The bullish pattern shown, with a 4573.25 rally target, will likely control price movement as the new week begins . It has already produced a profitable 'mechanical' buy on the pullback to the green line (x=4405.81), and we could see an equally opportune short materialize when the target is reached. This looks very likely, given the way buyers stabbed through p=4461.63 at the start of last week. The move accounted for most of the week's gains, illustrating yet again how volumeless gaps and short-covering are responsible for most of the bull market's orchestrated rise. Since the short would require a 30-point trigger interval, we'll look for our opportunity on the lesser charts when the time comes. For now, though, your bias should be bullish and allow for the possibility of a drop to p=4461.63 to trigger a 'mechanical' buy, stop 4424.25. The earlier in the week this occurs, if it does, the more attractive the trade. ______ UPDATE (Sep 6, 6:30 p.m.): We'll need to remind ourselves when ES plummets to the green line (x=4405.81), leaving many traders terror-stricken, that we are being gifted with a fairly attractive 'mechanical' buying opportunity. It won't be a back-up-the-truck event, since the relatively long B-C leg will have dissipated some of the bullish energy of the nicely impulsive A-B. But I do expect a one-level gain at least, implying a bounce to the red line (p=4461.63). A trend failure at that point could be fatal, so we'll be on our guard.
The bullish pattern we used last week to leverage a 1995.00 rally target is still viable, even if there haven't been any pullbacks sufficient to trigger a 'mechanical' buy on the daily chart. That could still occur on a swoon to the green line (x=1934.00), or to the red line, where a somewhat riskier trade would be signaled. More upside to the 1995.00 target is not in doubt, however, given the way the futures punched through p=1954.30 last Monday. We'll look at other ways to get aboard, so stay tuned to the chat room if you care.
Last week's top occurred an inch from the 25.34 target of a reverse pattern stretching back to July, so I've lowered its point A to June's bottom to produce a new, somewhat higher rally target at 25.74. A further drop to p=24.16, or to x=23.37 could cue up a 'mechanical' buying opportunity, although the latter would be somewhat less risky. The stop-loss for a bid placed at the higher level would be at 23.63, but check for timely guidance in the chat room, since we may be able to cut risk significantly. The predicted move to at least D=25.74 comes with high confidence, given the easy penetration of p=24.16 on the way up. _______ UPDATE (Sep 6, 6:41 p.m.): Now that the futures have come down to the green line (x=23.27), you can use a trigger interval of 28 cents to get long. That implies entry risk of about $1400 per contract, so the trade is advised only for subscribers who can locate the trigger pattern. Based on Wednesday's low at 23.31, the buy signal would come at 23.595, with a partial- profit-taking exit at p=23.875.
Although the futures finished the week with no net gain, price action was encouraging relative to the 38.28 rally target flagged here last week. The pattern could be setting up for an enticing 'mechanical' buy at the green line (x=34.30), but we'll need to be alert to other opportunities if the pullback doesn't go that far. I'll mention an even higher target at 38.73 if the one given above is penetrated decisively, especially the first time it's hit. It is derived from sliding the point A low of the reverse pattern down to June 29's 33.95 bottom. ______ UPDATE (Sep 6, 6:51 p.m.): This one is for advanced Pivoteers only, since GDXJ looks like hell. To bottom-fish, use a reverse-pattern trigger on the hourly chart, where a=35.71 on 8/31.
Talk of production cuts by OPEC and Russia sent crude quotes screaming last week toward the 87.40 target shown. It is all but certain to be achieved, given the easy with which buyers drove the future through the 82.51 midpoint HP resistance. If it's exceeded, the new target would be at 88.14. Considering that soaring pump prices are already threatening to choke off a U.S. economy already headed into certain recession, the energy producers' actions could be construed as hostile. The rally will make a juicy short at some point because lasting rallies are driven by global increases in demand, not by reductions in supply in a punk world economy. _______ UPDATE (Sep 5, 3:20 p.m.): No one mentioned it in the chat room, but the October contract topped today 7 cents from the 88.14 target boldfaced above. The joke was on me, though, since the actual target would have been 88.11 -- four cents from my target --if I had used the correct point 'C' low. The subsequent sharp pullback could have been worth as much as $1600 per contract, and virtually any reverse-trigger in any time frame would have worked with no problems. _______ UPDATE (Sep 6, 6:55 p.m.): Anyone paying attention?
