I've displayed a weekly chart because it makes the turgid price action of the last several weeks seem not so much depressing as tedious. Nasty, gratuitous swoons in a bull market that has yet to attract an institutional following are inevitable, but we should always keep in mind that bears do not have the power or the moxie to sustain damage. The June contract could come all the way down to x=181.60, in fact, and still look fine. That would trigger a succulent 'mechanical' buy, even through the implied $128 fall from here would likely ratchet up despair amongst gold's fair-weather supporters.
Silver has spent the last two weeks creating disappointment, since all the sturm und drang at what might have been a consolidation level turned out to have been distribution. Still more dispiriting was bulls' failure to take on the 27.29 high from March 11. The flaccid performance suggests the current retracement will have farther to go, although I wouldn't lay odds that it will exceed the 'external' low at 20.12 recorded on March 10, let alone C=17.90. The first bottom-fishing opportunity we might see could come at 21.46. That is the D' target on the weekly chart of the reverse pattern using A=25.10 from Feb 3.
I must confess that I've been struggling to keep up my interest in crude, since it is hostage to geopolitical forces that taken together do not add up to anything whose meaning can be distilled, at least not for predictive purposes. There is scant interest in the chat room for trading this vehicle, although sometimes a subscriber will mention having used an ETF to leverage my targets. There's one at 56.90 that is painful to watch and serves little practical purpose at the moment. Two 'mechanical' shorts performed well, but it is only on the weekly chart where the pain and sweat required to make money on these swings is somewhat obscured. I'll keep it on the list because oil is the most important commodity of them all, but you'll need to nudge me if you have a trading idea you'd like vetted.
Microsoft's bullish rampage last week added to already strong evidence that the stock market is headed to new records highs. The shares of the software leviathan's shares not only jackhammered through granite resistance in the form of the midpoint 'Hidden Pivot' shown in the chart, they ended the week decisively above it. This technical telltale is almost never wrong, as Rick's Picks subscribers could attest. When a stock fist-pumps through the midpoint 'Hidden Pivot' and then stays above it for even a short while, the rally is all but certain to reach the 'D' target -- in this case 430.58. That would equate to a 30% rally from current levels, putting MSFT 80 points above the old all-time high at 349. If the Dow Industrials were to achieve a relatively modest gain of 20% over the same period, they would be trading just shy of 40,000 -- substantially above the record 36,952 achieved in the early days of 2022. Previously, I wrote that similar wilding sprees in Chipotle and AAPL were pointing to the same outcome: new all-time highs for the broad averages. With a third world-beater joining the list, an enticing bet on new all-time highs has become even juicier. This is despite the fact that the radically inverted yield curve the financial system just weathered has never been wrong in predicting a recession. Factor in a collapse in commercial real estate that appears inevitable, as well as a wave of bank failures that even Janet Yellen is expecting, and it would seem that stocks are facing a perfect storm of deflationary forces. So how come your editor, a hard-core bear's bear, thinks stocks are just now lifting from the launching pad? Very simply, because the market is a rabid beast, inured to all logic, common sense and caution.
The futures ended the week a hair shy of the 4244.00 'internal peak' recorded on February 3. Hold the applause if buyers should surpass it this week, however, since the 4382.75 peak from August 19 is the one that matters. A rally exceeding it would generate a bullish impulse leg of weekly-chart degree, putting in jeopardy the hopes and dreams of those who think an old-fashioned economic depression would be just the thing to asphyxiate the trivial concerns of wokeness, tame rampant paganism in America, rebuke a hopelessly corrupt political system and provide a reality check for an economic system that runs on debt and helium. Stay tuned to the Trading Room for white-hot trading tips while we're waiting. _____ UPDATE (May 24, 8:54 p.m.): The 'white-hot tip' mentioned above popped up serendipitously during this morning's tutorial session for advanced Pivoteers. It helped us fine-tune a textbook 'mechanical' buy after the futures finished mau-mauing bulls with what we will assume for now was a gratuitous dive. The rally target is the 4287.75 D pivot of this pattern, but we'll sit back for now and let bulls prove their case. ______ UPDATE (May 25, 9:59 a.m.): The selloff that has caused last night's short-squeeze to detumesce is not going anywhere, since the peak of the overnight rally exceeded yesterday's high by two ticks. That makes it impulsive, so expect a rebound. Also, I have corrected the chart accompanying the previous update.
