The stock is entering its fourth week after stalling pennies from a 430.58 target that I first broached here last January. Isn't that sufficient evidence that THE top is in? asked a subscriber in the chat room. Ordinarily, I'd say yes. But this is no ordinary bull market, and we shouldn't underestimate its ability to trick us so that nearly every bull and bear still left in the game gets crushed when it ends. That is a given, and we've seen Mr. Market flex his muscles enough times over the years to become true believers in his ability to bamboozle the majority, especially at important turning points. Who would have guessed, for instance, that the most spectacular bull run in U.S. history would begin almost to the day in March 2020 when the country locked down against the covid threat? And now, there should be little doubt that the bull market will end with a flash of exuberance and bravado that are commensurate with the despair most investors felt in 2020. There is a palpable sense that we are close to a watershed top, but we shouldn't expect our instincts alone to locate it exactly.
Precious metals got bludgeoned on Friday after a strong rally spiked this vehicle to 29.90 around 11:15. The downdraft should not have caught any of you by surprise, since we were already using a 1.09 trigger interval (TI) to warn if intraday weakness looked likely to snowball. It did, but some subscribers might have used the alert not merely to exit or reduce long positions, but to go short. This would have occurred at 28.81, with half of the position still to be covered a 27.72, about 23 cents off the closing low. That is also my minimum downside projection at the moment, the p midpoint support of the corrective pattern shown. As always, an easy move through this Hidden Pivot it would portend more slippage to p2=26.61, the secondary Hidden Pivot. ______ UPDATE (Apr 15, 3:50 p.m.): The futures are perfectly synched with the forecast, having come down to 27.67 this morning before trampolining to a recovery high of 28.98 so far. If they take out C=29.90 without having corrected any lower than 27.67, that would imply this bull run is bound for the next important Hidden Pivot resistance. It lies at 30.08, only slightly above the recent high at 29.90, so the utmost caution is advised when it gets there. The target is drawn from the weekly chart, where A=18.71 on 9-30-22.
If the beating that gold and silver futures took in the last half of Friday's session was unnerving, we should still be reassured by the robust look of GDXJ's weekly chart. There are a few reasons to expect the bull cycle begun in September 2022 to achieve the 48.55 target. For one, the impulse leg, although balky at times, ultimately exceeded a key external peak at 42.19 recorded in June 2022. Also, even though the C-D leg stalled at p=39.51 for more than a month, the running start it got after pulling back nearly to 'C' spring-loaded a powerful blast that impaled both p and p2 while also exceeding the pattern's 'B' high. Taken together, these factors should leave no doubt concerning whether 48.55 will be reached. Plan accordingly, and don't get spooked by a hard pullback if it comes. That would be a buying opportunity, and the pattern itself provides ample means to do so with risk under tight control.
TLT looked like hell again last week, as usual. However, I will accentuate the positive for a rare change, as I did in this week's commentary featuring T-Bond futures. Turns out 2024's downtrend in both vehicles occurred within the context of respective reverse-pattern buy signals. Yes, it's a stretch to think both will turn higher without taking out their 'C' lows, especially since they've been falling since the first quarter of 2020. But if you're willing to consider the contrarian point of view, the picture for bonds has been so gloomy for so long that perhaps it's time to consider the bullish possibility.
Crude remains on track to easily achieve the 88.69 target we've been using for the last six weeks. The relentless rise has embarrassed those who pretend that the Fed's alleged "plan," whatever the hell it is, is somehow linked to observable reality. Powell keeps hinting he will "pivot" just as soon as the economy and inflation show the faintest sign of moderating. Instead, inflation is on the rise again and threatening to steepen with the price of a barrel of oil approaching $90. This silly game would be funny, but for the fact that the global economy can no longer function without credit stimulus or at least the promise of it. It will be interesting to see whether the Fed gooses the money supply when oil leaps toward $100 and joblessness falls to a new millennial low.