I let it all hang out in the interview I did Friday with USAWatchdog's Greg Hunter. Do I actually believe the U.S. economy is headed into a condition of barter? Yes, I do. It will be that bad. And global. Americans in particular will face a long period of severe hardship when these boom times end. That's because the USA is where credit excesses and wealth-effect hubris have been at their most visible and disconcerting. Presumably, the cataclysm required to wreck the banking system would occur in the late stages of a bear market that has always been inevitable. I don't mean to imply that the damage would necessarily take a long time to complete, however. Indeed, it is likely to happen with shocking speed. Imagine it as the collapse of a financial black hole, powered by the implosion of more than $2 quadrillion of derivatives backed chiefly by gaseous vapor. When the initial rumbling is felt, portfolio managers, including sovereign funds and the biggest investment firms in the world, will urge investors to keep their cool. Some will, at least for a short while. But mounting waves of redemptions will eventually force BlackRock, Fidelity, State Street et al. to dump the shares of clients desperate to raise cash in order to meet margin calls or worse. What Is Your 'Plan C'? Who will the buyers be in this avalanche? That is a question for which there can be no comforting answer. In the meantime, we should be thinking through what my colleague Charles Hugh Smith refers to as 'Plan C'. This doesn't mean hunkering down in suburban cul-de-sacs, hoping for the best. Rather, it might require moving to a town or locale with sufficient human and material resources to reduce dependency on distant providers of food, water and energy.
The dollar blew past the 104.03 'D' target of a minor pattern we were watching on the hourly chart, so I've deployed a bigger one with a midpoint Hidden Pivot resistance at 104.65 that looks likely to show more stopping power. It will have the help of an 'external peak a nickel above that was recorded on May 31, but if both fail to contain the rally, the Matterhorn high at 105.88 on March 8 that I also mentioned here will have a chance. My gut feeling is that a major breakout is imminent. If so, the deflationary implications of a waxing dollar would make it even harder for the quacks who run the central bank to continue tightening.
Bears gave it their all last week but couldn't close this gas-bag beneath either the secondary Hidden Pivot support at 4336.94 or even the structurally supportive low at 4368.50 recorded on June 26. The latter is considered crucial by some gurus, but it could just as easily become a springboard to higher prices if it stops out bulls on a theatrical feint lower. The downside 'D' target at 4237.75 remains technically in play nonetheless, and a run-up to x=4535.31 should be viewed as an opportunity to get short 'mechanically'. The futures are likely to remain easily tradeable in any event, so stay tuned to the chat room for real-time guidance. _______ UPDATE (Aug 28, 6:21 p.m.): Forty-five minutes before the opening, I posted this chart, with a 4478.50 target. The futures spent the entire day between p and p2 screwing the pooch, but the target remains viable as a minimum upside objective. _______ UPDATE (Aug 29, 9:06 p.m.): Today's wilding spree pushed the futures to within inches of a tempting 'mechanical' short at the green line (x=4535). The best such set-ups are supposed to look and feel scary, and this one surely qualifies. I'll recommend paper-trading it, but FYI, the textbook trigger interval once x is hit would be 30.00 points, implying initial theoretical risk of $1500 per contract. _______ UPDATE (Aug 31, 8:43 p.m.): Buyers looked so punk that I've lowered the A-B pairing a notch to produce a less ambitious target at 4579.00. First let's see if they can convert the attractive 'mechanical' buy triggered by the drop to the green line (4516.94) into a trading profit. That would take a run-up to at least p=4537.63. _______ UPDATE (Sep 1, 8:41 a.m.): And so they did, impaling p=4537.63 ahead of the opening with sufficient force to suggest that the D target at
I've shrunk the picture somewhat with a truncated a-b leg that projects a tradeable low at 164.90, well above the 146.25 target presented here last week. However, if AAPL should eventually relapse and close below last week's 171.96 low for two consecutive days, it would shorten the odds that the more bearish target will be reached. In the meantime, the best opportunity I could foresee for the next two weeks would be 'mechanically' shorting a run-up to x=189.90. Otherwise, AAPL still looks like a good bet to fall to at least 164.90 eventually, so our mid-term trading bias should remain bearish.
December Gold's failure last week to reach an 'easy' midpoint Hidden Pivot at 1954.30 seems like weakness, but I hesitate to draw so obvious a conclusion about a vehicle that likes to surprise us at the turns as much as this one. My bias remains mildly negative, however, and that implies the futures will at least feint beneath the 1913.60 point 'c' low of the reverse pattern shown. That would certainly be tradeable for bottom-fishing, but we'll let price action determine our next move. At the closing bell on Friday, bears remained in charge despite a sharp rally from a mid-morning low. _______ UPDATE (Aug 28, 3:44 pm. EDT): Just posted in the chat room: "I can't promise you that last week's low will prove to be the start of a major bull leg, Sparty. But I'm confident this bullish pattern, with a 1995.00 rally target, will make you money regardless -- and it could also clarify the outlook. Today's high occurred a single tick from p, validating the pattern. It has also set up an appealing 'mechanical' buy if Dec Gold should pull back to x=1934.00 (stop 1913.50). Click here to call up the chart.
