Price movement in this vehicle, a proxy for the biggest, deepest commodity market in the world, is so squirrelly that the chart, stripped of its right-hand axis, could be mistaken for that of a Vancouver penny stock. Even so, there is no trouble discerning the 98.72 rally target, nor in sticking with it through the inevitable feints, swoons, kamikaze dives and bottle-rocket rallies. The target is a presumptive weigh-station enroute to the $117 target of a bigger pattern that was the subject of a recent commentary.
The chart journeys back to 2021 to capture the weight and relentlessness of the downtrend, a full-blown bear market that has cut the price of this vehicle by 53% since its covid-era peak in March 2020. Over that time, interest rates on the long bond went from 0.8% to 5.05%, a so-far high achieved two weeks ago. Was that the top? I doubt it and still think TLT will fall to the 80.84 target before it can turn around. To even hint of a better outcome, the current rally would need to exceed 89.49, an 'external' peak recorded Sep 29 on the way down.
Finally, a rally in gold that looks capable of leaving the $2000 barrier in the dust! This one is being pushed not only by the threat of escalated conflict in the Middle East, but by the dawning realization that a strong dollar and rising interest rates are about to trigger a crisis for the world's central banks. Europe will be even more vulnerable than the U.S., since it cannot loosen credit as long as the Fed is tightening or even just vamping. The ECB will also have to deal with trillions in euroloans it made at subzero rates to give Europe's dying economy the appearance of solvency. Pegging the currency to gold is a logical way to keep the euro from collapsing while Frankfurt's best and brightest cobble together a plan. But hardening their currency so that it can compete with the dollar in the meantime will be enormously costly -- and deflationary, since it will increase not only the cost of borrowing, but the cost of servicing loans already on the books. Factor in the prospect of soaring oil prices and you can see what a mess the world is in. A commentary here three weeks ago featured a chart projecting a rise to $117 a barrel. This was before war broke out in the Middle East, but a surge of that magnitude or worse now seems likely if Iran joins the conflict. The Old AAPL Trick Recall that after the war erupted on Saturday, October 7, with an assault on Israel by Hamas, the markets seemed relatively subdued when trading resumed Sunday night. We can attribute this seemingly absurd behavior to the deft touch of the dirtballs who manipulate stocks, bonds and commodity prices for a living. They are very smart guys, especially in dire circumstances. And even
DaBoyz goosed stocks on Friday as investors took a day off from pondering the darkening implications of high interest rates. Bad news can sometimes take a back seat to the technical forces that drive shares willy-nilly, and this was one of those days. It did not alter the likelihood that the futures will eventually fall to the 3956.25 target shown once investors return to their senses. If Friday's fake rally hits x=4503.00, that would trigger a 'mechanical' short, so stay tuned to the chat room and/or email 'Notification' if you'd like actionable guidance in real time. _______ UPDATE (Oct 12, 8:30 p.m.): The short-squeeze countertrend in ES may have run its course with today's bull-trap high on the opening bar.
AAPL's handlers milked Friday's cluelessness for all it was worth, which turned out to be not much. The rally got past the first of three tightly spaced 'external' peaks going back to early September, meaning the move is not yet impulsive on the daily chart. A print at 180.31 would do the trick, but we should remain skeptical until such time as that happens. If the rally hits x-183.67, that would trigger a 'mechanical's short, stop 189.99, but we'll cross that bridge when we get to it. _______ UPDATE (Oct 12, 8:42 p.m.): If this vicious short squeeze hits x=183.67 tomorrow it will likely be the rally's last gasp, and we'll want to short it. Stay tuned to the chat room and be prepared for guidance via email toward day's end, since getting a good price on put options could be tricky.
Friday's rally was impulsive on the hourly chart and the best we've seen in a week. However, if bulls meant business, they would have taken out the 1849.30 peak recorded on October 3 to complete a hat-trick of 'priors'. Instead, they stopped a hair short of it, presumably too out-of-breath for a final-hour sprint to the finish line. We should give them the benefit of the doubt nonetheless, since the shallow correction off the intraday high suggests that at least somewhat higher prices are coming. My advice is to keep your expectations low until we've seen how the rally interacts with a couple of minor Hidden Pivot resistances. _______ UPDATE (Oct 12, 8:55 p.m.): A sharp rally reversed just as sharply this morning when the regular session began, but not before buyers had pushed the futures above some external peaks recorded at the end of September. This generated a bullish impulse leg on the hourly chart, shortening the odds of another leg up once the correction has run its course.
Silver did some agonized basing last week, all of it beneath a Hidden Pivot 'D' support at 21.38. Too late and too deep to save the day? We'll give the rally a week to develop and the temporary benefit of the doubt, but it would need to push above Sep 29's spike high at 23.80 to even hint that bulls may have regained the momentum of 2020. A monthly close above 26.67 would likely clinch it, however, since that's a key 'midpoint resistance on the weekly chart (A=11.640 in March 2020.)
The monthly chart offers a sobering perspective on what it would take to put GDXJ back on the bullish track it rode to $66 in 2020. This gold vehicle has been mucking around in no man's land ever since it tripped a theoretical buy signal at x=37.41 in 2014. The 49.02 midpoint Hidden Pivot will be a crucial threshold, but it lies 54% above, so there's no point in thinking about it now. A more realistic number is 33.79, a tick above a small but technically significant look-to-the-left 'external' peak recorded on September 25.
The chart shown in the inset is too clear and compelling to suggest TLT will somehow avoid falling all the way to the 80.84 target. Yes, important turns have been known to occur midway between p2 and D, especially in too-obvious patterns that have attracted a large following. But the impressive weight of the downtrend over the last two months would seem to argue against a turn occurring without bulls having done their full penance. Look for more slippage in October, but be ready to back up the truck to buy 'em with a tight stop-loss if and when the target is achieved.
The last push wasn't strong enough to get the futures to the 98.72 target (a presumptive weigh-station enroute to the $117 target of a larger pattern featured in last week's commentary). However, the thrust in early September that impaled a midpoint resistance at 81.42 was sufficiently powerful to suggest November crude will head up to the target once this correction has run its course. To get a precise handle on trend strength, I'll suggest tracking a red-line 'mechanical' buy at 81.42 that would take a 75.65 stop-loss. If the trade makes (hypothetical) money with a move to at least p2, it would shorten the odds of a further move to D=98.72. If not, I'll need to adjust the odds for a blowoff to $117.
