If bulls are unable to get traction at p2=138.67, more slippage to 136.75 will become likely. We haven't done any bottom-fishing in this vehicle in a long while, but a hit at or very near D=136.75 would warrant it, so stay tuned. We could use call options if the target is actually achieved, but the obviousness of the pattern argues against it. Regardless, a tradeable low is coming soon that could mark a pause in T-Bonds' murderous, two-month slide. My forecast for 3% on the long bond suggests, however, that there would still be more downside to come. ______ UPDATE (Feb 10, 2:21 p.m.): A fall to at least 135.41 is now all but certain, given the initial, decisive breach of p=139.89. I didn't see this initially because my imagination was not quite that bearish at the time. Here's the chart.
The marginally bearish pattern shown here last week obscured a marginally bullish one that put April Gold on a 'mechanical' buy signal. It was triggered a week ago when the futures came down to the green line (x=1785.90). The position would have produced a theoretical profit on four contracts of $12,000 on Friday, when a weak rally touched the red line where partial profit-taking would have been in order. All of this has little to tell us about gold's next move, but we shouldn't expect too much, given the tedium of the last ten months. _______ UPDATE (Feb 9, 8:31 p.m. EST): We can continue to use this pattern to get a precise handle on gold, since the 'mechanical' buy signal it generated two weeks ago is still live and very profitable, at least in theory. The story will become more interesting if bulls blow past D=1875.10, but I wouldn't count too heavily on it. In the meantime, a pullback from p2 to p once the higher pivot is touched could be 'mechanically' tradeable.
The pattern shown offers no good handholds for trading, but it is descriptive nonetheless of a stagnant, frustrating bull market that seems in no hurry to get back in gear. The so-far eighteen-month correction has produced several lower lows that would have stopped out bulls with no taste for tedium, and left even hard-core bulls wondering whether there mightn't be a better place for their capital. From a technical standpoint, a rally would need to clear the August 4 peak at 26.19 to signal a likely end to the correction. We can accumulate silver nonetheless by averaging down, but I will limit my guidance for now to responding to your ideas and queries in the chat room.
Bertie goosed itself on Friday with rather more brio than we've grown accustomed to, but the move was barely a blip when viewed against the backdrop of its crushing descent from 68,000. I still expect a relapse to the 29,000 neckline of the developing and still speculative head-and-shoulders pattern we've been monitoring for the last couple of months. This bounce would merit our attention if it pushes above the 44,434 peak (1/13) that sits just above the point 'A' in the chart. ______ UPDATE (Feb 7, 6:33 p.m. EST): Let's give the lunatics their due with an expansive view of the rally, which is bound, at a minimum, for the 46,751 midpoint resistance of this ambitious 'reverse' pattern. We'll be better able to judge whether the move is capable of reaching D=60,525 once we've seen how it interacts with the red line.
AAPL stalled almost to-the-penny at 170.18, the D target of the reverse pattern shown. We might have attempted to get short there if this had occurred in the middle of the day. However, it was not such an appealing play ahead of the weekend, especially with the stock closing on the high tick of the session. The rally to the target in retrospect was all but ordained, given the gap-up opening bar through the midpoint Hidden Pivot at 162.20. The spike also exceeded an external peak from a week ago, generating the kind of impulse leg that almost invariably portends a continuation of the trend. Elsewhere on the page, I've featured a chart that shows the stock rallying to the neckline of a bearish head-and-shoulders pattern. Which picture will prevail? The questions seems likely to be settled this week, since just sitting there is not an option. _______ UPDATE (Jan 31, 8:12 p.m. EST): DaBoyz showed the trading world's hard-core doubters of the bull's invincibility how it's done, effortlessly wafting a $3 trillion stock more than 2% higher on a volume-less Monday morning opening. Just a few more points and their perennially resurgent Phoenix will have the magnetic help of the old record-high at 182 to add imagination's pull to short-covering's push. ______ UPDATE (Feb 2, 8:47 p.m.): DaBoyz are about to let AAPL fall, since the carnage in Facebook and Paypal has made it unnecessary and uneconomical to support King Kong when lower 'reload' prices are guaranteed.
