More bad news for permabears, it would seem. At the start of last week, the futures easily pushed past d=5573 of the reverse pattern shown; then they spent the next few days frolicking above it before head-butting a stubborn voodoo resistance to end the week. All of this was doubtless propagated by shorts intent on torturing themselves, and there evidently are way too many for stocks to collapse at the moment. The potentially good news for all you collapsitarians is that my forecasts from months ago foresaw this presumably doomed bounce with a chart of IBM that shows how, just ahead of the Great Financial Crash of 2007-08, Mr Market set the hook. He did this so cleverly that the bear market took everyone, bulls and bears alike, down with it. As you can see, wreaking havoc on investors required a feint to marginal new highs after the broad averages seemingly had topped two months earlier. That is what I foresee now, as autumn approaches. Stay closely tuned to Rick's Picks if you believe that the stock market is long overdue for the wrenching correction that alone can return investors to sanity and prudence.
MSFT is taking its sweet old time getting to D=449.42, but it will get there. That's very significant, because as long as there's an outstanding rally target in this bellwether, the broad averages will continue to waft higher. A pullback to the green line (x=401.54) would offer an excellent opportunity for bottom-fishing or augmenting a long position. However, I doubt we'll see such weakness before the stock takes another leap skyward. I will signal any impending swings if they have tradable consequences, but there is little in prospect at the moment.
Sellers crushed the 102.4o downside target featured here last week, so I've substituted a longer-term chart with a more significant target at 93.79. We'll know better whether it is likely to be reached once we've seen how the midpoint support at 100.57 fares. It held precisely back in December, but I wouldn't bet on it to hold this time. If DXY trades significantly below it (i.e., 99.50 or lower), however, or closes below it for two consecutive weekly bars, that would make further downside to p2=97.18 an odds-on bet.
You don't need to be a chartist to see how bulls masticated major trendline resistance last week, setting up October Gold for a push to at least 2589.60 over the near term. If that Hidden Pivot doesn't stop the rally, 2597.80 will be the next stop, and thence 2752.20. The provenance of those last two numbers can be seen in this chart. In the meantime, any one-level pullback on the second chart would signal a 'mechanical' buy for a presumptive ride to D=2597.80. Intraday buying opportunities abound on the lesser charts.
September Silver spent the week munching on midpoint resistance at p=29.700 ahead of a presumptive push to at least p2=31,298, and thence D=32,895. There's always the chance Mr Slammy could bludgeon the futures lower for a few days, but a fall to x=28.103, however unlikely, should be regarded as a great buying opportunity. Silver moves much like crude, which is to say, with wicked, gratuitous feints in both directions that could unnerve anyone not proficient at interpreting charts. Focus on impulse legs of varying degree and you'll never go far wrong.
Mr Slammy hauled out his sledgehammer and knocked GDXJ for a loop midweek, but by Friday buyers were back in force, threatening to turn the 49.02 midpoint Hidden Pivot resistance into chop suey. It had stopped a strong rally cold a week earlier, but the next time, which appears imminent, bulls seem likely to triumph. A decisive breach of the red line would put this symbol on track for an easy shot at p2=60.62. That number can be used as a minimum upside projection once GDXJ has traded for two consecutive days above p.
[I’m taking a summer break, so this will be my last commentary until after Labor Day. It will be the usual busman’s holiday for me, however, and actionable ‘touts’ for popular symbols will be updated ‘round-the-clock as always. Some recommendations will be accessible to non-paying subscribers, so check the home page regularly, especially if stocks go bonkers. I will also continue to provide tradable guidance and timely analysis in the chat room. To sum up the markets for now, though, let me note that the scripted savaging of the lunatic stocks (aka the egregiously misnamed 'Magnificent Seven') unfolded in July exactly as anticipated. Now, I am focused on the strong possibility that the manic bounce that has ensued will turn out to be a sucker rally, a distribution much like the summer binge that preceded the 1929 Crash. Concerning the painting, it is by Geoffrey Leckie and titled 'Restoration of St. Marco'. Geoff and I attended the University of Virginia at the same time and shared a farmhouse outside of Charlottesville. He is a deeply gifted artist whose works, mostly oil on canvas, include landscapes, still-lifes and portraits that have always stirred me with their beauty and uncompromising style. His California seascapes are a particular favorite of mine, capturing the roughness of the Northern California coastline and the ceaseless fury of the waves. Geoff lives in Venice, Italy, but travels the world for inspiration. Here is a link to some of his other paintings and the galleries that represent him. The Venetian scene is thematically tied to the literary text below, an excerpt from Thomas Mann’s magisterial The Magic Mountain. Mann considered vacations essential to restoring one’s vital energy following boring stretches on-the-job. His novella Death in Venice concerns a writer who takes a holiday to recoup his gifts, only to
The futures are bound for at least 5749.25, the 'D rally target of the conventional pattern shown. Barring nuclear Armageddon, this outcome is all but certain because buyers had no difficulty whatsoever getting past the 5434 midpoint Hidden Pivot last week. The move used up the largest available reverse pattern on the daily chart, so I've switched to the conventional one you see in the thumbnail inset. The vehicles we trade are unwitting slaves of Hidden Pivot levels, and so it comes as no surprise that E-Mini S&Ps spent all day Friday heading-butting Hidden Pivot resistance points. The intraday high occurred at the 5573 'd' target flagged here earlier as a place to get short, but also at the secondary pivot (p2=5591) of the new, conventional chart. ________ UPDATE (Aug 21, 10:05 a.m. EDT): As anticipated, the futures are getting second wind, presumably to make a tradable high even closer to the 5648.00 target I flagged in the chat room earlier this week. See my Monday, 11:39 points for details and an illuminating chart.
Our favorite bull market bellwether is still on track for a rendezvous with 449.13, the 'd' target of the reverse pattern shown. Buyers didn't exactly shred the midpoint resistance (p=417.36), but they did exceed it by four points, then closed above it. That is sufficient for us to infer the stock is likely, if not quite certain, to achieve 'd'. A pullback first to x=401.47, however unlikely, would offer an excellent opportunity to get long 'mechanically', although I expect the stock to head straightforwardly to p2=433.24 when trading resumes Sunday evening.
With expectations of a rally into the low 80s at least, we should be prepared to bottom-fish this correction when it comes down to the green line (x=73.56). This is a 'mechanical' set-up, and it comes with the caveat that x is neither target, nor support, nor Hidden Pivot, just a place on charts where we set up 'mechanical' trades. This one looks like a very good bet, but it will require staging on the lesser charts, since the textbook stop-loss would otherwise be at 70.87, a tick beneath C. That's too much to risk on a conventional entry, so stay tuned to the chat room for alternatives. _______ UPDATE (Aug 19, 9:34 p.m.): The futures rallied 45 cents after bottoming at 73.48, affording us a small winner of around $920 on four contracts (see my 14:58 post in the chat room for details). They have relapsed this evening and are now rallying in their wonted, psychotic fashion after making a marginal new low. Step away as crude carves out a tortuous bottom. _______ UPDATE (Aug 23): Crude doesn't merit an update, since it's trading exactly where it was six months ago. This is notwithstanding the flatulent rumble emanating from the charts since then. It has been paradoxically easy to trade, but you'll have to nudge me proactively in the chat room for timely guidance. _______ UPDATE (Aug 31): Zzzzzzzzzzzzzzzzzzzzzzzzzzz.
