Last week's violent histrionics left an engulfing bar on the weekly chart that holds bearish implications for the near term, at least. Expect the futures to fall to the 3792.50 'D' target of the 'rABC' pattern shown. Bottom-fishing there with a 'camouflage' set-up looks promising, and that's what I am suggesting. Of course, any rally in the interim would be short-able, albeit with a pattern derived from the lesser intraday charts. Be advised that shorting this sonofabitch with risk nearly eliminated will require very close attention to fifteen-minute bars or less. _____ UPDATE (Sep 19, 8:18 p.m .): I'm planting a tightly staged 'reverse' c at 3933.50 to get short with less than two points of risk, but my hunch is that the short squeeze driving ES on the close will either negate the trade or stop it out. If the rally exceeds the 3963. 50 'external' peak from last Thursday, we'll need to feign a little more respect for the trend, which is being driven 100% by bears. _______ UPDATE (Sep 21, 7:24 p.m.): This afternoon's Fed-induced psychosis culminated with a steep plunge to within two ticks (i.e., 0.50 points) of the 3792.00 target billboarded above. The Hidden Pivot support held for two hours and fifteen minutes, but its failure a short while ago is yet one more sign that there is something far more seriously wrong with the stock market than has been reflected by the hard selling since early April. Most immediately, I see more downside to at least 3699.25, a voodoo number where I intend to anchor the 'c' low of a tight 'rABC' pattern to do some risk-obsessed bottom-fishing. Isn't it remarkable how we can watch the S&Ps shed hundreds upon hundreds of points without offering any decent opportunities to get short? Only a trader with
Wall Street's best and brightest are as clever and scurrilous as any broad-tosser who ever plied the Piccadilly Circus or Times Square, but they will have their dexterous hands full as they continue to distribute AAPL shares ahead of the crash below $100 that is coming. For the moment, the stock looks bound for the middling downside 'D' target at 145.89 shown in the inset. The pattern is choppy enough to qualify as gnarly, so bottom-fishing there will have a good chance of producing a profit. We might look to exit such a position by reversing it. The mild caveat is that the A-B leg here is 'sausage', which argues against the target working as precisely as we are used to. I haven't seen any evidence that subscribers are trading this stock, but please make your interest known if I am wrong. When AAPL hits 145.89, that will represent a 17% fall from mid-August's peak, which, amazingly, came within less than 4% of achieving new record highs (!) My hunch is that the stock's institutional sponsors want the stock to fall by at least 20%-30% before they start accumulating seriously again. Realize that their goal is no longer to push AAPL to new all-time highs, since that is probably impossible, but rather to buy it cheaply enough, and with sellers sufficiently depleted, to guarantee a profit on whatever short-squeeze rallies they can trigger off. Count on them to do this repeatedly as the Mother of All Bear Markets works its way to the bottom of the Marianas Trench over the next 2-3 years. ______ UPDATE (Sep 19, 8:10 p.m.): Today's short-squeeze was rigged in the usual way: Pull all bids ahead of the opening bell, exhausting sellers. This ploy almost never fails, and today it produced a bullish impulse leg
Pardon me for not getting excited about Friday's impulsive thrust, but scores of failed rallies have taken the thrill out of gold's occasional, meaningless flights of fancy. We should make the futures earn our trust every step of the way, meaning in this case we shouldn't even assume D=1704.10 will be reached via this presumptive bear rally. Let buyers push this sack of cement decisively past our minimum upside objective first, p=1692.00, and then we can raise our expectations just a little. This pattern should work well for 'mechanical' buying, but don't pass up an opportunity to take a partial profit on a modest, one-level move. Incidentally, gold ended the week at the scariest precipice on this chart -- i.e., the 1660.90 midpoint Hidden Pivot of a pattern projecting to as low as 1497.20. If the support doesn't hold, the futures should be presumed bound for at least 1619.90, a secondary D target derived from A2 on the chart.
Silver triggered a 'mechanical' short on Friday, although I'd advised paper-trading this one. I had to redraw the chart to discover that the short was more promising than it initially appeared. I hadn't realized that the 'B' low exceeded the external low from June 2020, making the downtrend more powerful than I'd originally inferred from a cursory glance. In fact, the A-B leg was quite powerful, implying that December Silver will not be able to push above C=20.98 of the downtrending pattern and eventually will fall to D=16.355. Nudge me in the chat room on Monday if shorting silver appeals to you, since we may be able to 'camo' ourselves aboard belatedly with risk very tightly controlled as always. (I would not have recommended using a conventional stop above C in any case, since that would have implied more than $23,000 of entry risk on four contracts.)
The Dollar Index is headed toward an interim top at 113.16, a Hidden Pivot resistance that would culminate a bull trend begun from around 79 in 2014. However, there is an even longer-term target at 119.37 that is shown in the inset. Both uptrends could experience significant corrections along the way, but the retracement that has played out over the last week or so from a peak at 110.79 would generate a 'mechanical' buy signal at 106.64 (stop 104.64: weekly chart, A=101.30 on 6/3). I've provided a big-picture perspective this week to explain why any weakness in the dollar, even if severe, would not jeopardize the very bullish projections possible using charts that go back as far as 20 years. This would be true even if the dollar were to fall to the green line (96.03) shown in the chart. Presumably, this would require an unprecedented money-printing spree, or a geopolitical shock severe enough to knock the dollar off its pins.