The rally of the last two weeks has gotten past four small 'external' peaks without taking a breather, so this could be the start of a sustained move. There hasn't been one since earlier this year, but this one looks capable of reaching a minimum 105.85. That's the 'D' target of a reverse pattern begun from 100.82 on February 2. As always, an easy move through a D Hidden Pivot would suggest bulls are not yet finished. Potential thereupon would be to 110.95 (daily chart, A=104.64 on August 10). Gold bulls should take note, since an extended rally in the dollar would put downward pressure on bullion.
Last week's waft maxed out the pattern shown, nearly touching a potentially important D target at 176.52. The actual high at 176.39 fell just 13 cents shy. We bought some 2 June 165 puts at or very near the low of the day just in case, but don't get your hopes too high. Because the pattern has taken more than four months to play out, we might expect a pullback of at least a few weeks' duration to give buyers a rest. However, they will be tempted in any event to push past the resistance in order to to take on three formidable 'external' peaks recorded, respectively, at 176.15, 179.81, and 182.94, the all-time high notched in January 2022. Anything above that would still beckon caution, since there is a Hidden Pivot resistance to overcome at 184.96 with some stopping power. What a head-fake that would be! The stock will be easily shortable if it moves into the midst of the prior peaks listed above. Since subscribers seem not to trade the stock, you'll need to nudge me in the chat room for timely guidance. Meanwhile, offer half of the puts to close for twice what you paid for them. ______ |UPDATE (May 23, 6:28 p.m.): The puts doubled to 0.57 today as the stock's downtrend lengthened, so you should have cashed out half of the position to leave you with no skin in the game. There was a raucous cavalcade of buyers in the chat room on Friday when the 0.28 bid I'd advised caught the lowest price ever paid for the 2 June 165 puts. Today, however, only one subscriber seemed to have noticed that the puts were on the move. I suggested keeping 25% of the position for a bigger win than you might currently imagine is
GDXJ looks like it will continue to grope its way lower to reflect softening quotes for bullion futures. If the bloodletting should reach the green line (x=35.58), however, it would trigger a 'mechanical' buy that we should not pass up. Corrections that traverse Hidden Levels from above p2 down to x often yield profitable 'mechanical' entries at the low, even if the anticipated bounce does not always achieve the D target. If bulls were going to find traction somewhere above x, it would have happened with last Thursday's dip to D=37.73 of a corrective pattern begun on April 13 from 43.89. Alas, the support was breached, suggesting there is more downside to endure.
The rally target at 115.32 has been on the marquee for so long that I'd taken a relaxed view of its likelihood of being achieved. However, last week's ratcheting fall threatened to kill the bullish project with a dip beneath the 'c' low at 98.88 that would invalidate the rally pattern. The chart would still be bullish overall, but more tenuously so, since structural support from lows recorded last November near 92 would beckon a test. In the meantime, expect TLT to continue working its way down to 98.88, if only to further discourage the few bond bulls out there.
Maybe. Yeah, right. A headline here just two weeks ago implied that stocks were about to go bananas: Why a Permabear Is Certain We're Going Much Higher. Hubris aside, this was based on the very bullish chart of just one stock, Chipotle (CMG). It had just crossed the $2,000 threshold and appeared -- still appears -- bound for a rendezvous with a Hidden Pivot target at $2,739 that lies $600 above Friday's close. Some might question the logic of using a projection for a single stock to make a prediction about the stock market as a whole. I am confident that my method, more intuitive than factual, will prove superior to the benighted, self-serving blather coming from the likes of Jim Cramer, various talking heads on the financial news shows, and from Wall Street shills who get paid by the word to tell us why we should be bullish. These mongers of gladness will always try to connect the stock market's performance with supposedly objective facts tied to the economy and corporate earnings. Unfortunately, and has been demonstrated time and again, this is like trying to predict the behavior of a sea snake by analyzing the contents of the ocean. And in case you haven't noticed, the "facts" that the talking heads cite unrelentingly are used almost solely for one purpose: to justify buying stocks at any price, no matter how grim the economic outlook. (And it is indeed grim, with little doubt that a collapse in commercial real estate is imminent, accompanied by a potentially catastrophic wave of bank failures.) Vaporous 'Wealth' None of which argues that stocks cannot continue to climb heedlessly. It's not as though it takes bullish buying or even real money to make this happen. To the contrary, most of the big rallies occur on
