Although we should always be alert to the possibility of a turn from the secondary pivot (p2), in this case it seems unlikely. Once September Silver penetrated p=19.59 decisively, it never looked back. The futures seem to have eyes for the 16.53 target we've been using, and this is corroborated by a corresponding one in August Gold at 1665. A tradeable turn from near 16.53 if it is reached is all but a lock-up, but as I've mentioned in the latest gold update, the pattern looks too obvious to deliver a low we can count on to be precise.
T-Bonds struggled for loft last week, recouping most of the previous week's sharp losses but leaving some unfinished business. First, there is a minor rally target at 118.93; it looks likely to be achieved soon. Second is a series of peaks near 120 recorded in the last week of May. Together they will pose daunting resistance. Rather than try to predict what will happen, we'll simply observe price action and let TLT tell us whether the long bond is in the nascent stage of a major bull market. A decisive burst past 120 would imply it. _______ UPDATE (Jul 19, 6:56 p.m. EDT): The D target at 118.93 has gone from a shoe-in to a 'maybe' this week, since the 'sloppy seconds' mechanical buy at x=113.77 has such limited appeal. Move to the sidelines for now.
Conventional patterns project rally targets that seem too ambitious, so I've settled on an rABC that allows upside over the near term to a relatively modest 158.55. This should be an easy trek, but I would still consider shorting near the target with a 'camouflage' set-up that risks no more than 12 to 20 cents a share initially. A sign that the pattern is working is the winning 'mechanical' buy at the green line. Don't pass up a second opportunity to buy there, stop 129.03, if the stock should unexpectedly revisit it by Wednesday. _______ UPDATE (Jul 18, 18:03): If AAPL is about to reclaim its usefulness as a market bellwether, it should deliver a 'mechanical' winner from the red line (p=143.80). The trade would require a stop-loss at 138.88, but I'd suggest paper trading if you are developing your 'mechanical' chops or just curious to see how well these trades work. _______ UPDATE (Jul 19, 10:22 p.m.): AAPL did in fact lead the way, but with a nasty short squeeze on the opening bar rather than a shakedown. The target at 158.55 is not quite a lock-up, but it is a good enough bet to suggest the broad averages are likely to move higher for the next 2-3 days.
There was a point last Thursday when virtually all of the hundred or so market symbols I track were 'red' except for the U.S. Dollar Index. This was unusual and unsettling but hardly mysterious, since the dollar's strength was the reason everything else was falling in value. The trend unfortunately is only just beginning and eventually will overwhelm the global economy and banking system. Any observer could have seen this coming, although few did. Even now, only hard-core deflationists understand the dire implications that a strong dollar holds for mountainous debts that have piled up around the world. Nor is it generally understood why hyperinflation is an extremely unlikely option for liquidating this debt, since it would destroy creditors – i.e., the Masters of the Universe – as a class. Deflation is not only far more logical, it already appears to have begun sucking asset values toward worthless singularity with power that ultimately will grow irresistible. The possibility of a ruinous debt deflation was once considered looney-bin talk. I was virtually alone in writing about it in the early 1990s. I even suggested at the time, in think-pieces published in Barron's and the San Francisco Examiner, that a short-squeeze on the dollar could bring on deflation precipitously. My floor-trading background made this scenario seem not merely plausible, but likely. It still is, I believe, and it seems predictable that it will begin with a small disturbance in the credit markets that quickly causes short-term lending to dry up. Borrowers unable to roll their loans as usual will be forced to settle in cash, an unfamiliar medium of exchange in the world of finance. This will cause ripples of panic overnight, but don’t bother lining up at the door of your bank before dawn, since the $25k to $50k that branches
DXY has blown past a 107.57 rally target today that, although not minor, is less important than the one at 113.16 shown in the chart (inset). More immediately, however, there is this Hidden Pivot resistance to contend with at 108.62. It can serve as a minimum upside projection for the near term, and although we should expect a tradeable pullback from it, the higher target at 113.16 looks nearly as likely to be reached. To keep these middling price objectives in perspective, in interviews over the last 15 years I've predicted that the dollar eventually would test highs near 120 recorded as the new Millennium began. I've also suggested thinking like a deflationist if you want to make clear sense of the economy, Fed policy, the financial system and the ruinous deflation that has become all but inevitable for the U.S. and the world. _______ UPDATE (Jul 13, 9:35 p.m.): DXY turned wildly aerobatic after rallying to within a hair (four cents) of the 108.62 target. When the craziness subsides, expect the consolidation to give way to a renewed push toward 113.16. _______ UPDATE (Jul 24): The rally subsequently poked above 108.62, topping at 109.29, before a so-far moderate correction set in. The 113.16 target remains viable and presumably will be achieved when the pullback has run its course. Here's a current chart.
