What a mess! Even so, the pattern shown in the chart meets our criteria for accuracy and reliability in subtle ways, so let's assume the cycle of hard-selling begun from 25.47 a month ago is headed down to at least D=21.18. In the meantime, we should be alert to shorting opportunities if last week's so-far weak bounce gets legs. A run-up to p=23.33 would trigger a relatively risky 'mechanical' short, stop 24.04, but there may easier ways to do it, so stay tuned to the chat room for timely guidance. ______ UPDATE (Aug 21, 9:29 a.m.): A subscriber reported shorting silver based on the above. My response n the chat room, for your guidance, was as follows: "My target missed the top of the nasty spike by 0.03, but I hadn't expected it to be reached so dramatically. Is your stop at 24.04, the number in the tout? That implies 72 cents of theoretical entry risk. However, you could have cut that to 11 cents using an rABC set-up that triggered at 23.25, with 23.15 as the threshold for partial-profit-taking (15m, a=23.07 on 8/17." D=22.93). _______ UPDATE (2:49 p.m.): The futures bottomed an inch from the 22.93 target I provided in the chat room, generating a profit of as much as $2,000 per contract for shorts from 34.33. Shorts covered near 22.93, then reversed and turned into long positions, could have made an additional $2,000 per contract, since the bounce took Sep Silver all the way back up to the intraday high. All the swings were gratuitous and orchestrated by thieves, but as I hope as has been demonstrated, such movement is perfectly predictable and easily tradeable.
I've drawn a bullish reverse pattern, but only to highlight a target failure that is bearish. GDXJ's decline since mid-July's peak at 39.70 'should have' turned from the pattern's 'D' target at 34.70. It did, but so feebly that a trader would need to have been nimble to extract even a small profit. The subsequent relapse took this symbol to marginal new lows, where buyers and sellers spent most of the week mucking around. This is sloppy price action, and although I am not going to write off the possibility of a resolution to the upside, my expectation is for lower prices in the weeks ahead. ______ UPDATE (Aug 16, 7:38 p.m.): This glue horse and its sleazy handlers have eyes for the 32.25 low recorded in March, and they will not rest until stop-losses below it have been triggered like land mines on the Ukrainian front. That price, by the way, is a major point 'C' low associated with a 45.56 rally target that was missed by $1.50 in April.
The midpoint Hidden Pivot support at 93.15 shown in the chart provided a so-far weak bounce to 94.19, but it's too early to tell whether the reversal is the start of something big. My hunch is that it is the start of something small and that a 'mechanical' short from x=95.26 will be a winner. That's assuming TLT gets there, which is somewhat optimistic considering the relentlessness of the selling.
[The following was sent out to clients in late July by my friend Doug Behnfield, a wealth manager and senior vice president at Morgan Stanley Wealth Management in Boulder, CO. Long-time followers of Rick's Picks will be familiar with Doug's work, since his thoughts have appeared here many times. I have always considered him not only one of the smartest investors I know, but also one of the smartest guys. I am grateful to him for allowing me to share the insightful report with you. RA] On July 12, the Bureau of Labor Statistics reported that the Consumer Price Index (CPI) for the 12 months ending in June came in at 3% inflation. This annualized inflation rate represents a drop from 9.1% in June of last year, which was the peak in this cycle. The interest rate on long-term bonds correlates very closely with CPI, so it is unusual that bond yields have not followed inflation down in a meaningful way so far. [Editor's note: At this point the report displayed a chart showing bond yields increasing into late October and then going sideways. However, just after the report went out in late July, yields exploded upward in a manner unforeseen herein. Here is a chart that shows this. If it has changed Doug's outloook, we will share his thoughts with you at a later date.] One contributing factor to this sideways action is that long-term bond yields also correlate very closely with the Fed’s interest rate policy and the Fed has continually raised the Fed Funds (overnight) Rate since inflation peaked last summer. In June 2022, the Fed was still at 1.5% on Fed Funds, but since then they have hiked rates by 4%. The Fed has also hiked rates by 2.25% since October, even as long bond rates
The simple picture shown is similar to the one accompanying the current AAPL tout, and I am confident it won't let us down. That means, for starters, that the correction begun from late July's 4634.50 high will come down to at least p=4436.00 before sellers ease up, perhaps only temporarily. The tradeable bounce I expect from p will provide an excellent opportunity to bottom-fish with a tight stop-loss, but if the bounce sputters out, that would be warning of more slippage to as low as D=4237.75. I broached this number earlier, and it would equate to an 8.5% correction from the top. The pattern also has the potential to deliver an epic 'mechanical' short, but I will pinpoint it for you behind closed doors if and when the opportunity develops.
