Yields on the Ten-Year Note ended the week just beneath a Hidden Pivot resistance at 4.49%, but the damage had already been done with the slight penetration of the resistance earlier in the session. If the rate had settled above it for a second consecutive day, I'd have shortened the odds of a further run-up to the 4.75% target to even money. As things stand, I'll use a voodoo # at 4.62% as a minimum upside target for the near term. We'll be better able to assess the odds of new highs at that time.
On the weekly chart, the futures have been on a 'mechanical' sell signal since mid-June. They seem in no hurry to do what they ought -- i.e., fall to the modest, 6959.00 target of the pattern shown. That would equate to a 7.5% correction from these levels and 9.5% from the record-high 7694 notched in the first week of June. That's the worst I could see at the moment, and it would be the kind of garden-variety correction that would draw in buyers who have been waiting for a token discount. But fear? Not hardly. The low would likely come in the middle of August, however, leaving enough time for plenty of fear to develop ahead of the November elections. Fear of what, you ask? The possibilities are too numerous to predict, so let's focus instead on ways to chase boredom during what promises to be a dull, glum summer on Wall Street.
Last week's dip below the red line (p=68.75) amounted to just 2.4%, but that's enough to somewhat darken the picture. For starters, it implies that a rally to the green line (x=73.44) should be shorted with a 78.15 stop-loss just above the pattern's point 'C' high. (I am recommending this trade only to subscribers who are adept at fashioning risk-averse, 'camo' entry triggers.) It also opens a path to the 59.35 'D' target. However, given bears' struggle to push quotes below p=68.75, a slide to 59.35 is still no better than an even bet. But p2=64.05 is likely to be reached, and we should plan accordingly.
I'm taking an extended break from the daunting challenge of predicting the stock market's behavior each week as though it were correlated rationally and logically with events in the real world. My weekly commentaries will resume when I am feeling better up to the task. In the meantime, if you need a regular dose of Rick's Picks, don't pass up a free opportunity to use and enjoy all of the site's amenities, including the Trading Room, the heart and soul of my service. Its purpose is to help investors make money, a goal it achieves so consistently that gifted traders from around the world like to hang out there. The photo above shows Venezuela's Angel Falls, the world's highest waterfall and a good metaphor for my outlook on the stock market. Finally, here's a link to my latest rant at This Week in Money on July 2 [Note: This link will change to present fresh material every other week.]
August Crude ended the week tap dancing on a crucial support at 68.75. That's the midpoint Hidden Pivot of a pattern projecting to as low as 59.35. The pattern looked like a bearish head-and-shoulders formation a week ago, but last week's 19% slide turned the immediate picture even more bearish. Now, if the futures close below the red line for two consecutive days, it will significantly shorten the odds of a further slide to at least p2=64.05, or even to 59.35.
Friday's vague crosscurrents allowed MSFT's handlers to seize the advantage with a short-squeeze reversal that caught bears unawares. The bullish pattern shown gives this con-job wide berth, since DaBoyz can be expected to pull out all the stops to recoup the hundreds of billions of dollars' worth of gaseous 'wealth effect' the stock shed as it slid 25% from a record 466 peak in early June. A key test awaits when the push hits p=383.36, the midpoint Hidden Pivot resistance. An easy and decisive move past it would imply more upside to the pattern's D target at 417.51.
The textbook-perfect pattern shown promises to deliver at least a temporary low at 4.35%, the D target shown. That would represent a 7% decrease in yields on the Ten-Year Note since they peaked at 4.69% on June 19. A weak bounce would open the door to even lower rates, with mid-April's 4.22% serving as a benchmark and potential support.
The futures spent the last two sessions head-butting a modest midpoint Hidden Pivot resistance at 7582. You might think the failure to break through was a sign of weakness, but the opposite is true. Considering that no one but Trump and Vance is impressed with the cease-fire plan, and that the Fed is waxing hawkish, the lackluster performance of the S&P must be viewed as a volcano gathering subterranean force. The index hardly pulled back at all, and so we should expect it to launch anew on Monday, assuming Wall Street is not too hungover from Juneteenth craziness. Look for the E-Minis to ascend to D=7692.00, a sufficiently 'D' target to show tradeable stopping power. A dip first to the green line from above Thursday's highs, however unlikely, would trigger a tempting 'mechanical' buy, so be ready if you know how to handle it with a small-pattern (i.e., 'camo') trigger. _______ UPDATE (Jun 22, 11:27): Cancel the trade (or exit it now for a nice profit if you got long at the green line). Mr Market is doing his utmost to screw with our heads, first by dropping ES to within a single point of the green line at 1:00 a.m. before popping off a 71-point rally. He then plunged ES to the green line EXACTLY before embarking on the current, so-far 23-point, rally. Since no subscriber mentioned any of this in the chat room, I will assume everyone either slept through it or ignored the opportunity. _______ UPDATE (Jun 23, 12:21 p.m.): It's too early to say the bear market has finally begun, especially since the worst case I can offer for the moment is the 7266.00 target of this pattern. The futures are all but certain to get there, but sellers will have to demolish the Hidden Pivot support
An unorthodox target I'd drawn near 380 failed to contain the selling, so I've switched to a conventional pattern that projects significantly lower, to 339.27. My expectations are bullish for the market as a whole when stocks start to trade on Sunday, and I don't expect MSFT to go its own way. However, the stock's decisive breach of the midpoint support (p=402.80) suggests it is likely to eventually reach the target. The implication is that MSFT and the broad average could head higher over the next few days, but the rally won't get very far. We can adjust our expectations as more evidence becomes available.
Friday's rally mirrored gold's, meaning you shouldn't get your hopes too high. The pattern suggests that once the bounce ends and silver resumes its downward course, it could eventually go as low as 54.735. That's 20% below these levels, meaning a whole 'nother bear market could unfold before Ag finds a bottom. If that sounds overly bearish, we can allow for the possibility that bulls have turned things around if the July contract surpasses the 77.355 peak recorded on June 2. For current purposes, however, we'll plan on trading with a bullish bias if and when the futures push above last week's 68.800 peak. That would generate a bullish impulse leg on the hourly chart, brightening the short-term outlook. _______ UPDATE (Jun 21): As expected, a weak rally died before the futures could surpass even a single Hidden Pivot level on the daily chart. By week's end, they appeared on track again for a fall to the 54.735 target shown. That would equate to a 53% drop since spot quotes peaked in late January around 123. _______ UPDATE Jun 24, 8:53 a.m.): On July Silver's daily chart going back to February, there are more downtrending ABC patterns driving it lower than I can parse -- and zero ABC uptrends on any chart of any degree. Worst-case technically is 39.305 (!), but that is much lower than I can imagine, given the strong industrial demand for silver in the Western world. My best case would be a bounce from here (i.e., 58.409), the p2 pivot of A=79.250 on 5/26); or, far more likely, from either of two more or less coincident supports at D=53.995 or p2=53.865 (A=.123.45 on Jan 29).
