The Dollar Index rallied just enough last week to trigger a 'mechanical' short at the green line (x=102.80). The trade is predicated on further slippage to at least D=98.71, the target of a bearish pattern measured from November 2022. Just to get on record with this, there is room for even more weakness down to as low as 93.55. That's a Hidden Pivot support derived from a higher point 'A', the 113.15 peak recorded a couple weeks earlier in November 2022.
Inflation is being crushed from the system by vastly larger forces of deflation that have been lurking for decades. Although we might have expected the trillions in funny money that were force-fed into the U.S. economy during the covid era to have a longer-lasting effect on prices, inflation never had much of a chance. With real and nominal mortgage costs rising, home prices have begun to fall sharply, along with rents, used-car prices, gasoline and even some basic grocery items such as milk and eggs. Real estate is the 800-pound gorilla, though, because it is the chief source of loans that are destined to implode. This is particularly ominous for the commercial sector, since even the sky-high rents that still obtain in New York City, for one, are proving insufficient to service borrowing costs. Residential real estate will not be far behind, however. The median price for existing homes fell 3.1% in May, to a still-pumped $396,100, from a year earlier. We have some catching up to do with Germany, though, where even higher mortgage rates and official recession have caused home values to fall by a record 6.8% year-over-year. The 800-pound gorilla will ultimately be dwarfed by King Kong himself as the biggest cities in America spiral toward economic doom. This will be a key feature of the Second Great Depression, which awaits only an end to the nutty rally on Wall Street to commence. A very run-down San Francisco seems likely to lead the pack, but don't expect New York, Chicago, L.A. et al. to fare much better over the long run. The cities will collapse economically on three levels: above ground (i.e., skyscrapers); at ground level (virtually all amenities, from hot dog carts to concert halls); and below ground (subways, with fixed costs that include $90,000 retirement
The September contract has signaled an all but certain rally to the 4576.25 target shown in the chart (see inset). The pattern is unorthodox but meets our all of our criteria for usability. Most immediately, it would enable a compelling 'mechanical' buy following a corrective swoon to p=4396.13 (for which a 4336.00 stop-loss would apply). A deeper retracement to the green line (x=4306.06) would be even more enticing as a place to bottom-fish. One or both of these numbers could conceivably be reached, since, as I've detailed elsewhere on this page, two bellwether stocks look ripe for punitive corrections.
AAPL appears very likely to achieve the 191.73 target shown in the chart (inset), since the stock has spent two weeks above the Hidden Pivot midpoint (p=184.53) after impaling it on June 15 with an opening-bar gap. A swooning retracement to the green line (x=180.92) would trigger a 'mechanical' buy that you should not pass up if you trade the stock. Nudge me in the chat room when appropriate and I may be able to craft a risk-averse trigger for playing the bounce with call options.
What looked like the start of a promising rally in early May turns out to have been just a drum-roll for yet another head-fake. The uptrend was mildly impulsive on the lesser charts at first, but the end result was a 'mechanical' shorting opportunity at the green line (x=104.09). This implies the Dollar Index could fall to D=98.71 before it finds a foothold. This should be at least slightly bullish for bullion, but we've seen that the effect is often so feeble as to be negligible.
Last week's Whoopee Cushion bounce came just in time to rescue the faintly bullish pattern on the rightmost side of the chart (inset). If the subsequent selloff resumes this week, causing TLT to land on the green line (x=101.69) with a thud, that would trigger a moderately attractive 'mechanical' buy. It would not be predicated on a run-up to the 'D target, however, but rather on a one-level ride to p that could produce a small gain with good odds nonetheless, even with call options.
When will the rampaging bull run out of steam? A good question, considering how Wall Street has been flouting a slew of good reasons for the broad averages to be at multiyear lows rather than revving up for a shot at new record highs. Two destructive juggernauts in particular are bearing down on the economy with such force that only investors in a far-gone state of madness could contrive to ignore them. For one, an epic collapse in commercial real estate is well under way that will flatten the economy for decades. And for two, the most extreme yield-curve inversion on record is predicting a commensurately extreme recession. Under the circumstances, it would seem logical for traders to short into the stock market's show of bravado. So far, however, this strategy has brought only pain, along with the sight of stubborn bears being carried out in body bags. "This is starting to get out of hand," remarked a bruised and battered Rick's Picks subscriber in the chat room the other day. "What's the latest [Hidden Pivot] for a topping call. At least an intermediate top?" You can access my precisely detailed response by clicking here, but the bottom line is this: Two bellwether stocks have at least somewhat higher to go before they, and presumably the entire stock market, are ready to keel over from exhaustion. A Setback, then Higher Specifically, MSFT has a 5% rally ahead of it before it reaches a potentially important top, and AAPL an additional 3.6%. These figures are based on Friday's close and differ slightly from the ones given in the recording, a tech analysis session that includes some nifty tricks you can try yourself with put and call options. The precise price targets for the two stocks lie, respectively, at 360.02 and 191.73.
The stock market is in the grip of mass insanity, blithely ignoring warning signs of recession and the certain collapse of commercial real estate. How high could it go? To stretch your imagination, I've reproduced the weekly chart to show how 6136 is possible -- 1788 points (41%) above the current 4348. This is not to suggest that a bear market collapse from last week's high is not possible; it could indeed happen. But it seems unlikely, given that the 27% drop from Jan 2022's 4808 peak couldn't even generate an impulse leg. That would have required a further fall of 304 points beneath the 3502 low recorded in October. Under the circumstances, the rally since then seems likely to reach p=4819 at a minimum. Look for a temporary peak there that is tradeable, but don't count on it to work precisely, since the chart is a composite of ABC coordinates from different contract months.
The extravagant, 253.96 target clearly visible in the weekly chart (inset) corresponds to one that I've proffered this week for the E-Mini S&Ps. First things first, though, since AAPL will need to demolish p=189.07 to be rated an odds-on bet to achieve so ambitious a 'D' objective. As an added precaution, and to deny Mr. Market even a small chance of fooling us, we should keep in mind this less ambitious chart, with a 204.01 target extrapolated from a lesser point 'A' low drawn. We need consider this number only if and when 189.07 is exceeded. The chart also allows for the possibility of a correction off last week's high -- or conceivably even the start of a bear market, since a stall has occurred at the secondary pivot (p2), a notoriously difficult impediment for bulls.
Yet another week of tedious slop produced no change in my bullish outlook for the intermediate- and long-term. For now, August Gold's correction is targeted on 1903.90, a 3.5% drop from last week's settlement price. Neither bears nor bulls have shown more than slight interest in bullion since early March, and both will likely be bored out of their minds before the bullish trend resumes in earnest. The first hint of this would come on a pop above 2006.20, the 'C' high of the pattern shown. Otherwise, expect the weak, downward dirge to continue. ______ UPDATE (Jun 16,): The presumably meaningless rally that ended the week triggered the fourth 'mechanical' short since May 30. The first three produced a theoretical profit of $10,000 apiece on four contracts. Here's a fresh chart that shows gold's pooch-screwing price action. _______ UPDATE (June 20, 1:58 p.m.): With gold in its wonted gold-is-garbage mode, the 1903.90 downside target is looking increasingly likely to be reached -- and precisely, given the umpteen bounces the futures have taken from p=1956.10. An arguably even more appealing pattern projecting to 1892.10 will be in play if 1903.90 is exceeded by more than $1.00 or so. I say 'more appealing' because of the pert little alternative one-off 'A' at 2087 recorded on May 4.
