We've been using 4.82% as a minimum upside projection, but it's time to shift the target to the 5.09% Hidden Pivot shown in the chart (see inset). The erratic ascent of long-term rates has been making headlines lately, but Rick's Picks subscribers have been expecting them to hit 5% for nearly a year. The crazed bull market has acted as though it doesn't care, but it soon will—or rather, must—demonstrating its concern with a stunning decline. Nothing spells big trouble for the U.S. economy like 7% mortgage rates that coincide with the highest home prices in history. The Ten-Year Note hasn't been at 5% since the Great Financial Crash of 2008-09. Although the crash itself caused rates to recede quickly to 4%, we may not be so "lucky" this time. If you haven't done so already, time is growing short to secure your assets—and your household—against a catastrophic event that will rebuke financial excesses that have been piling up over decades.
Crude has pulled back sharply three times since its moon shot to 120 last March. The first two times, the subsequent rallies died precisely at their respective Hidden Pivot midpoints. If the third pullback to early July's 67.04 low produces the same result, which is what I expect, the current rally will sputter out at exactly 99.34, a Hidden Pivot midpoint just like the others. The only other scenario worth pondering at the moment would be for buyers to rip through 99.34 with such ferocity as to practically guarantee more upside to the 131.63 target. It's possible, but only if something truly horrendous occurs to curtail the global supply of oil. Take the odds on that outcome only if you can get at least 10-to-1. Finally, if the uptrend exceeds p=99.34 without impaling it, that could mean there will be yet another leg up following a deep retracement, possibly into the 50s. ______ UPDATE (Jul 27, 12:30 p.m.): Oh, yeah, right, a fourth scenario --and who could not have seen it coming? There is word tonight of a 'pause' in U.S. air strikes, and of new 'talks' in Oman. Oil quotes have responded with a 7% drop to 83.10. Don't get your hopes too high for 'peace,' though, since the chart says prices for the September contract will fall no lower than 82.11. It is only if they crush that Hidden Pivot support, implying more downside to as low as 70.72, that you should believe the news is anything more than the usual Sunday night spin, calculated to slow the relentless rise of prices at the pump. The 93.50 target that I suggested shorting (see my 11:29 post) on Friday has caught the exact-to-the-penny top of a $10 decline. If you still hold a position, use a 'dynamic' or impulsive
I've set a high bar at 4403.70 to signal the possible end of a bear market that began in January, when the August contract hit a record 5700. Otherwise, we should expect the weakness to continue at least until the 3793.40 target shown in the inset is achieved. There are two more Hidden Pivot supports you should be aware of, since either is capable of reversing the trend at least temporarily: 3822.70, the target of a smaller pattern that was featured here last week; and 3603.40, a worst-case projection derived from sliding 'A' up to the 5513.00 'marquee' high recorded on March 2. Of the three possibilities, I favor 3793.40, which is why I have boldfaced it. The other two will work for careful bottom-fishing, however.
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Although buyers did not quite impale the midpoint Hidden Pivot at 79.37 on first contact, they broke free of its gravitational pull with sufficient force on Friday to all but ensure more upside to at least p2=85.53, or more likely to the d target at 91.69. Traders, and even the hacks who invent 'the news,' have learned by now to tune out any suggestion emanating from on high that crude oil markets will return to normal any time soon. The August contract will offer an enticing short at the target, but it should be traded from the long side until the target is reached. Does that imply some breakthrough in the war is at hand? We may have an answer before August.
The bull is taking its time consolidating for an upthrust to the 4.82% target shown in the chart. The process could include a dip to x=4.48% that would trigger a theoretical buy signal. Although we do not actually trade this vehicle, such a signal could be easily leveraged using TLT or T-Bond futures. But it is more the implications that interest us, since higher rates will tend to make nearly every economic challenge each of us faces more difficult to cope with. Gold will remain under pressure, and many tens of trillions of dollars of debt reckoned in dollars will grow more costly for borrowers to service. Imports would be cheaper, but the relief that would bring to beleaguered consumers would be negligible compared to so many other factors that have been making life increasingly expensive. Our new Fed chairman thinks inflation might be moderating, but he knows a good deal less about this than a housewife tending to the needs of a family with children.
The futures ended the week on a tempting buy signal that was best ignored, since it is impossible to predict on a Friday what fresh hell Sunday's news might bring. The headlines were decidedly bearish in producing Thursday's overnight cascade: crude prices were up nearly 4%, Xi Jinping was boasting of China's supposed answer to Anthropic, and a SpaceX rocket ship failed to get airborne. Stocks did not so much shrug off this news as leverage it to spring a weak bear trap. The short-covering Whoopee Cushion that resulted culminated in the buying temptation noted above. Now, the futures will either leap to the 7573.50 target, or at least to p=7523.25; or more likely in my view, stop out the trade and continue down to late-June's lows near 7350. Stay tuned to the chat room for ringside commentary as events reveal the nature and purpose of Mister Market's deceptions.
Last week began with a doomed two-day rally that left our 82.46 target unchanged. It has now been five months since shorting an upthrust proved to be a bad bet, and that will probably hold true at least until GDXJ finds a bottom at or near our target. It is a Hidden Pivot support too compelling to simply give way. It is also commensurate with a 3630 target I've provided for August Gold where a significant bullish reversal seems most likely to occur. Alternatively, we'll set the bar at 120.06, just above an external peak recorded on May 29, to alert us to the possible ending of the bloodletting. _______ UPDATE (July 25): Unlike gold and silver futures, GDXJ rallied last week to create an impulse leg on the hourly chart. I suspect this is a false alarm, but we'll give it the benefit of the doubt for now. The rally would gain credibility if and when it vaults the midpoint resistance at 101.55 and then goes on to trash D=107.22. We'll monitor these obstacles closely, since a move through them has the potential to lead a similarly bullish move in gold.
A two-day surge pushed rates on the Ten-Year past three prior peaks, two of them daunting 'externals'. This amounts to a quite powerful impulse leg, presumably with enough power to challenge the 4.69% high recorded in mid-May. The usual gallimaufry of 'scholars' will debate how many Fed governors can dance on a cow pie, but that won't alter the fact the market forces are putting significant upward pressure on Treasury yields. The short-term technical picture suggests they will reach a minimum 4.73% over the next 2-3 weeks, but 4.82% is possible,
Last week's strong two-day rally generated a lot of bullish talk, but from a Hidden Pivot standpoint it merely triggered an enticing 'mechanical' short at the green line (x=73.44). The position was theoretically profitable when the week ended, since the futures were trading $2 below the entry point and nearly $7 from the 78.15 stop-loss. There are no guarantees the downtrend will reach D=59.35, since sellers have still yet to decisively penetrate the midpoint support (p=68.75). But the hypothetical trade looks likely to produce a profit with a dip to at least p, or even p2=64.05. _______ UPDATE Jul 14, 8:43 a.m. EDT): The futures this morning have fist-pumped through a midpoint Hidden Pivot at 79.37 associated with a D target at 91.69. Looks like July/August is unlikely to be Trump's -- or anyone else's -- best month.