The devastating bear market in Treasury paper since 2020 may be nearing an end. I was pessimistic about this myself when TLT, an exchange-traded fund, that tracks the long bond, broke down last week. But a bigger picture saw this as occurring in the context of a market that may have bottomed last October. The bounce from that low triggered a theoretical 'buy' signal in bonds in mid-December when it touched the green line shown in the chart. Don't expect a meteoric rise, however, since it could take a while for T-Bonds to build a base for a sustained move higher. Assuming the 107^04 low holds, however, the worst may be over. That would imply that long-term rates, currently at 4.53% for 30-Year T-Bonds and 4.38% for the 10-Year Note, have peaked. In any event, I do not expect them to exceed the highs they achieved in October at, respectively, 4.99% and 5.15%. Debt's Real Cost I should point out that this is not necessarily cause for jubilation, especially if recession causes asset values to deflate. That would return us to the financial environment of the 2007-08 Crash, when even 4% mortgages placed a crushing burden on homeowners whose property values had gone underwater. It is real rates -- yield minus inflation -- that ultimately matter, not nominal rates. Unfortunately, there is no escaping the debts we have amassed publicly and privately, and there are reasons to strongly doubt that those who owe will get to stiff creditors via hyperinflation or even sustained inflation. Regardless, and irrespective of the nominal level of rates, payback will exact a heavy toll on future production and our standard of living.
The pattern shown projects a rally to at least 439.35. That would torpedo an argument I've been making since January -- i.e., that MSFT would make a bull-market top at exactly 430.58, and that the stock's subsequent fall would take the stock market and the global economy with it. I haven't given up on the possibility that my magic number at 430.58 will ultimately come close to having nailed the bull's last gasp, but the shorter-term pattern shown is just too compelling to think D will not be achieved. It has produced three winning 'mechanical' buys at the green line already and will continue to favor bulls unless a swoon in the next few days takes out C=412.79. Stay tuned.
Although prayer can't hurt, I doubt that it can push June Gold past the 2356.90 target shown any time soon. With the futures peaking just $7 from this daunting Hidden Pivot on Friday, a correction is due soon. We should be prepared for a nasty one, too, since it has taken the June contract more than four years to get there. Even so, we should open our minds to the satisfying possibility that buyers will blow past D with ease. If that happens, accompanied by voracious, insatiable buying, our focus could shift hopefully toward $3000, gold bugs' next dream number. In the meantime, we can use this reverse pattern, with a tentative, worst-case pullback target at 1991.10, to exploit the trend confidently. We'll adjust everything upward if a new high occurs. _______ UPDATE (Apr 8, 12:54 a.m. EDT): Although the June futures have receded from this morning's 2372.50 peak, the $18 overshoot of so clear a target is significant and at least mildly bullish. When a big-pattern target has been exceeded, we usually look at the target of a smaller 'extension' pattern as an alternative. In this case, the lesser pattern's D target at 2367.50 has also been hit -- and somewhat exceeded -- implying gold should correct for perhaps 2-3 days. Here's the chart. And if it doesn't? Ordinarily, I would say June Gold's overshoot of $2372 is quite bullish. But I am all-too-conscious of the fact that subscribers are counting on me to avoid getting crushed if and when the pond scum that Spartacus refers to as 'Mr Slammy' makes his all-but-inevitable appearance. Greatly complicating things is Mr Market's propensity to fuck as many of us as possible, as often as He can. That could mean He continues to push the precious metals complex higher without rest, so that
Like bullion futures, this ETF for gold explorers ended the week in a place that should produce a corrective retracement. If it surprises by shredding the reverse pattern's d target at 42.10, our focus would shift to a conventional pattern that promises a further run-up to 48.55. This is the first time I've mentioned the target, but the pattern from which it is derived is strictly kosher, with a second-wind thrust to B=43.89 (4/14/23) that turned A-B too gnarly to be widely observed. That will always be a plus for us. Here's the chart, which, like May Silver's, delivered a quite encouraging thrust through a midpoint Hidden Pivot at p=39.51.
I warned here last week that if TLT couldn't hold above the 91.20 Hidden Pivot support shown in the chart, we'd better look out below. It now appears that the support will fail, sending this T-Bond proxy into a vast void that extends all the way down to last October's low near 82. If that happens, we'll see a corresponding spike in rates that approaches or matches the 5% peak in the Ten-Year recorded last October. This is yet one more reason why the mass psychosis that has driven stocks into a relentless vertical climb is about to succumb to reality.
