TLT, an ETF proxy for the long bond, is headed down to at least 95.85, a 5% fall from these levels. That would imply that rates on the 30-year are about to rise from a current 3.84% to 3.91%. However, my long-term forecast calls for a 5% rate on the Long Bond and 4.9% on the Note, so TLT presumably has a long way to before it hits bottom. Most immediately, though, look for more slippage to the 97.72 target shown in this chart. It is all but certain to be hit, but it can also be used to bottom-fish with a tight rABC trigger. _____ UPDATE (Oct 18, 8:52 p.m.): TLT's dip beneath the 97.72 target precipitated an outpouring of interest in the chat room that I would never have imagined existed. This latest show of weakness has not much depleted our supply of downside targets, the next of which lies at 95.85 (as noted above). That Hidden Pivot support isn't likely to last long either, since rates on the 30-Year have a long way to go before they reach my target at 4.9%.
The sound of one hand clapping was all that bulls deserved at last week's high. Although the exhaustion spike on Tuesday exceeded a challenging 'external' peak, buyers elected not to take on a second that lay just inches above it. We'll give them the benefit of the doubt nonetheless, since the two-week surge begun from 25.80 was nominally impulsive on the daily chart, and because the surge featured some deftly engineered short-squeeze gaps on the way up. For now, let's kick back and observe price action on the lesser charts. If Friday's sell-off continues, exceeding 29.71 (15-min, a=32.35 on 10/4), that would imply bears are in charge, at least for the near term. ______ UPDATE (Oct 14): GDXJ is close to creating yet another gratuitous hump on the intraday charts, presumably bound for a test of late September's 25.80 low. If you trade this vehicle, here's a chart with a 26.83 target
Gold has impaled a significant midpoint Hidden Pivot resistance at 1686.50 with this morning's strong upthrust, clearing an easy path for more upside to D=1750.70. This tout updates an earlier one that displayed the wrong chart, but it also has given me an opportunity to acknowledge the very bullish price action witnessed in the last two hours. The pattern will yield excellent odds for bottom-fishing any swoons with a 'mechanical' bid, but if the opportunity fails to develop we can still buy on the way up using other tactics (which could conceivably include a small-pattern 'mechanical' entry).
The December contract is headed lower than the 3488.00 target shown, but it still looks like an opportune spot to try bottom-fishing, given the precise bounce from p=3916.88. Sliding the pattern's point 'A' high up to either of two alternatives shown in the chart yields additional downside targets at, respectively, 3401.75 and 3362.00, That last Hidden Pivot support is my worst case for October. However, there is little likelihood the Mother of All Bears will not take a breather at one of those levels, notwithstanding the fact that my expectation is for the S&Ps eventually to fall far beneath the pandemic low at 2174.00. That would represent a further slide of 40% on top of the 25% that has already occurred, but I doubt the bear market will be so kind, since it will be correcting a 30-year spreed of malinvestment. _______ UPDATE (Oct 3, 6:18 p.m.); The 3712 peak of today's powerful short squeeze precisely achieved the D target of this reverse pattern before the futures eased into the close. If they push above the peak tonight or tomorrow, that would activate this bigger reverse pattern, with a 3846.75 target. Notice that its Hidden Pivot midpoint resistance is coincident with the smaller pattern's p. That implies double resistance, and any decisive push past it should be assumed strong enough to reach p2=3778.00 at least. The pattern looks well-suited for profitable 'mechanical' buy set-ups. _______ UPDATE (Oct 7, 9:11 a.m.): Houston we have a problem. The prop-desk drama queens have pancaked index futures ahead of the bell on absolutely meaningless news that the economy added 263,000 "jobs". The fact that this has occurred after the December contract missed achieving my 3846.75 target by 26 points, or 0.6%, is a sign that the bear market is about to resume with full fury.
How refreshing to see the Masters of the Universe choking on Apple shares Friday after efforts to hold the stock aloft until the bell collapsed. The stock finished on the low of the day, presumably bound for a test of June's watershed bottom at 129.04. Expect a tradeable bounce on the way down from the 136.06 Hidden Pivot target shown in the chart. The stock's vertical ascent from mid-June to mid-August never spread to the broad averages. That had been DaBoyz' intention, and it appeared they might succeed when AAPL got within 3.7% of new record highs on August 17. Alas, sustaining altitude until hoards of other stocks caught up proved too challenging, and AAPL began to roll down like an aerobatic plane in a hammerhead stall, Earlier, I described in detail how the stock's canny sponsors levitated it without risking much. This occurred mostly via short-squeeze rallies in thin, overnight markets, and with gap-up openings that allowed instantaneous leaps of $2-$4 on zero cash outlays. This trick will not work nearly as well now because perceptions concerning the company's prospects have darkened with the onset of recession in Europe, a key market. The U.S. consumer economy is close behind, and the one-two whammy is certain to depress sales of the pricey iPhone. Rick's Picks will continue to track AAPL closely and trade it aggressively in both directions. Get AAPL right and you get the stock market right. We've been doing it with consistent precision, so stay tuned. _______ UPDATE (Oct 3, 6:30 p.m.): The algos and hubcap thieves who work the night shift must be tuned to Rick's Picks, since they front-ran my 136.06 target by 34 cents. Ordinarily I would not assume they are on a target of mine like fleas, but in this case the pattern seemed
Last week's decisive breach of a midpoint support at 103.59 on the weekly chart implies that bulls have yet more pain to endure. TLT looks primed to fall all the way to D=86.48. The odds of this shortened when the breach was followed by a Friday close beneath the 'p' Hidden Pivot support. The abysmal target is congruent with my 4.9% forecast for rates on the 10-Year, which ended the week at 3.8%. A rally to the green line (112.14) might be seen by some as a hopeful sign, but from a Hidden Pivot perspective it would be a great opportunity to get short 'mechanically, stop 120.70. (Note: I am not featuring the 30-Year here because it has inverted relative to the 10-Year.)
