A short squeeze on Silver in the London market has pushed quotes easily past a Hidden Pivot target at 50.955 that had seemed ambitious less than a week ago. This has put the December contract on course for additional gains up to D=55.185 over the near term. Judging from the way buyers fist-pumped through the midpoint 'hidden' resistance at 50.943, they are no worse than an 80% shot to achieve D sometime soon. In the somewhat unlikely event of a felicitous swoon over the next 3-5 days, belated buyers should position themselves with a 'mechanical' bid at x=48.820, stop 46.695. ______ UPDATE (Oct 14, 10:35 a.m.): The fresh tout I put out last night at 10:20 p.m. (see above), nailed a quick, easy profit of $10,600 per contract. This graph shows how December Silver swooned overnight to a low at 48.75 that lay within 0.14% of the 'mechanical' bid I'd suggested. This means you would have endured no more than $350 of adversity to capture a gain of $10,600 (or an additional $3,300, for a total of $14,200, if you held out for the actual, overnight high at 51.160 that occurred somewhat above the red line). The 55.185 rally target remains valid as a minimum upside objective for the next two weeks.
I've put MSFT at the top of the list because it is about to provide the clearest test of whether a bear market has in fact begun. No matter how bearish one's outlook is for the stock market following Friday's stunning reversal, MSFT would trigger an irresistible 'mechanical' buy signal if it touches the green line (x=506.06), as seems likely. That doesn't necessarily mean the implied bounce will achieve d=547.12, effectively reviving the bull market. More likely in my estimation is that a weak bounce will carries no higher than p=519.75, the midpoint Hidden Pivot. Whatever happens, the second most valuable company in the world cannot but reveal the health of the bull market, or lack thereof.
Sellers exceeded a compelling 'hidden' support at 6582 that I posted in the chat room on Friday, implying they will likely return in force this week. The reversal off a strong opening was unusually severe, even for a Freaky Friday, and I am therefore treating it as the possible start of a full-blown bear market. My reasons are detailed in the current commentary, but the grim technical implications are shown in the chart (inset). A 6.6% fall to at least p=6120.75 is indicated, but this is admittedly speculative, since the futures have not yet touched the green line (x=6466.50) to trigger a theoretical short. There is an alternative, minimum downside target at 6315.75 that we should monitor closely, but I have decided not to feature such half-baked scenarios because I believe Papa Bear has at last emerged from his lair after hibernating for 16 years. Incidentally, a voodoo number above 6300.00 will be worth bottom-fishing in any case, but since it is proprietary, I have posted it in the chat room. ______ UPDATE (Oct 13, 10:45 p.m.): Check out my 4:45 a.m. post in the chat room for guidance on getting long in this vehicle, and then shorting it at 6741.50. I'd suggest a small-pattern trigger (a.k.a. 'camouflage') for the latter trade. _______ UPDATE (Oct 15, 11:10 a.m. EDT): The trade triggered and was quickly stopped out for a $700 loss per contract. Although the pre-opening, overnight high at 6741.00 missed my Hidden Pivot target by just two ticks, it thereupon became a 'number of interest' when the high sat for an hour-and-a-half to be anxiously contemplated by traders ahead of the bell. The most important takeaway here: ES was a good short only if it was cushioned by profits made en route to the target. The odds of catching a
GDXJ's ballistic rally died midway between two middling targets at 104.25 and 106.84, respectively. A more important one lies at 111.59, and we are using it as a bull-market objective with the potential to stop buyers in their tracks. More immediately, you can play for a run-up to the 107.96 target shown in the inset. The pattern has yet to develop, since a 'buy' signal at the green line gave way to weakness on Friday that nearly stopped out the trade. We'll give bulls the benefit of the doubt for the moment nevertheless, implying p=103.21 can be used as a minimum upside objective when shares start to trade on Monday. If they fall on their face at the starting bell, slide 'C' down to the new low to create a fresh, usable pattern, even if it is beneath the current 'C' at 95.71 (10/2).
T-Bonds got a strong lift from Friday's panicky sell-off on Wall Street. TLT became a good bet to reach p=91.24, at least, but a decisive move through this Hidden Pivot, especially on first contact, would imply more upside to p2=92.63, and thence to as high as D=94.02 over the near term. Although the pattern is a conventional one with a 'C' low above 'A', it is sufficiently compelling to lend authority to the bullish case. Assuming D is achieved, look for stocks to continue lower, with hard selling in the institutionally driven lunatic sector (a.k.a. the 'Magnificent Seven') and in Bitcoin.