The sharp rally off the July 6 low at 95.10 does not appear bound for greatness. Although I still have a lofty outstanding target at 134.59, I've grown increasingly skeptical that it will be achieved. It has yet to be negated by a dip below C=86.81, but evidence grows that the bullish pattern is weakening nonetheless. Last week, for instance, we saw a corrective ABCD complete to its D target at 94.70. If the larger and still theoretically dominant, bull-market were as robust as its initial A-B impulse leg, the correction should not have exceeded p=104.38 (the red line in the chart). My hunch is that, barring an unforeseeable geopolitical shock to global supply, the June 14 top will stand and that this rally should be shorted. Stay tuned to the chat room and email 'Notifications' if you care. ______ UPDATE (Jul 12, 5:18 p.m.): Bombs away! I am projecting $3.00 more downside before August Crude becomes an appealing speculative buy. ______ UPDATE (Jul 13, 9:40 p.m.): The futures have bounced after bottoming $1 above where I'd predicted. The rally shows promise, but it would need to surpass an external peak at 111.46 to merit our serious attention. Getting short (or long, for that matter) will be tricky, so 'camouflage' is advised. ________ UPDATE (Jul 14, 9:57 a.m.): Someone asked in the chat room where I thought crude was headed. I responded as follows: $40 a barrel or lower-- just a hunch. But if you are addicted to bottom-fishing, the most promising place to try it would be 88.90 (basis the August). That's my minimum downside target for the near term, and I am confident it will be reached. The pattern is too obvious for precision, since the mouth-breathers and algos will be out in force trying to exploit it, so camouflage is
We'll start the week with a modest rally target at 3998.00, given the futures' tortured progress last week toward heights unknown. The next 100 points would offer little resistance, since most of it traverses a nearly crag-less El Capitan created by the steep downdraft during the second week in June. Balky as July's uptrend has been, it has yet to provide any 'mechanical' buying opportunities tied to the pattern shown. A swoon on Monday to the green line (3805.25), however unlikely, would generate a 'mechanical' buy, stop 3741.00, but I cannot recommend the trade until I've seen how DaBoyz open index futures Sunday night. ______ UPDATE (Jul 11, 9:40 p.m.): The trade looks appealing enough to rate a '7.4'. However, with nearly $13,000 of initial risk on four contracts, it is recommended only to Pivoteers who can cut that down with 'camouflage' to no more than $300 theoretical per contract. If the trade is setting up during Tuesday's Q&A 'bonus' session for recent 'mechanical' course registrants, we'll give it a shot. ______ UPDATE (Jul 12, 5:14 p.m.): The trade triggered in the final hour, so let's see how it goes. It will produce a theoretical profit of about $13,000 if p=3869.63 is touched before 3741.00. Here's the chart. _______ UPDATE (Jul 13, 9:52 p.m.): The trade was a quick winner of around $11,000, since ES head-faked to 3873 on meaningless CPI news before veering sharply south. In the chat room, I'd suggested taking a partial profit just before the lunatick leap on the news, but even then the futures were up 40 points above the 3805 'mechanical' entry point from a day earlier. I was unable to determine if, or how many, subscribers did the trade, so there was no tracking guidance, just a price target that worked precisely. _______ UPDATE (Jul
Rates on the Ten-Year Note have come down hard since getting within an inch of a 3.56% target flagged here a while back. There were two other targets in play going back to October 0f 2021: 3.46% and 3.24%. Odds were good that an important top would form in the narrow band between them. This is notwithstanding expectations even now that that Fed will continue to raise rates. My hunch, which is an extreme outlier in a world obsessed with inflation, is that rates are already high enough to snuff inflation without any further tightening. However, last week's surge from 2.8% to 3.1% reminds us that the so-far top is not chiseled in stone, especially since the selloff from the high did not exceed any significant prior lows. For now we'll simply monitor the chart, which is hinting of a run-up to around 3.29%.
T-Bond prices fell last week not for reasons of weakness, but because the bonds got winded after pushing into heavy supply created by a last-ditch distribution over the last three weeks in May. The possibility of an important bottom in Treasurys is corroborated by interst rates on the Ten-Year Note's having reached a corresponding rally target at 3.56% when the bonds were cratering. TLT looks like it needs a little more corrective action to base for a sustained rally, and my hunch is that it will occur closer to 110. A retest of the 108.12 low is also possible, but I would expect only a marginal breach at worst if one occurs.
Our favorite stock-market bellwether had a decent week, with a 6% rally sufficiently lacking in excitement to suggest the stock's handlers are quietly planning more of the same. The rally came on the heels of a successful 'mechanical' short from x=143.27 that I had recommended paper trading. The winning pullback did not so much suggest weakness as restfulness, and that's why we should expect the current uptrend to take out C=151.74, even if there's not much follow-through. Indeed, it would be a shocker -- at least for me -- if this bear squeeze makes it to 166.48 peak that I've used as the point 'A' high shown in the chart. _______ UPDATE (Jul 13, 10:01 p.m.): Portfolio managers who have lived effortlessly off AAPL over the years are prepared to move heaven and earth to stop out shorts above C=151.74. They will have their work cut out for them, since iPhone sales have never faced a global downturn remotely as menacing as the one that has already begun.
