The hellish collapse of the last two weeks has brought TLT within easy distance of a 116.06 target that has been in play since January. Given the size of the Treasury bond market, a fall of this magnitude will hold very significant implications for the global banking system. It is also a thumb in the eye for the charlatans who run the central bank, since market action has pre-empted the Fed's need to tighten much of anything. Given the clarity of the pattern, it seems extremely unlikely the downtrend will significantly overshoot D=116.06. That means skyrocketing yields on the long bond are about to level off or possibly reverse. _______ UPDATE (May 5, 10:26 a.m.): TLT has breached the 116.06 pivot and traded as low as 115.36 this morning, but I doubt this can go much farther without a substantial bounce. Without divulging proprietary details, a 'reverse-pattern' buy would trigger with a bounce of 1.33 points from any low between the so-far low at 115.36 and no lower than 114.80. (That implies a trigger currently and tentatively at 116.70). The initial target for profit-taking would be 1.33 points above the entry price. I am still forecasting an important top in the 10-Year Note, currently trading near 3.04%, at 3.24%. ______ UPDATE (May 5, 9:35 p.m.): In the chat room this afternoon, I suggested using the 113.21 downside target of a lesser pattern now that the granite pivot at 116.06 has been pulverized. It would take a print at 119.32, however, to suggest a serious turn is under way.
The rally has tacked on $15 a barrel since a Hidden Pivot support at at 93.07 nailed the bottom within 14 cents a week ago. Now, judging from the way in which buyers obliterated the 104.91 midpoint resistance last Thursday, the move is all but certain to achieve the 116.89 target of the reverse pattern shown in the inset. If it gets past that Hidden Pivot with ease, we'll be looking at more upside to as high as 130.00 by the end of April or early May. ______ UPDATE (Apr 20, 1:07 a.m.): A fall to x=98.92 would trigger a 'mechanical' buy with entry risk per contract of $6000 per contract, assuming stop-loss at 92.92. _______ UPDATE (Apr 21, 11:38 p.m.): The mechanical buy triggered at 102.30, basis the June contract, and a subsequent rally to 104.32 could have been used to exit with a decent partial profit. If anyone is still on board, please let me know in the chat room so that I can determine whether to establish a tracking position.
This chart restores the original 3.24% target for yields on the 30-Year Bond. It was rickismed down to 3.22% for a short while due to the usual misdrawn coordinate. Notice that last week's peak came in a crucial spot, a zillionth of an inch below the pattern's secondary resistance at 2.85%. I doubt we'll see much of a stall here, meaning 3.24% is coming soon, Given the clarity of the pattern, however, a top of at least intermediate degree seems extremely likely, so look for a leveling off or reversal in the ensuing weeks. If, heaven help us, rates simply blow past D, that would have enormously significant implications for a global asset boom that was going to end sooner or later anyway.
I was going to drop Bertie from the list to see if anyone noticed, but force of habit has cause me to leave it. Rather than stoke your enthusiasm by reminding you of a 61,163 rally target, however, I won't even highlight this number in green. Instead, I'll call your attention to the 36,725 target of the corrective patterns shown in the inset. It has yet to gift us with any decent 'mechanical' shorts, but I wouldn't rule out the prospect of bottom-fishing with a 'counterintuitive' set-up if and when 36,725 is achieved. The pattern is not so obvious that it should attract much interest from the usual droolers and math majors. ______ UPDATE (Apr 27, 12:06 a.m.): Bertie finally did trip a 'mechanical' short on last week's run-up to 42,468, but, like, who cares, right? _______ UPDATE (May 5, 11:17 a.m.): I just posted the following in the chat room in response to a query about how low bitcoin can go. The 36,725 downside target I've been using for bitcoin was the most conservative possible, since it used a relatively small 'reverse' pattern to project 'D'. If and when 36,725 gives way, I would simply switch to the next larger pattern to project a new target. In this case, it is a conventional pattern that projects 29,130 as a likely low. Here's the chart.
