The pattern shown, with a target as high as 130,189, is good enough for government work even though I've settled on an indistinct point 'A' low that could muddy the D target. Regardless, as I've mentioned before, the midpoint pivot is a reliable telltale even when it is embedded in a dubious or too-obvious pattern. It lies at 102,305 here, and so we'll make that our minimum upside objective for the near term. A decisive push through it on first contact would, of course, shorten the odds of a follow-through to at least p2=116,247, or 130,189 if any higher.
So many traders evidently anticipated Friday's low that the futures never got there. The peanut gallery would have been focused on Wednesday's 3270.80 bottom as a logical place for a test of support. It was not to be, however, and my 3264.60 midpoint support finished even further out of the money when the June contract turned higher from 3274.80, a number in the middle of Nowheresville. The subsequent bounce was impulsive on the hourly chart, implying bulls had a reason to hold a position over the weekend. This seems a little too pat to me, but I won't let skepticism cloud my thinking if bullion wants to go higher when the futures start trading again Sunday afternoon. _______ UPDATE (May 1, 12:52 p.m. EDT): Gold’s weakness appears to be merely corrective, and you can therefore expect an upturn from no lower than 3174.50. That’s a Hidden Pivot support that lies about $80 below the current price, 3225. A second possibility, dimming at the moment, would be for this morning’s so-far low at 3209.40 to support a strong rally. That’s a ‘secondary’ Hidden Pivot, and it is capable of turning things around. The so-far moderate decline since April 22 occurred after June Gold peaked within 0.6% of a 3533.90 Hidden Pivot I first featured here when the futures were trading below $2800. It stood to be a potential stumbling block, and that has been the case. However, I doubt that gold has topped for good and expect it to reach $ 5,000 an ounce or more eventually.
The pattern shown, with a big-picture rally target at 35.445, has kept us in close harmony with the trend, but it never promised much satisfaction. Pullbacks haven't been sufficiently robust to trigger any 'mechanical' buys, and a short from d is unappealing because the target coincides with some prior peaks that are certain to attract a crowd. That doesn't mean the pattern is untradable, but it takes work. Mainly, it's a matter of hunkering down on the lesser charts to derive entry triggers from them. The daily chart yielded up a fat-looking one at 32.565, but the turn from 15 cents above it suggests it may have had a fan club.
Last week's gap through p=62.17 all but ensures that the downtrend will achieve the 57.53 target. The good news is that the pattern is just opaque enough to deliver a tradable bounce from somewhere very close to d. It is also sufficiently compelling to make a move significantly below 57.53 unlikely, at least initially. GDXJ will have taken a month to get there, so even under the most bearish assumptions, it would need to hang out in an around 'd' for at least 4-7 days before breaking down.
The Dollar Index triggered a 'mechanical' short when it rallied to the green line as the week began. The signal would rate a 6.0 out of 10, since the low that preceded the rally was distant from our sweet spot, even if it did touch the red line. I am leaning bearish, but if DXY blows past C=100.28 toward the beginning of the week, we should give the move the attention it deserves. The greenback is long overdue for a rally, and there's nothing to say it can't start here. Worst case for the near term is 95.79, the 'D' target of the pattern shown.
The short-term picture has turned mildly bullish with TLT's so-far timid poke above the Hidden Pivot midpoint resistance, p=88.91. It's not too late for a decisive blast through it, but we'll reserve judgment on the strength and durability of the rally until we've seen more. A conventional 'buy' signal has been in effect since TLT first touched the green line (x=86.95) two weeks ago. I'd rather buy on a pullback to the green line from our 'sweet spot' above p, however, and we should plan on doing so if the opportunity arises. _______ UPDATE (May 3): TLT did precisely what we needed, vaulting to the 'sweet spot' before receding toward the green line. The move has created a price we can bid 'mechanically' with confidence. The trade should be good for at least a one-level move, from x=86.96 to p=88.91, with a stop-loss at 84.99.