The tortuous pattern shown should be serviceable for now, although we have come to expect gold's nasty, gratuitous dives to fall short of their 'D' targets -- in this case 1740.00. The p2 secondary pivot (p2) at 1769.20 is another matter, however, and it should be used to attempt bottom-fishing with a tight stop-loss. Specifically, I'll suggest managing the trade with a reverse pattern where a=1836.80 on 1/25 at 6:00 a.m. EST. Theoretical entry risk will be around $500 per contract, so this one is not recommended for novices. _______ UPDATE (Feb 4, 8:22 a.m.): Gold's moves in either direction are 100% gratuitous but tradeable nonetheless. Although the April contract failed to dip to the secondary pivot where we'd planned to do some bottom-fishing, the current rally will become 'mechanically' shortable if and when it touches x=1826.60. With about $12,000 of theoretical entry risk on four contracts, this gambit calls for a deft 'camouflage' touch. Here's the chart.
The pattern shown is a civilizational embarrassment, proof that the markets, far from being prescient or even rational, are just a cosmic circle jerk with no real purpose. I won't dignify or otherwise comment on this chart, since it would be akin to predicting a cockroach's next feint as it scuddles across a kitchen floor in search of darkness. Nudge me if something interesting happens. The next move is likely to be up, since bears and those who manipulate silver prices for a living don't have the guts to take out any important lows.
Last week's elongated bars imply bulls and bears were more or less evenly divided as they fought for their respective lives near the bottom of January's plunge. You can use the 4500.75 'D' target of the reverse pattern shown as an upside target as the week begins, but I am not recommending shorting there unless with 'camouflage' cover limiting your risk to no more than relative pocket change. The pattern worked well for 'mechanical' bids at the green line, but using it again will likely be pushing your luck. ______ UPDATE (Jan 31, 7:43 p.m.): ES poked its snout above the 4500 target for a few minutes, then pulled back to cruising altitude so that DaBoyz can await further instruction. It will come via the desertion of sellers, short-covering bears uncomfortable with the recalcitrance of the pullback or, most likely, a combination of both. ______ UPDATE (Feb 1, 5:40 p.m.): The way bears have obligingly placed their testicles in Mr. Market's vise could make one wonder how on earth the bull market will ever end. DaBoyz twiddled their thumbs for most of the session, effortlessly holding stocks aloft until shorts capitulated in the final hour. The latter now look like dead ducks -- worse than dead ducks, actually, since they are probably hoping tomorrow will somehow be different. _______ UPDATE (Feb 2, 8:56 p.m.): Use this sumptuously gnarly pattern for all purposes -- and yes, it does imply a 'mechanical' bid at x=4503.25 is warranted if you know how to 'camo' your way aboard for no more than $800 of theoretical entry risk (on four contracts). ______ UPDATE (Feb 3, 9:35 p.m.): The futures are in a steep short-squeeze following after-hours news that business is just hunky-dory at Amazon. Wall Street is crazy for companies that show sufficient pricing power to sodomize their
Bertie's constipated price action does not warrant any changes in the chart previously shown here. We see a large, potentially gorgeous head-and-shoulders top forming that could continue to evolve until April or May. It's hard to believe the bull market will last that long, but we'll give this scenario the benefit of the doubt, since what else do we have to sustain our interest in bitcoin when it is in a cooling-off period that is about to enter its second year? I will supply trading guidance in the chat room if the interest is there. For now, use the neckline just below 30,000 as a minimum downside objective for the bear cycle begun from 69,000 in November. _______ UPDATE (Feb 1, 5:55 p.m.): Bertie has become gutless -- a go-along trading vehicle that at the moment is docilely trailing the short squeeze in the broad averages. ______ UPDATE (Feb 2, 9:03 p.m.): ...and now it is following index futures lower, in high-beta fashion. ______ UPDATE (Feb 3, 10:05 a.m.): Bertie has triggered a 'conventional' short down to 28,742, but bears shouldn't look for a quick payoff. There are no sellers, only a relative dearth of buyers, so any bleed-out will necessarily come from an accretion of paper cuts.
I've substituted TLT for T-Bond futures to give equity traders a chance to get involved. If a trade is signaled, it should be executed using TLT itself rather than puts and calls (unless they look particularly timely and opportune). There is nothing of the sort in this picture at the moment, although it may hold some small appeal for straddle sellers. A bullish resolution to this tenesmus picture is possible if TLT can rally above the pattern's 144.42 point 'C' high. That would exceed two peaks, creating an impulse leg more powerful than would be apparent at a glance.