For many of us, as pleasurable as it might be to picture Twitter in the hands of Elon Musk, and to imagine a despairing Jack Dorsey committing seppuku, Musk should save his billions for more useful purposes. He could start by building a competitive platform for a hundredth of what he's offered to pay for Twitter. He could also buy an existing platform such as the up-and-coming TruthSocial for a relative pittance. What is Twitter's value, after all? The company has been losing steady money offering a place for 'progressive' extremists to set up sniper positions online. But would allowing the rest of us to post there improve the bottom line? There are reason to doubt this, for in fact the resulting free-for-all could wind up driving subscribers and advertisers away. Musk says he simply wants to promote free speech. While it is true that nearly any conceivable change in Twitter's content would bring improvement, one suspects that his main goal is to punish the platform's narrow-minded managers for being the crypto-Stalinist apparatchiks they are. That being the case, and assuming Musk's offer is successful, we should look for him to relocate Twitter from San Francisco to a red-state stronghold. Enid in Oklahoma comes to mind. Or perhaps Bristol, Tennessee. Or Bullhead City, Arizona. Woke-ism Under Attack Regardless of whether the deal flies -- and there are good reasons to doubt that it will -- Musk has provoked a healthy discussion of the impact on America of Twitter's heavy-handed censorship. Woke-ism is on the run, under attack lately not just from political conservatives, but from centrists and others who have tired of living under wacky rules designed to benefit the few at the expense of the many. Most of us would be content to live and let live. November's mid-term
For more than a year, I've recommended what my friend Doug Behnfield calls the 'barbell strategy' to secure one's nest egg against the deflationary hard times that lie ahead. As formulated by Doug, a wealth-management advisor based in Boulder, the barbell portfolio is constructed with gold and bonds as offsets. Try to imagine the worst of times and you may have difficulty concocting a scenario in which T-Bonds and munis on one hand, and gold on the other, would fall together. However, it is relatively easy to imagine circumstances in which either or even both sides of the hedge would rise in times of extreme economic adversity. I had suggested holding off on the T-Bond portion of the hedge until interest rates peak. That day is coming, probably sooner than most 'experts' think, but we are not quite there yet. Yields on the Ten-Year Note ended last week at 2.71%, but my forecast calls for a top, or at least a lengthy leveling off, at exactly 3.24%. This is somewhat higher than the 3.02% rate I'd projected for the 30-Year T-Bond, the difference lying in the way their respective rallies have unfolded. For purposes of optimizing the barbell hedge, however, I'd suggest using the 3.24% rate indicated in the chart above. No More Volckers A top at that level would be a far cry from the 20% peak in June 1981 that followed two years of tightening by Paul Volcker. As a result, inflation remained subdued for more than 30 years. The effects of tightening this time around could not conceivably turn out to be as benign as before because the debt sums affected are exponentially larger. To cite one particularly menacing example, Third World debts amounted to perhaps $1.5 trillion in the mid-1980s. This sum was deemed sufficient to
I've slightly raised my target to 3.24%, but I still expect the pattern shown to capture the main features of this bull move in tradeable fashion. That implies p2=2.85% can be used not only as a minimum upside projection, but also as a place to scalp short against the trend. However, the way last week's blitz shredded the p2 resistance leaves little doubt that rates on the Ten-Year will hit 3.24% before they have a chance to level off.
Did you get Mr. Market's little joke last week? Although angst over the Fed's plan to tighten until the cows come home stirred up a shitstorm of commentary and fearful headlines, the stock market acted like it was reliving a quiet week in 1955 under Eisenhower. For those who bet on volatility, it was like watching the croupier rake in all the red/green bets when zero has come up on a roulette wheel. The 4146.75 target shown remains my worst-case for now, and the pattern still looks serviceable for getting short on the way down. Don't pass up an opportunity to bottom-fish at p=4388.88 in the usual way. Nudge me in the chat room and I may be able to help. I haven't mentioned a scenario in which the futures rally to stop out C=4631 because the buying enthusiasm to get them there just doesn't seem to be present at the moment. ______ UPDATE (Apr 12, 4:35 p.m.): The 4388 Hidden Pivot noted above nicely nailed the low of a 39-point rally that could have been worth as much as $16,000 to anyone who jumped on the opportunity as I'd advised. Alas, the trade triggered in the dead of night, as so many great opportunities do, so not many would have caught the move. The subsequent relapse to a new intraday low identified the rally as a distribution. It also reaffirmed that when a trade goes our way, we don't want to be caught patting ourselves on the back as Mr. Market turns on us with a buzz saw. Here's a chart that shows the stupid, gratuitous hump created by the day's price action. Considering how bulls got sandbagged, look for more weakness on Wednesday.
AAPL is still an enticing 'mechanical' buy on a drop to x=158.97, although there are no guarantees that the sleazeballs who control the stock are planning to let it fall that far. A bid at p=167.83 would be riskier, but we may attempt it anyway -- using a 'camouflage' set-up, of course. That would entail dropping down to the 5-minute chart or less to create an entry trigger on an ABCD pattern of small degree, but we'll leave the details for when the stock closely approaches the red line. The 'D' rally target at 185.56 will nonetheless remain viable in any foreseeable case. _____ UPDATE (Apr 12, 12:19 p.m.): Sellers have pulped the midpoint support so badly that there was no blip to trigger us 'long'. The downtrend looks ferocious enough to achieve x=158.97, setting up the 'mechanical' buy noted above. Stay tuned to the chat room and 'Notifications' for details. _______ UPDATE (Apr 12, 4:39 p.m.): The downtrend turned to mush, but I doubt there are enough buyers to ignite a rally with staying power.
The 116.06 downside target seemed farfetched when it first came into play theoretically back in January. However, with Friday's plunge through p2=125.83, it has become no worse than an even-odds bet to be achieved. The pattern looks a little too obvious to yield up a bottom-fishing gem for us. Indeed, as a practical matter I'll be look for the Big Turn to occur in the discomfort-zone void between p2 and D=116.06. For now, however, unless you've been trading this vehicle all the way down, I'd suggest continuing to gape in awe.
