Free

With long-term rates closing like a missile on my 3.24% target for the U.S. Ten-Year Note, I was compelled to double-check my math. The chart not only confirms the validity of the target, it offers a bigger-picture perspective on an ABCD pattern that is as gnarly as it is compelling. I'd previously used a daily chart to project an identical target, but the fact that the same persuasive, rules-based elements are present on the weekly chart makes 3.24% the number to watch. It is not short-able with the usual precision because its stopping power will be conflated with that of a top made in the same place in October 2018.  I have more to say about this in this week's Morning Line commentary, so check it out if your curious about what a top in Treasury rates could mean for the U.S. economy. _______ UPDATE (May 24, 10:14 p.m. EDT): A slight breach of the 2.72% low recorded on April 26 corresponds to TLT's inverse poke above a small 'external' peak recorded around the same time. Have interests rate seen their high? It's possible, but the evidence is not yet decisive. It would imply that the recession that began months ago -- the one Goldman's resident genius said a few weeks ago had a 15% chance of occurring within the next 12 months -- is beginning to deepen.  Here's the chart. 

My apologies for putting out a gold tout Sunday night so confusing that it confused even me. It were as though aliens had beamed signals into my head when I composed and published it. The 1825,8 target we've been using all along is still a 'definite', and it would be a load-up-the-truck-price were it not for the fact that I have been drum-rolling this number for the last several weeks. We can still make use of it when the time comes, so tune to the trading room when the futures get within $7-$10 of it. ______ UPDATE (May 11, 10:33 p.m. EDT): Today's nitwit-powered conniptions push the June contract moderately higher but failed to surpass any 'external peaks even on the hourly chart. This is disappointing, considering the rally came off a longstanding, very important Hidden Pivot target at 1825.80.  Perhaps it was too well advertised and must suffer a relapse before gold can bottom?  Regardless, an important low appears all but certain to occur somewhere very near here because the target is so clear and compelling. _______ UPDATE (May 12, 9:55 p.m.): The futures crashed the 1825.80 'hidden' support, so I've shifted to the 'marquee' point A high, which allows for a bottom at 1814.20. That 'D' target has been exceeded, but only by $5. The jury is still out, but it'll take a print at 1864.80 to get out of immediate jeopardy.

I've left Silver on the list this week only as a placeholder, since its chart says absolutely nothing to me. The corresponding chart in gold is somewhat more bullish, and I've said so.  However, it is not so bullish as to suggest it will pull silver higher any time soon. The July contract would need to push past the 'external' peak at 23.65 made on April 29 to get our attention, but until such time as that happens, expect meaningless feints in both directions as bulls and bears duke it out for control of...not much. _______ UPDATE (May 12, 10;05 p.m.); There's a bottom somewhere, although bulls could be pardoned for thinking this time may be the exception. Here's a chart that shows two possibilities, respectively, at 20.27, or 19.24 if any lower.

Sellers have laid waste to so many Hidden Pivot supports, both minor and major, in the past year that I hesitate to assert that the new target shown, at 108.74, will end the bear market in Treasury paper.  Let's focus for the time being on the possibility of a turn from p2=112.31, since that would be more closely congruent with my longstanding forecast for a 3.24% top in yields on the Ten-Year Note. Regardless, an easy breach of that 'hidden' support would portend more downside to 108.74. At that point, long-term yields would be above 3.5%, dealing a presumably fatal blow to a U.S. economy that is already arguably in recession. ______ UPDATE (May 9, 6:15 p.m.): A promising bounce has come from a low today at 112.62 that lay just an inch from the secondary pivot I'd flagged above. Let's see what it makes.  The action is yellow-bellied so far because the intraday high failed by a single tick to take out the 'external' peak at 114.71 recorded Friday on the way down. _______ UPDATE (May 10, 11:43 a.m.): So far so good, but the bounce would become more persuasive if it can surpass the 'external' peak at 119.31 recorded last Tuesday. Here's the chart. It would be even more bullish if the rally does this without requiring a visually evident pullback on the hourly chart.

The bearish target at 29,130 is the tail end of a legitimate pattern that meets all of our rules. We'll have a better idea of how likely the target is to be reached once we've seen sellers interact with p2, a secondary Hidden Pivot support at 33,900. There will be a good opportunity to bottom-fish there, but it will require some deft 'camo' work, since p2 is close to two prior 'external' lows that the droolers will be using for their own purposes. From a visual standpoint, lows made last summer 'want' to be tested, and that's why my gut is going with a drop beneath 30k before bulls are likely to turn feisty again. _______ UPDATE (May 10, 6:38 p.m.): The p2 pivot barely broke Bertie's fall, affirming the likelihood that this plunge will continue to 29,130. If you've made money on the way down using my two successive, very bearish targets, use it to cushion  a stop-loss for bottom-fishing. _______ UPDATE (May 11, 10:42 p.m.): Bertie took a psychotic, $2800 leap from a low $54 (0.2%) beneath the 29,130 target, only to relapse to a so-far low at 27,731.  This is bearish, but we should give it a day or two to generate a bullish impulse leg on the hourly chart.  That would require a print at 32,132. _______ UPDATE (May 12, 10:15 p.m.); With the decisive breach of 29,120, I've shifted to a higher point 'A' to produce a new downside target at 21,947.  Judging from the way sellers sliced through p=35,079, it seems likely to be reached.