[My prediction three weeks ago that the bear market had seen its worst seemed crazy at the time -- particularly to me, because I'm an inveterate permabear. However, last week, bulls distanced themselves further from the low of the mini-crash that occurred when tariff panic was in the air. I'd said the selling would take the S&Ps no lower than 4820, and that is almost exactly what occurred: a 4835 low marked the bottom of a 1312-point plunge. If it also caught the bear's last gasp, that would mean everyone taking pot-shots at Trump for screwing up the world is flat-out wrong. In any case, I will continue to run my original commentary (see below) until SPX proves me wrong by relapsing decisively below 4820. I have reduced the odds that the low will survive to 50-50 because the continuing rise in long-term rates could make it impossible for the economy to avoid a recession. But maybe that trend is about to peter out as well. In any case, it is still much better odds than most economists, the news media and the blogosphere are giving Trump and the economy. RA ] *** A word of advice if you’re looking for bankable information on the direction of the economy: tune out the mainstream media’s cavalcade of Trump-deranged bozos and focus on the 4820 target in the SPX chart above. Think of it as Trump’s lucky number, but also a very good place for these all-too-interesting times to find temporary equilibrium. That is my worst-case target for a bear market that many believe is only just getting started. As a die-hard permabear myself, I’ve been eagerly anticipating the Mother of All Bears since, like, 2010. The global economy was badly in need of a reset and still is. It will
T-Bonds and stocks came down so hard today that I now give my ‘outrageously bullish scenario’ (see above) no better than a 50% chance of surviving. Putting aside gold’s globally unnerving price surge, June T-Bond futures bulldozed a path down to as low as 100^12. If that were to happen, the implied rise in interest rates would be sufficient to tip the U.S. and global economies into deepest recession. A reported $7.5 trillion in Treasury debt needs to be refinanced over the next three years, with much of it due in 2025. It is therefore a particularly bad time for the Masters of the Universe to lose control of long-term rates. Beleaguered consumers will struggle even harder, and an already tottering commercial real estate market will finally give up the ghost. Residential real estate is about to deflate as well, putting a potentially economically rejuvenating refinancing cycle so far out of reach that Baby Boomers might not see another in their lifetime. Trump will get the blame, and deservedly so. Usually, economic cycles of boom and bust are much bigger than the presidency, but in this case, if stocks continue to fall, Trump will surely have been the catalyst. _______ UPDATE (April 25): Last week's rally left the futures a hair shy of an important Hidden Pivot midpoint resistance at 116^14. A decisive move through it would not announce that the bear market is over, but it would quietly suggest an important turn may be nigh. It would also imply the futures are on their way to 121^11, a Hidden Pivot that would leave the June contract just short of a breakout. The pattern will not be comfy-cozy for seasoned Pivoters, but I am using it nonetheless, in part because of its obscurity. (Always keep in mind our rule concerning
The futures spent the entire week fraternizing with three of four Hidden Pivot levels of the pattern shown. It's peculiar that the bounce from p and p2 missed their respective levels by a tick or two, but there's no reason to think the action at d=5156.75 will be any different, especially since it coincides with the too-obvious low' at 5146,75 recorded on April 10. A Mini-Cooperful of clowns is likely to converge there when it is closely approached, so don't bet too heavily on a precise turn, even if a reversal from near there is likely.
There are idiosyncratic reasons for selecting the reverse pattern shown, but its main purpose is to bring visual clarity to the 'mechanical' buy signal that would trigger if MSFT touches the green line (x=362.44), which it almost certainly will. I was unable to drag the 'a' low into the picture, but if you want to replicate the chart, it lies at 385.58 (8/5/24). There's plenty of potential here, although I would find a way around the textbook stop-loss at 344.78. A 'camo' trigger fashioned from the 5-minute chart would allow you to test the water without risking more than relative pocket change.