November Crude is taking its time achieving a bearish Hidden Pivot target at 73.70 that has been a month in coming. Upward stabs have been brutal on shorts, making a sell-and-hold strategy impractical and unwise in retrospect. The downtrend has nonetheless triggered two mechanical shorts on feints higher if you count the one at the red line that was signaled last Wednesday. We don't typically initiate shorts at p, only at x, but this one would have taken a stop-loss at 84.33 if we had. That would have put at risk a third of what we stood to gain if CLX completes the pattern. It is sufficiently gnarly to imply that bottom-fishing at 73.70 with a tight stop-loss would enjoy attractive odds. _____ UPDATE (Oct 3, 6:50 p.m.): Tracking this dervish is mentally depleting, but we’ll still want to paper-trade the 'mechanical' short that would trigger if and when it hits X=85.65. I'd rate the trade a '5' -- a 50% chance to profit, and therefore not very enticing.
[Louie Piro, my barber when I lived in Mountain View CA shortly before Google arrived, became a multimillionaire with a simple investment strategy. I thought of him the other day when a Rick's Picks subscriber wondered aloud in the chat room which investments are most likely to prosper in the recessionary hard times that Americans will soon face. The subscriber evidently favors the shares of gold companies that pay dividends. My own choice comes straight from Louie's playbook: Invest in utility companies that serve growing populations and that have good dividend histories. Thus did Louie's initial, $100 stake in a Nevada purveyor of water and power seed the wealth the haircutter was to amass over the next 50 years. Following is his story, as told in a column I wrote for The San Francisco Sunday Examiner 25 years ago. I have published it here before, but it seems more relevant than ever now, as investors try to figure out which stocks will be favored by the flight to safety that could come at any time. Louie's remarkable saga holds promising investment implications as we watch Californians, New Yorkers and other blue-state refugees flee economically doomed regions of the country for better lives in Florida, Texas, Utah, Tennessee and a few other states that are not so heavy-handed in the way they regulate businesses, schools, commerce and free speech . RA ] If there is a single word to sum up the success of investor Louis Piro, that word is "dull." Piro has never made a killing on a stock. He doesn't play hunches and he runs from hot tips. He says he passed up Pfizer not long ago because its shares were too pricey even before impotent men started flocking to their Viagra pill for a cure. Nor will Piro
The Dollar Index peaked on Friday seven cents above a 113.16 target that has been on our radar for more than four years. The pattern took nearly a decade to play out, implying that any correction from these levels could last for quite a while -- perhaps 12-18 months or even longer. The retracement presumably would set the stage for a renewed uptrend to the 119.37 target shown in this chart. Please note that although a severe correction down to the green line at 96.03 might be viewed by pundits as nothing less than the death of the dollar, it would in fact trigger an opportune 'mechanical' buy signal according to our trading rules. Because the dollar's daily ups and downs have correlated inversely with nearly every trading vehicle we track, we might expect a resurgence in gold, stocks and T-Bonds, among other investibles, if the dollar is in fact headed into a prolonged decline. There's also a chance it will power its way past the 113.16 target without a pause and just keep rising. That would suggest that the catastrophic deflation we've been predicting for many years is under way. A hardening dollar would tighten the screws on all who owe dollars, including debts arising from short-dollar positions in the $2 quadrillion derivatives market. _______ UPDATE (Sep 27, 5:11 p.m.): Amazing! DXY hasn't quite shredded the granite Hidden Pivot at 113.16, but it does look like it's trying to turn the resistance into support. This implies there is still plenty of unspent power pushing the dollar higher. If so, that would be very bad news for the economic world. ______ UPDATE (Sep 29, 11:28 p.m.): DXY has corrected sharply for the last two days after exceeding the target of a long-term pattern. If the retracement is going to be
Only in a child's fairy tale book -- a punitively boring fairy tale book, to be sure -- would the December contract have made a major bottom three points above the June low as could conceivably have occurred on Friday. A more painful test of the low will likely be required, implying it will have to be breached, even if only to rebuke Jim Cramer and frighten the large TV audience that would have taken him literally when he guaranteed a couple of months ago that June's 3657.00 bottom would stand more or less forever. Unfortunately for his fan club, based on the way the downtrend crushed the midpoint support at 3853.50 last week, I would expect the futures to fall to at least p2=3607.38 before they can turn around, or more likely to D=3361.25. This is somewhat at odds with the bullish glimmer of hope for the S&Ps that I've provided elsewhere on the page in my analysis of the Dollar Index (DXY). On Friday, it precisely achieved an important rally target that has been 13 years in coming. If the dollar is therefore about to enter a corrective phase, it seems logical that just about everything else will reverse and move higher. That's because for months nearly everything has fallen in lock-step with the dollar's rise. The inverse relationship is so tight that it can be seen even in intraday feints, jiggles and jaggles. We should know by later in the week whether the relationship will hold, so stay tuned. _______ UPDATE (Sep 27, 5:18 p.m.): I still like the prospect of a (very) tradeable bottom at 3607.38, the minimum downside target we've been using, but I'd have to concede that it's possible the turn will come from today's low, 3635.25, for reasons this chart makes clear. It