The futures have resisted falling to the midpoint support of the pattern shown (inset), stopping out bears no fewer than two times. The pivot currently lies at 84.18 and can be used as a minimum downside objective for the near term. If p is touched, it would set up an enticing opportunity to bottom-fish with a tight reverse pattern that has a 'c' anchor anywhere in the range 84.01-84.19. Ask in the chat room if you are uncertain about how to handle this 'counterintuitive' trade. As always, a decisive penetration of a 'p' support would imply more slippage to the next Hidden Pivot level, in this case p2=82.97. ______ UPDATE (Sep 19, 8:39 a.m. EDT): Sellers easily took out the p and p2 supports, ensuring that the selloff will reach a minimum D=81.76. You can bottom-fish there with a tight 'camo' pattern on the lesser charts provided theoretical risk at entry is no greater than $200-$250 per contract. ______ UPDATE (Sep 19, 8:23 p.m.); A Whoopee Cushion bounce from 82.10 negated the trade. I suggest indifference for the time being as crude continues to screw the pooch.
Use the 105.53 target of the pattern show as a minimum downside objective for now. It seems likely to produce a tradeable bounce, if no more, since the pattern has already worked twice for initiating profitable 'mechanical' shorts. My hunch is that any bounce from this 'hidden support' will be short-lived and that TLT will subsequently relapse to new lows. I will continue to monitor price action in this symbol closely, since gold will remain under pressure as long as TLT, which correlates inversely with Treasury yields, is falling. ______ UPDATE (Sep 20, 12:55 p.m.): TLT has taken a so-far 94-cent bounce after plummeting to within an inch of the 105.53 target billboarded above. Subscribers have reported covering shorts there profitably, but it's too early to tell whether the reversal will get legs. _______ UPDATE (Sep 21, 7:51 p.m.): The bounce showed some 'leg' today, that's for sure. Let's see how bulls handle three (!) 'external' peaks immediately above. They lie, respectively, at 108.21, 109.52 and 110.56. An uncorrected blast exceeding all of them would imply that a powerful recovery is under way. _______ UPDATE (Sep 22, 10:16): Treasurys have gotten smacked down brutally today, implying this vehicle will grope its way down to the 2013 low at 101.17 in search of support. Here's the chart.
Today's refreshing plunge didn't negate the bullish target we were using, but it did make a more compelling case for the bearish pattern shown (see inset), with a 3830.75 target. The early morning high recorded ahead of Tuesday's unsettling inflation news didn't quite reach the green line (4196.25), which would have set up a juicy 'mechanical' trade -- a short in this case. However the futures make their way down to 3830.75, we should expect them to be as tricky to short as Tuesday's sudden reversal into a headline-induced air pocket. Bottom-fishing will be easier, presumably with a bid utilizing the somewhat obscure D target tied to our reverse pattern. Be alert for a possible turn from 3868.75, a discomfort-zone 'voodoo' number.
The portfolio managers who diddle the markets with our hard-earned money have limited bandwidth for the mindless 'themes' that determine which groups of stocks will be in or out of fashion at a given time. At the moment, simplicity rules with this theme: dollar up, sell everything else; dollar down, buy everything else. That's the way things have been working lately -- and are likely to keep working for the foreseeable future, since the dollar's strength lies well beyond the control of the little Napoleons who run the central bank. At present, DXY is in a so-far minor correction following a run-up that culminated last week with a 20-year high at 110.79. However, if the bounce from Friday's 108.36 low impales p=109.05 in the early going on Monday and then goes on to exceed D=109.73 of the modest pattern shown, that would signal the likely resumption of the bull trend and an imminent move to new, multi-decade highs. This will be an inflation-killer, but don't expect to read about it in the mainstream media until after the global economy has been sucked into a black hole of bankruptcies and barter. ______ UPDATE (Sep 12, 9:55 p.m.): Here's a serviceable new pattern to gauge trend strength and trade this symbol, since last night's dive wiped out the point 'c' low of the original pattern. A decisive push past p=108.50 is needed to put the dollar back in bullish gear. ______ UPDATE (Sep 13, 6:50 p.m.): The stock market's cascade today opposite a very strong dollar underscores the point I made above. Look for new highs on Wednesday after the rally impales D=110.88 of A=107.69 (6/26).
Last week's plunge to ten-year lows was so dispiriting that perhaps it's time to prepare for an important turn. My gut feeling is that Friday's 107.42 bottom lies within a single point or so of a major low that would surely be tradeable. If so, I'd suggest using a 'camo' set-up on the lesser charts to leverage a possible reversal. This one is likely to require expert play, but I'll provide timely guidance in the chat room if interest is strong. ______ UPDATE (Sep 13, 8:57 p.m.): The so-far feeble bounce suggests TLT will continue down to at least p2=102.06 of this pattern before it can turn around. Otherwise, you can use a print at 108.90 as a bullish telltale.