The bearish, big-picture pattern shown was validated last week by the powerful short-squeeze rally precisely from its D target at 153.00.  I did not feature this picture earlier because I was focused on an even bigger one, but I'm somewhat relieved to see that it would not have gotten us short 'mechanically' in any event. That's because the downtrend until this week did not produce any corrective bounces sufficient to trip a short-sale signal. Looking ahead, we can rely confidently on the new pattern, starting at A2, to give us a juicy trading opportunity at D2=146.77. That is where AAPL is going, and I won't queer the usefulness of the target by discussing it any further, including in the chat room. I have not put it in boldface green as I usually do, I have not put a $ sign next to the symbol to indicate this tout is actionable, and I will bury it toward the bottom of the list so that the tout will have a better chance of being "our little secret."  Keep in mind something I have repeated here many times:  AAPL is the only stock that matters. Get it right, and you get the market right. _______ UPDATE (May 11, 10:54 p.m. EDT): I expect my targets to work very precisely when they are derived from patterns as clear as the one shown in the chart. The so-far 66-cent overshoot of 146.77 has left the stock straddling the bull/bear divide, but my bias is bearish nonetheless and will become moreso if the grifters and pederasts who control AAPL open it on Thursday with a weak short-squeeze. _______ UPDATE (May 12, 10:20 p.m.): Sellers have trashed every 'D' Hidden Pivot, major and minor, leaving only last October's low at 138.27 to break the stock's fall. I aired

Last week's commentary asked how high the dollar can climb before it snuffs inflation and the increasingly shrill hysteria that has accompanied it. Inflation is supposed to cheapen the dollar, but that is not what has been happening. Instead, it has been climbing steeply relative to all other currencies. The experts have not been able to explain this, nor why the rally began well before the Fed was even thinking about tightening. It is simple, though, if you understand deflation and its chief symptom, a rise in the real burden of debt. The dollar has been climbing because it "knows" there are more debts than can ever be repaid. This can only result in massive waves of bankruptcies that are going to make us nostalgic for the consumer inflation that is today's headline news. Sure, the Fed could print enough money to pay off everyone's debts, including its own: student loans, our collective liabilities for Social Security, Medicare and private pensions, etcetera - but also car loans, mortgages and credit card balances that have ballooned. The resulting hyperinflation would solve nothing, however, even as it destroyed lenders as a class and all institutional conduits of borrowing. The megabanks would be ruined, leaving no one to lend to you, me or anyone else. It could take a generation or longer for credit to sprout roots again. Do we really want to go down that path? More Tightening Unneeded This week's question is related to the one about the dollar: How high can interest rates climb before they snuff inflation and the increasingly shrill hysteria that has accompanied it? Economists and pundits seem to think the Fed has only begun to tighten. More likely is that interest rates are already high enough to have tripped the U.S. and global economies into deep

Although charts with shorter time frames would appear to suggest that crude is in a bullish consolidation, the continuous weekly chart displayed (see inset) provides a speculative basis for inferring that the bull market peaked with March's surge to 130.26.  I say this is speculative because there is nothing in this picture arguing against another bull leg once the spectacular Covid rally begun in 2020 has had time to regain strength. There are reasons to doubt this scenario, however, particularly the significant weakening of China's economy. Energy demand from China sets the global price of oil at the margin, and when the nation's manufacturing sector in particular is imploding, as it is now, no amount of cartel price-rigging or ginned-up constraints on supply can surmount the deflationary effect of falling demand. An even bigger picture suggests the global economy has begun to shrink, with a report on Friday that U.S. GDP fell 1.4% in Q1. (Leave it to the WSJ to publish an op-ed by that useful idiot Alan Blinder saying IF a recession comes, it will be mild.)  If a U.S. recession has indeed begun, as I asserted in my commentary last week, then the March high in crude is certain to stand for a very long time.  ______ UPDATE (May 3, 10:28 p.m.): Check out the Trading Room thread starting with my 12:50 post, which produced an easy winner bottom-fishing June Crude futures. The 99.02 downside target in the pattern linked in my post will remain my price objective unless the 'C' igh gets stopped out. _______ UPDATE (May 4, 11:)3 a.m.): Since the minor bearish pattern we used yesterday to make money (from the long side!) has gotten stopped out, and because the upturn has come from the midpoint pivot of a corrective pattern, we will gaze upward

The week ended with a feebly impulsive rally, so we shouldn't get our hopes too high that the June contract will somehow avoid a predicted fall to at least the 1825.80 target of the pattern shown. It ha s been working fairly well for trading purposes although, strictly speaking, the rally to the red line on Friday did not trigger a valid 'mechanical' short because it came from a low that missed touching p2 by a hair's breadth. ______ UPDATE (May 2, 6:47 p.m.): Mechanical trades rated higher the '7' are rare, but here's one that triggered today -- on the monthly chart, no less! With more than $60,000 of initial risk on four contracts, however, this is one you should either paper trade or execute using 'camouflage' in the full-size  contract or the mini.  My target for the corrective move, basis the June contract, suggests the futures will go lower, to at least 1825.80, before they can turn around.  The 2329.10 rally target is hardly a done deal, but it is not looking too shabby for the long term, given the way buyers impaled p=2011 in March. _______ UPDATE (May 4, 10:45 p.m.): So far, so good!  The corrective rally implied in my last update has traveled $50 since bottoming. This occurred a millimeter from an 1852.30 low I'd rated 8.1 for 'mechanical' longs. Anyone aboard?  _______ UPDATE (May 5, 9:31 p.m.): Yet another promising rally turned to dross when the futures reversed near the opening and gave up nearly all of the previous day's gains. I'll have little more to say ahead of the weekend.