Although in recent years October has not lived up to its reputation for scaring the pants off investors, we should take Friday's punitive reversal seriously, since it could mark the start of a bear market that is arguably years overdue. Although we have grown accustomed to 'freaky' Fridays producing headline events now and then, there was something especially disconcerting about this latest episode. It was driven unmistakably by news that Trump had threatened to slap a 100% tariff on Chinese goods in retaliation for restrictions they placed on so-called rare-earth exports to the U.S. These minerals, while not actually rare, are essential to the production of powerful magnets that are used in electronic hardware, including components vital to the aerospace industry and the military. The U.S. was already focused on establishing alternative sources for rare earth minerals, but it will take time and money, since extracting 'rare earths' from dirt requires processing that is costly and complicated. Downplaying China's Threat In any event, Western factories and computers are not going to grind to a halt simply because of China's threat. And it is likely to be no more than that, since Trump has cards of his own to play, including access to advanced computer chips that China is presently unable to produce. The foregoing is all secondary to the matter of why U.S. stocks plunged on the news. The broad averages were up sharply in the early going, but by day's end the Dow had reversed by nearly 1200 points. A corresponding reversal took place in the institutionally-driven lunatic sector (aka the Magnificent Seven), wiping trillions of dollars of dubious 'wealth effect' lucre from the macro ledger. Clearly, this was an extreme overreaction to the news, since investors had grown used to Trump's frequent tariff shenanigans. Although the mainstream media
Hey, I'm only the messenger, but this bloated sack of horse manure is headed down to at least 91,358. That would represent a 28% plunge from the all-time high at 126,296 recorded less than a week ago. Although that's probably not enough to scare out the dolts who bid it up to those heights, just wait till they've involuntarily participated in the next leg down after the cryptos have partially recouped Friday's big losses. The dive promises to be a humdinger, one that causes supply to metastasize every time bitcoin tries to rally. Most immediately, you can get short 'mechanically' at 117,561, stop 127,000. There are no guarantees the bounce under way at this moment will get there, but if it does, the rally would become an opportune short sale. ______ UPDATE (Oct 14, 12:11 p.m. EDT): The little twerps and juvenile delinquents who occasionally move this hoax outside of bands determined by Saylor & Friends are evidently too chicken-hearted to push down through double support at, respectively, 109,013 (a 'd' target of more than middling significance) and 108,827 (a 'p' midpoint of major significance). Until they do, a resumption of weakness to d=91,358 will remain no better than a 50% shot. Basically, it will depend on whether the long bull market in stocks has ended, as I believe it has.
MSFT is in a messy, timid bull cycle that points to 547.12, about 6% above. I am tracking a long position from 506.06, since I'd suggested buying there 'mechanically' ahead of the pullback. (A separate long position from 493 that was initiated on my say-so is being tracked at GoldenMeadow.eu ) Further progress to 547.12 is hardly a done deal, as the stock has yet to decisively penetrate the midpoint resistance at 519.75. But bears look too tired to resist MSFT's inexorable upward drift, and so a move to the target must be regarded as likely. We may know more as the new week begins, since the E-Mini S&Ps ended the week with a moderate selloff from within a split hair of a rally target I'd drum-rolled at 6803.
I'm still in San Francisco, avoiding the withering heat of Florida's monsoon season. I am also taking a break from my regular commentaries, since writing about the greed and stupidity that have propped up the stock market and the economy for the last decade was growing boring and repetitive. Instead, I've featured paintings by friends, most recently Geoffrey Leckie and Deborah Oropallo. The photograph above was taken by Victor Riess, whom I met two decades ago in Colorado when he took my trading course. An avid bicyclist and musician, Victor is also the best photographer I know. He took the picture above near his home in Lancaster, PA. It is a wintry Pennsylvania scene that vividly recalls landscapes painted by the Dutch master Pieter Bruegel in the mid-1500s at the height of his powers. All of Victor's photos are for sale, including the picture of the Amish girl featured here last week. The work above, a signed, original print, is priced at $32,000. It is approximately 20" x 30". Considering that a collector paid $68,750 for this appalling Peter Hujar photo of a dead cow at Christie's a few years ago, Victor's beautiful landscape, which makes the heart sing, is a great bargain for $32k. For further details, email me at Rick's Picks.
The 53.05 target shown is the highest that can be projected for Silver on a long-term chart. It is unlikely to work precisely, since the chart is a blend of different contract months, and because the pattern itself will be too obvious to too many. Even so, the target is sufficiently compelling to suggest the Comex price will either top somewhere near there, or stall on the way to still greater heights. We can use 53.05 as a minimum objective in any event, since that stab through p2, the secondary pivot, left little doubt about the feistiness of silver bulls. ______ UPDATE (Oct 3): Assuming today's top at 48.325 endures for a day or two, try bottom-fishing with a tightly stopped bid at 47.175, a minor midpoint Hidden Pivot support. An easy breach would portend more slippage to as low as 46.025. ________ UPDATE (Oct 6, 12:08 p.m. EDT): The pullback got no lower than 47.685 before silver took off again. The closest Hidden Pivot 'D target you can use for a minimum objective for the next couple of days is 49.835.