Expect AAPL's correction to continue down to the red line at 172.24, at least. That's a major Hidden Pivot support of weekly-chart degree. If and when it is reached, the correction from July's all-time high at 198.23 would be about 13%%. Earlier, I predicted that pullbacks in this stock and some others in the institutionally beloved 'lunatic sector' would ultimately reach their respective 'D' targets roughly 27% below. I'm holding to that prediction for now but it could change depending on how bulls and bears fare when they duke it out at p=172.24. And they will. Bottom-fishing there can be attempted using a reverse pattern with a trigger interval of 2.90. Stay tuned to the chat room if you care, since I may be able to hone this guidance in real time as the stock gets closer. My confidence in the pattern to deliver everything we require is high. ______ UPDATE (Aug 18): A two-day selloff brought AAPL down to within an inch of the 172.24 target billboarded above. The subsequent, strong bounce hit 175.10, triggering the trade I'd recommended at 174.86. If you bought stock or used options to get aboard, please let me know so that I can determine whether to establish a tracking position. I don't expect the rally to get very far, so tight risk management could be crucial to booking a profit. _______ UPDATE (Aug 22, 5:56 p.m.): AAPL swam against the tide today, but I doubt the stock can keep it up for long. That's why I suggested covering at least half of any long positions held from 174.86. One subscriber reported booking a $2,600 profit on exiting his entire position, and so I will end my guidance here unless there are additional reports. A run-up to x=185.24 would tempt us with a juicy 'mechanical'
No change in my earlier forecast that October Gold would fall at least to D=1908.10 of the pattern shown. This ABCD is too obvious to yield a tradeable bounce precisely from the 'hidden' support, so we may need to let the rubes get stopped out once or twice before we attempt to bottom-fish there ourselves. Obviousness aside, the pattern is pretty 'textbook', and so a significant bounce would appear to be all but certain. A turbocharged one from no lower than 1921.00 or so would provide a technical rationale for getting 'mechanically' short at x=1983.40. However, somewhat more likely in my estimation is eventual slippage below 1908, presaging a test of spring's lows near 1865. ______ UPDATE (Aug 15, 5:35 p.m.): Reversing a relentless plunge, gold bounced sharply from less than a point of the 1908.10 target today. However, because the 1910.10 target has been more than two months in coming, we might have expected more from the rebound. Let's give it another day or two to develop, but trading should be with a moderately bullish bias in the meantime. Here's the chart. _______ UPDATE (Aug 16, 7:25 p.m.): The next stop on the way to hell is 1895.60, a Hidden Pivot support sufficiently obscure that we can safely assume we own it. Bottom-fish there with a tightly stopped reverse-pattern trigger, but be aware that if the futures relapse and the support gives way easily, the October contract will be headed down to at least 1878.00. I am suggesting a reverse-pattern entry because gold tends to be most heavily manipulated in the early going. (Note: I will switch to the December contract when I update on Sunday. The equivalent downside targets lie, respectively, at 1915.20 and 1897.90.)
The chart projects a correction to as low as 21.39 of the big bull move begun in March from 20.42. Since the initial downside penetration of p=23.43 earlier this month was not especially dramatic, however, we should be alert to a possibly significant upturn without D having been reached. There is a chance it began Friday, since the bounce from an intraday low began at a voodoo number that should have jumped out at advanced Pivoteers. If the futures relapse as the week begins, look here and in the chat room for an update that could be tradeable.
With gasoline prices in the East pushing well above $4, consumers could use some help from the 84.66 'midpoint Hidden Pivot resistance' shown in the chart. It held against Friday's surge, but it looks like a slender reed for beleaguered consumers to lean on. A decisive push past it would imply more upside to p2=94.88, at which point we may become nostalgic for $4 gas. A bright spot for investors is that because the stock market has come completely decoupled from reality, the crushing economic burden of higher energy prices has barely registered on Wall Street's dim, fevered brain. ______ UPDATE (Aug 18): The bounce into Friday's close looked menacing from the perspective of bears hoping the top a week ago at the 84.66 midpoint Hidden would endure. A decisive push past it would put the 94.88 'secondary' pivot mentioned above in play, and possibly even D=105.10. Even a run-up to the lower target would be ruinous for motorists already challenged by soaring gas prices.
I've featured a scary forecast for this vehicle in the latest Morning Line commentary, but the requisite plunge is not yet a done deal. That's because sellers have hesitated to crush the midpoint support of the pattern shown. It was touched for the first time twice in the last week or so and has begun to creak under the weight of selling, but we shouldn't dismiss the possibility of a rally-out-of-nowhere, since it is always darkest before the dawn. However, the bounce would have to exceed July 31's 'external' peak at 103.33 to generate a promising impulse leg. _______ UPDATE (Aug 13, 11:20 p.m.): Check out my post just now in the chat room. It contains potentially actionable advice using call options. ______ UPDATE (Aug 16, 7:44 p.m.): Stay close to the chat room if you care about this symbol, since that's where the buzz is. It looks like it's about to fall to at least 88.05, the secondary Hidden Pivot shown in the latest tout.
