TLT has bounced from a place that is obvious only to us -- the swaddling bosom, as it were, of a visually defined 'discomfort zone'. That means the rally has been endowed with enough mystery and surprise to juice it pretty good. Will bulls seize the advantage ? Rather than try to predict, we'll simply keep an eye on it and trade TLT with a bullish bias. Bring your timely ideas to the chat room if you're interested and I will gladly vet and score them using Morning Line odds. _______ UPDATE (Mar 2, 12:10 a.m.): The rally looks certain to hit a minimum D=145.13, given the way buyers obliterated midpoint resistance today at p=139.82. Here's the chart. ______ UPDATE (Mar 2, 8:05): The worst selloff in recent memory triggered a 'mechanical' buy at x=137.19, stop 134.50. No one mentioned this opportunity, but I'll track it as a paper-trade nonetheless. We're looking to exit at least half at p=139.82. _______ UPDATE (Mar 3, 10:52 p.m.): Once again, a 'mechanical' trade has caught the low of a scary dive to produce a quick and relatively painless winner. T-Bonds' sharp reversal this evening has pushed TLT up to the 139.82 midpoint pivot where I'd advised selling half. If you used expiring, near-the-money calls, they should have more than tripled in value. Selling TLT against the calls tonight would hedge the profit with a backspread. Here's the chart, with the elongated green bar representing night-session price action.
[The markets will be closed on Monday for President's Day, but I am putting out fresh touts and commentary because DaBoyz are required to briefly let the beast out of its cage on Sunday evening. Up-to-the-minute updates from Rick's Picks will resume on the home page and in the trading rooms on Tuesday. RA ] Technicians use charts to get a precise handle on trends and price reversals. However, even the unschooled eye can sometimes form a tradeable opinion by merely glancing at a chart. Does the one displayed above tell you anything that might be actionable? To my eye, and without resorting to any of the proprietary tricks that are possible with the Hidden Pivot Method, I see the Dow Industrials rolling over due to the presumptive weight of heavy supply. There are many reasons we could adduce for this; however, pondering 'reasons' would negate the value and usefulness of technical analysis, which shuns 'reasons' as mere noise in order to focus on how an infinitely complex conflation of 'reasons' are actually perceived and acted on by traders and investors. The chart above does not make it possible to infer with confidence that a full-blown bear market is about to unfold. But there is still the visually intuitive sense that: 1) a major rally from these levels is unlikely; and, 2) a large drop is needed to form a base before spectacular new highs could conceivably be achieved. Again, using only the eyes rather than the brain, how far do you think the decline would have to go in order for a base to form? There is no correct answer, but my subjective eye 'needs' a selloff into the void between the pink and red lines. Respectively, the levels are a 'secondary' Hidden Pivot at 31,036 and a Hidden
For now, allow for minimum downside to the 165.41 midpoint 'hidden' support of this pattern. Because of the mild gnarliness of this picture and the deep-sea location of p, you can try bottom-fishing there with a very tight stop-loss, even using out-of-the-money call options to leverage the bounce. Be sure to cash out half if they double in price! The chart shown in the inset yields a different and more troubling picture. The stochastic divergence shown is quite bearish, even if it is not yet ominous. I will continue to monitor it, since AAPL remains The Only Stock That Matters. ______ UPDATE (Feb 14, 2022): AAPL's unwillingness to fall is what kept the stock market from continuing Friday's refreshing slide. The Hidden Pivot at 165.41 could still get schmeissed, but that didn't seem likely at the bell. _______ UPDATE (Feb 15, 11:04 p.m.): Even if the pattern shown in this chart doesn't develop into a textbook head-and-shoulders, the look of it at the moment is bullish. To give bears the benefit of the doubt, however, we should hold the applause until such time as buyers push above the key peak at 177.18 recorded on January 12. _______ UPDATE (Feb 17, 6:07 p.m.): Weakness over the last several days has started to bend the head-and-shoulders pattern out of symmetry, somewhat diminishing its bullishness..
Because the steep selloff that ended the week was driven by news from Kiev, we should view it as corrective. I've implied as much in the current Morning Line commentary, which notes that no one ever went broke buying stocks as they plummeted on some distressing headline. Friday's dive terminated precisely at the 'D' target of the small pattern shown in the chart, but still lower prices seem likely before the 'rumor' of a Ukraine invasion is actualized by Russian tanks and troops. We should therefore focus on p=4323.25 of the larger, bearish pattern, since that is where the futures are most likely to head on Monday. Bottom-fish there in the usual ways, but let's remain open-minded to the possibility the midpoint support will give way. Depending on how badly, this could portend a test of January 24's bombed-out low at 4212.75. _______ UPDATE (Feb 14, 5:15): Candy-ass bears evidently were so unnerved today by rumors that Putin might be willing to negotiate that they failed to follow through on Friday's promising selloff. Add in the divergent, 'green' finish of AAPL and Bertie (bitcoin), and it is hard to imagine stocks going anywhere but sideways-to-higher this week. _______ UPDATE (Feb 15, 10:47 p.m.): DaSleazeballs are still in charge, and they mean to take this hoax higher whether there are buyers or not. All of yesterday's gains occurred on zero volume around 4:00 a.m. What more do you need to know? _______ UPDATE (Feb 17, 10:35 a.m.): See my recent Trading Room posts for an actionable idea that I aired yesterday and slightly revised a moment ago. _______ UPDATE (Feb 17, 5:55 p.m.): Barring a bounce from p2=4359.63, the futures appear headed down to the 4318.00 target of this pattern. Any profits booked on the way down should be applied to bottom-fishing there
The chart raises the question of whether Friday's sharp bounce precisely from the 'D' target of a fairly large, bearish pattern is the start of a major rally. We'll keep an open mind rather than speculate, trading this vehicle as opportunities present themselves. Subscribers who bottom-fished as I suggested would be cushioned by partial profits booked after TLT reversed with a powerful leap. The run-up caused Feb 22 138 calls to more than quadruple in value, but whichever options you used, gains already booked should be sufficient to put your mind at ease about holding onto a few for a swing at the fences. You can rotate them into the future with calendar spreads, but in any case please let me know in the chat room if you need further guidance. ______ UPDATE (Feb 15, 11:15 p.m. EST): The resumption today of TLT's death spiral should serve to renew our focus on the 3.01% rate I've projected for the long bond. It currently sits at 2.36%, up from 1.70% in early December.
