much less, the longest duration Treasury and municipal bonds were just as bad as stocks. The Index of long Treasury Strips was down 27.90%1 and the CEF Connect Index of National Leveraged closed-end Municipal Bond Funds was down 20.1%2 . Here, at the end of the first half of 2022, we are staring at the worst start to
The picture shown makes much better visual sense than the tortuous, gutless pattern I posted here earlier. (It had an erroneous target to begin with.) The new graph will enable us to use p=1840.80 as a minimum upside projection, and D=1985.40 as a best-case objective for the next 6-8 weeks. Depending on how the uptrend interacts with p=1840.80, I may move 'A' down to the marquee low at 1793.50 to produce a slightly higher target. There are no guarantees that the rally will achieve 1840.8, since the chart lacks sufficient information as yet to determine this. At a gut level, though, it looks safe to use 1840.8 as a minimum upside projection.
This correction could turn out to be be the most significant since the Covid outbreak in 2020. Higher peaks this spring diverged from lower stochastic peaks, as you can see. This is quite bearish and portends more weakness until the stochastic lines reach the oversold zone between zero and 20. There are no obvious Hidden Pivots target below, but an imaginative reading of the weekly chart suggests the dollar could grope its way down to as low as 97.63 in search of bottom. That would represent an ostensibly healthy, 10% correction from the 109.29 high recorded a few weeks ago. It would probably be misread as the dollar's death knell, but from a technical standpoint the retracement could prepare the buck for a rally strong enough to usher in an era of deflation that seems inevitable.
Whatta guy! Nothing has happened to brighten the picture for Apple, but that hasn't stopped it from reversing out of a bear market abyss with such force that you'd think Covid-induced nuttiness was rampaging again. You've got to hand it to the institutional chimpanzees who have never sold a single share of the stock since Steve Jobs resurrected the company. They've shown unflagging confidence and limitless patience since the Great Financial Crash of 2007-08, waiting this time for the perfect opportunity to trigger off a short squeeze menacing enough to turn bears into panic-stricken buyers. Realize that this is the biggest-cap stock in the world, and that every inch of the rally would ordinarily require trainloads of money, were it propelled by merely bullish buying. Shorts have done all the lifting, though, into supply lightened by greed; by large, airy gaps in supply at odd hours of the night; and by the misplaced confidence of widows, pensioners and hayseeds enticed by the last stock-split. From a technical standpoint, the 172.78 target shown makes a logical and compelling upside target. It should be shorted aggressively, especially if you've made money on the way up. This Hidden Pivot is close enough to January's record high at 182.63 that its attainment would most surely get investors salivating over the prospect of another monster leg up for a bull market now in its 161st month. ______ UPDATE Aug 10, 8:15 p.m.): This short in AAPL is for entertainment only, since it already triggered at 168.93. It is similar to the trade I've suggested in ES, except that the price where I'd have anchored the 'C' high has already been exceeded. That makes it riskier than if we'd acted during the regular session. Theoretical entry risk is only about 40 cents per share nonetheless, with
The futures shredded their way past a 4116 'hidden' resistance with such ease that the remaining target at 4256 now seems likely to be achieved. Please note that this is not a Hidden Pivot, but rather an instinctual spot to anchor the 'c' high of a 'reverse' pattern in order to get short. I'll calculate the a-b interval if and when we get there, but my gut feeling is that it will be about 25-30 points, yielding implied initial risk of about $300-$350 per contract. In the meantime, you can use the middling pattern shown to project a tradeable target at 4205.75. There have been no pullbacks so far that would have enabled a 'mechanical' buy on the hourly chart, but D=4205.75 will be shortable nonetheless, presumably using a 'camo' set-up. You can be more aggressive, shorting the target with a tight stop, if you've made money on the way up. _______ UPDATE (Aug 4, 10:45 p.m.): A freaky Friday swoon to x=4118.69 would trigger an appealing 'mechanical' buy, but I am recommending the trade only to subscribers who can cut the $8000 risk on four contracts down to something more comfortable. Please note that 'x' is neither a support nor a target.
I said I'd loosen up on gold if the December contract popped through three 'external' peaks, the highest of which lies at 1785.80. It very nearly succeeded, falling just 1.30 shy of my benchmark when the clock ran out on buyers Friday. However, I remain distrustful of gold's rallies nonetheless and probably would not have become less skeptical even if this rally had met my bullish criterion. Beginning with the July 21 bottom, it has been a shaky, ratcheting affair all the way up. The fact that it couldn't muster the extra inch it would have taken to surpass the small-ish peak at 1785.50 has left my mild skepticism intact. Accordingly, I've used two modest patterns to project unambitious targets. The first lies at 1788.90, just $6 above, and comes from a reverse pattern begun with a low near 1800 in early May. The second, at 1804.60, is derived from a larger rABC tracing back to a point 'a' low made in February. I'll be watching closely to see how much resistance they put up, but either can be shorted using 'camouflage', especially if you've been long on the way up.
Silver's rally has come from a promising place, a hair beneath a 'secondary' Hidden Pivot at 18.06. This has provided the kind of high-octane boost we've come to associate with reversals at p2. I've used a modest rABC pattern nonetheless to project a 21.29 target somewhat more challenging than the one at 1788.90 in December Gold. The target looks all but certain to be achieved, given the fist-pump past p=19.66 last Thursday. The pattern can be used to get long 'mechanically', most obviously via a swoon to the green line (18.84). If 21.32 is eventually exceeded, especially decisively on first contact, I'd raise my sights to 23.20, a 'D' target derived from the large reverse pattern begun from 22.14 (labeled 'a' in the chart). Please note there is a midpoint resistance at 20.60 associated with that last target, and a precise pullback from it would validate the pattern itself if not necessarily ensure that 23.20 will be achieved. _______ UPDATE (Aug 3, 4:25): The rally missed 20.60 by 9 cents -- not quite close enough to validate the pattern and target, nor to set up a high-confidence 'mechanical' buy if the relapse hits x=19.30.