The 1875.10 rally target of a 'reverse' pattern tracing back to November remains my minimum upside projection for the near term. The pattern has produced stellar 'mechanical' gains for subscribers who used it to get long on the dip to the green line back in October. Looking ahead optimistically, I'll suggest using the new, larger 'reverse' pattern shown to stay with the trend no matter how erratic it becomes. The pattern paradoxically yields a more modest target at 1916.40 than some smaller ones I could have used. However, because this is gold, which so often disappoints, I am being cautious. As always, a decisive move through this Hidden Pivot resistance on first contact would be a welcome sign that the rally has farther to go -- perhaps much farther. We shall see. _______ UPDATE (Feb 15, 11:23 p.m.): The rally's failure by $1 to surpass key peak at 1882.50 recorded in November warrants a cautious outlook. Even if the peak eventually is exceeded, the likelihood of significant upside from there has already decreased. _____ UPDATE (Feb 17, 6:15 p.m.): The futures appear all but certain to achieve the 1916.40 target, which served to keep us confidently on the right side of a balky trend. Let's see how bulls handle this 'hidden' resistance, since an easy move past it would portend a continuation of the uptrend. You can short there with 'camouflage' if you've made some bucks on the way up.
The chart shown uses a slightly more ambitious and gnarlier pattern than my latest one in gold to project a rally target at 26.12. It has yielded a profitable 'mechanical' buy, although not as lucrative as the one in gold. However, it should serve in any case to keep us confidently aboard the uptrend for as long as it continues. A second 'mechanical' entry could be attempted if the futures revisit the green line (22.59), but I am recommending this only if the implied drop follows a high in the 'sweet spot' between p and p2. We should also be alert to a possible resumption of weakness, since there is a downtrending conventional abc pattern that tripped a 'mechanical' short on last week's rally to x=23.72 (Daily chart, A=25.54 on 11/16).
Quotes are headed to at least 101.88, but more likely to the maxed out D target at 107.63 shown in the chart. We've been using a 105.08 target that was based on the March contract to keep us comfortably in step with crude's sensationally steep rise, but switching to the April futures has revealed a pattern of greater clarity. The $100 mark is of course psychologically important, but it also raises the prospect of a global economy dependent on cheap energy collapsing under the staggering load of even marginally higher prices. Will the inevitable price reversal be the catalyst for the catastrophic deflation that central banks have struggled for decades to avoid? That would be my guess. Whatever is coming, we'll stay disinterestedly focused on the two targets given above to get a sense of whether prices could conceivably rise to as high as $200 a barrel, as at least one noted forecaster has been predicting.
Bertie has displayed little of its former market-leading brio lately, but it is nonetheless in a robustly impulsive uptrend that projects to as high as 51,556 over the near term. That target is speculative at this point, since the calculation uses a low at 42,011 on Friday that may not endure. A bigger picture using a 'reverse' pattern dating back to October offers the prospect of a run-up to as high as D=61,163, but we'll need to see how bulls fare at p=47,070 before we can confidently assess the strength of the uptrend.
Thinking back over the last 30 years, it's hard to recall a single instance when traders ultimately lost money diving into stocks on 'bad' news. There was a hot mess of it on Friday, when shares plummeted to presumptive bargain levels on reports that Putin is about to invade Ukraine. That's bad news indeed, although the talking heads seem as clueless as the rest of us about what it will ultimately mean. The end of NATO? Possibly. But even then we are left to wonder how NATO's demise would change the global balance of power. And is Biden's further mishandling of this crisis likely to doom his presidency? There's no denying that he has ever looked stupider or more incompetent, and that's saying something. His first disastrous gaffe was to announce to the world that America's reaction to an invasion would depend on the scale of it. In other words, if Putin invades only a little bit, the U.S. would stand down militarily. Biden's handlers had already drummed up some very harsh economic sanctions a couple of weeks ago, but the jury is still out on whether the measures are so extreme that they will cause the collapse of the global banking system. We should have an answer in the fullness of time, but for now it couldn't hurt to get a vegetable garden started in your back yard as spring approaches. Realize that the myriad shortages we are experiencing these days could seem relatively mild if shock waves from Ukraine prove unexpectedly destructive to worldwide trade. Where Red and Blue Agree Biden could have placed the blame for whatever happens in Germany's lap by simply pointing out that the U.S. has no compelling reason to risk blood and treasure in Ukraine if Germany's leaders can't summon the gumption or
