The week ended with a very real profit of as much as $8,000 for anyone who followed my explicit instructions. Can we do it again, you ask? Probably, although trading this particular vehicle successfully will always be akin to extracting opportunity from a hacking cough. Our winners are necessarily leveraged at the tops of disappointing rallies and at the bottoms of gratuitously scary dives. That, after all, is what gold does -- has been doing for years. Between these extremities lies the aforementioned hacking cough, and although its volatility should make for bountiful trading in theory, it is too much work to concern ourselves with here. The pattern shown has rewarded 'mechanical' buyers twice, but I doubt a third winner will be so easy. Even so, you can use the 'reverse' pattern shown, with an 1873.90 rally target, to plot your strategy or merely assess the strength of the uptrend, such as it is. The bad guys seemingly lack the guts to push the futures below C=1753.00, but I hesitate to use this observation to greenlight any old 'mechanical' buy set-up that comes along. ______ UPDATE (Jan 19, 10:40 p.m. EST): This evening's vertical spike has stalled very precisely at p2=1843.70 of the bullish pattern that has guided us for the last month. A decisive push through it would clinch more upside to the 1873.90 target, but it will be more interesting if this Hidden Pivot gives way easily. That would set up a test of the key 'external' peak at 1922.80 recorded on June 1.
The bull trade explicitly detailed here as last week began could have produced a profit of as much as $9100 with relatively little stress. And here's more good news: The tradeable pattern has continued to evolve into one that can probably be used successfully again. For starters, a pullback to the green line (x=22.46) would trigger a very appealing mechanical buy. This gambit will work best for those of you who are familiar with camouflage set-ups, since the straight-up risk from a conventional entry would be around $10,000 on four contracts. A short initiated at D=24.01 looks enticing as well, although the obviousness of the pattern could make it a tricky play. The target is a strong bet to be reached, given the way buyers impaled p=22.98 on the first time they came in contract with this 'hidden' resistance. ______ UPDATE (Jan 29, 10:50 p.m.): Buyers speared the 24.01 pivot we were using as a minimum upside target, foreshadowing a test of November's imposing peak at 25.40. A vast void separates the two levels on the chart, creating a a formidable discomfort zone for us to play with. Stay tuned to the chat room if you're interested.
February Crude is in a crucial place, just shy of an 83.87 rally target that has taken nearly five months to reach. Tradeable resistance there should be fairly exact, given the way the futures pulled back so dramatically from within just six cents of p=73.07, the pattern's Hidden Pivot midpoint resistance. I'd still suggest using a tight 'camouflage' set-up to reduce entry risk on the implied short, since the pattern, obvious as it is, can hardly be regarded as 'our little secret'. However much the futures retrace after hitting D, we should be open to the possibility that the next leg up, assuming there is one, will hit $100. If there is no pullback and the February contract simply blows past 83.87, then $100 oil will not only become certain, it will come quickly. That would be yet another body blow for the psychotic bull-market-that-wouldn't-die-but-seems-to-be-dying-nonetheless.
The supply-and-demand logic of the chart shown predicts a potentially important top at 4752.00. This is not a Hidden Pivot resistance, but rather a price along a trendline that explains itself. The very gentle slope of the line is determined by two peaks where anyone who bought got crushed by what happened next. All of these losers have been praying for the last month or so to get out 'even', and they may just get their wish. But I doubt they'll come away with much of a profit, since there's a dome of copious supply just above the line (which can be shorted with a stop-loss as tight as you can handle.) There is no way buyers will get past the trendline on the first try, and if their efforts continue for a few more weeks, that would eventually create a head-and-shoulders pattern. It would require perhaps 20-25 days to accomplish this, assuming the right shoulder develops with the symmetry common to H&S formations. The foregoing doesn't negate the 4907.75 bull-market target I've been drum-rolling here for quite a while, but it does give us a more modest objective that could prevent an important downturn from somewhere shy of 4907.75 from catching us unawares. _______ UPDATE (Jan 13, 6:43 p.m.): We got chumped out of an enticing short when buyers failed to push this hoax up to the trendline. The line seems too eclectic to have been front-run, but we'll never know for sure. There's still tons of resistance there in any event, so we'll have to figure out another way to get short if and when the futures rally back up to the line. In the meantime, I expect a tradeable bounce from very close to p=4631.75 in this chart to confirm the pattern and its 4524.00 downside target.
What could possibly go right in 2022? Merely posing this question is courting ridicule from some quarters, since we have grown an asset bubble with the disaster potential of 1929's. Still worse is that it sits on a geopolitical powder keg as big and dangerous as the one that detonated a decade later. Under the circumstances, the best outcome imaginable would be for the Dow Industrials to be trading at or near current levels come December, for that would imply economic Armageddon had been postponed for yet another year and that Covid bloviators had taken our minds off much bigger problems. But at what cost? The Fed already has $8 trillion of manifestly unpayable Treasury debt on its books, and piling up more of it in order to keep stocks and real estate from crashing will only deepen the inevitable damage when the bubble pops. That's why the very idea of a 'taper' seems so ridiculous, even if the mainstream media take this logistical absurdity seriously. Why would Powell & Co. tighten credit when merely hinting about it causes the stock market to dive unnervingly? Worsen the effect with actual tightening and you risk throttling an asset mania that has indefinitely postponed the collapse of the U.S. economy and the onset of a deep depression. ...or Wrong Two assumptions that could go very wrong in 2022 illustrate the treacherousness of the mine field in front of us. First is the notion that a semblance of political leadership will be restored when the Republicans regain control of Congress in November. There are good reasons to think voters will turn out in droves to neutralize the already senescent Biden and repudiate the destructive political agenda of the hard left. But what if a bear market comes first, pitching the U.S. into
I'll be interested to see how well our longstanding bull market target at 187.93 works. On the one-hand, I've drum-rolled it loud enough and for long enough to compromise its usefulness. On the other, the particular pattern is the most reliable of the ones I employ for trading and forecasting, with a relative quick ABC, followed by a very elongated C-D leg that causes Gartley and other 1-2-3 pattern traders to lose sight of the 'D' target. There is also the punitive correction that began a zillionth of an inch from the midpoint pivot. That is usually predictive of an equally precise pullback from the D' target, which became an odds-on bet to be reached when the stock blasted free of the midpoint pivot's gravity in November. The least likely scenario I can envision is a bear market starting without D having been reached. We'll be on our guard for this nonetheless, watching for minor corrective abc patterns to start exceeding their 'd' targets, and for minor abc rallies to start failing at 'p'. _______ UPDATE (Jan 10, 5:20 p.m.): Bears gave it their all but failed to drive AAPL down to p2=167.36, even, let alone to D=167.37. The short-squeeze that ended the session would trip a 'mechanical' short at x=172.66, stop 175.31, but I'm going to suggest sitting this one out, since the squeeze is unlikely to abate overnight. _______ UPDATE (Jan 12, 5:10): Bulls will face heavy supply between 177 and 181, and I'll be as interested as you to see how they handle it. If poorly, the expected push to 187.93 may take significantly longer than I'd originally imagined, assuming it happens at all. _______ UPDATE (Jan 13, 6:52 p.m.): I'm no fan of head-and-shoulders patterns because they are everywhere you seek them, but this one is
We'll treat last week's stall-n-dive as just an annoying detour on the way to a 4907.75 rally target that still looks likely to be reached. It is odd nonetheless that sellers were unable to put this gas bag down on Friday with a concerted push toward D=4585.25 of the small 'reverse' pattern shown. Powell had ratcheted up his tapeworm twaddle to the max earlier in the week, and although T-Bonds acted as though they actually believe the guy, stocks evidently know better. Still, ES is in the throes of a 'Matt's Curse', having peaked almost precisely at the 4803 secondary pivot, When this happens, odds of a corrective crash through the 'C' low -- in this case 4485.75 -- supposedly rise. _______ UPDATE (Jan 10, 5:33 pm.): It took two tries, but a trade I recommended in the chat room at 10:53 got traction just ahead of today's 90-point rally. Several subscribers appeared to have jumped on it, so I tracked the position and provided detailed suggestions for managing the risk as the day wore on. Check it out and see whether you could have followed my advice. It included the use of a 'dynamic' trailing stop, a concept explained in my running commentary. I'd suggest moving to the sidelines for now, since the session ended with bears hanging on the ropes.
A 'mechanical' buy that had been two weeks in coming triggered on Friday after bouncing off the green line at 22.02 no fewer than three times. Numerous subscribers swore on a stack of Holy Bibles that they have been paying attention to my Silver touts, so I will establish a tracking position and see how it goes. I'll use a 22.10 cost basis, since Thursday's initial bounce from the green line would have been stopped out following a partial, profitable exit. The not-so-sloppy-seconds pattern we are left to trade is shown here, and it implies two contracts would have been exited at p=22.27. Cash out a third at d=22.59 and use a 22.03 stop-loss for the 25% that remains unless instructed otherwise. _______ UPDATE (Jan 10, 7:03 p.m.): The futures are closing on 22.59 this evening. Exit another 25% as suggested, but switch to an impulsive stop-loss on the 30-minute chart for the 25% that remains. This implies stopping out the trade if a presumably corrective down-leg exceeds two prior lows without correcting, At present, the stop would be at 22.36. ______ UPDATE (Jan 11, 8:41 p.m.): If you Bible-thumping supposed silver lovers followed my instructions, you are still long a single contract (or 25% of the original position), with a realized gain of $4150 and another $3400 of unrealized. Use a 22.48 stop-loss for what remains, o-c-o with a closing offer at 23.20. An exit there would yield a total profit of around $9100. _______ UPDATE (Jan 12, 1:24 p.m.): Today's strong upthrust has hit 23.22, so we are officially out of the position with a theoretical profit of $9100. The rally impaled the midpoint pivot of a larger pattern with such force that we can now use D=24.01 shown in this chart as a minimum upside objective.
Since there are no actual bears trading the cryptos, we have to assume that wrenching declines such as we've seen in this vehicle over the last two months have occurred simply because its institutional sponsors have stepped away to pick their teeth and have their nails done. They may not know it, but the chart says they will begin buying again at either the 39,805 'D' target of the pattern shown, or deep in the 'discomfort zone', a tad below 38,500. There is no equivalent pattern in ETHE, only a jerry-rigged one with a 'D' target at 23.54 (daily chart, A= 47.08 on 12/1) and a too-vague discomfort zone. _______ UPDATE (Jan 10, 6:55 p.m.): Ahem. The 39,805 Hidden Pivot support drum-rolled above caught the nearly exact low of a $2,454 rally. This feat -- just a cheap parlor trick, as you will already know by now -- seems to have been the proverbial tree falling silently in the forest, since no one noticed, much less inquired about how to trade it. ______ UPDATE (Jan 11, 8:46 p.m.): Several subscribers professed to have leveraged the target; however, because this vehicle is not tradeable and the subscribers did not say what they used as an alternative, I have not established a tracking position.
The 'reverse' pattern shown triggered a 'mechanical' buy on Friday slightly above the green line I'd flagged at 1783.20. A subscriber who reported doing the trade didn't say how, but I'll assume a tight 'camo' set-up was used that might have triggered as low as 1783.90 (for instance: 60-minute, reverse a= 1785.40 on 1/6 at 9 a.m.). I'll recommend exiting half the position on the opening Sunday night, since gold's rallies have been balky and short-lived. Thereupon, implement a trailing stop that would put half of any profits booked up to that point at risk. A third contract should be offered $10 higher, but check back, since that could change depending on how this vehicle opens on Sunday. ______ UPDATE (Jan 10, 7:13 a.m.): Exiting two contracts at 1796.40, Sunday evening's opening price, leaves two contracts (or 50% of the original position) with an effective cost basis of 1770.00. Offer half of what remains at 1813.30, just below the pattern's midpoint Hidden Pivot, with an o-c-o order stopping out the entire position at 1785.60. (This is an 'impulsive' stop on the 30-minute chart that references two very recent, external lows.) _______ UPDATE (Jan 11, 8:55 p.m.): If you followed my instructions, you're sitting on realized gains of $4,300 and are still long a single contract (or 25% of the original position) with an unrealized gain of $5,000. Use an 1801.00 stop-loss for now, O-C-O with an order to exit the remainder of the position at 1839. A 'dynamic' trailing stop can be substituted above 1828. ______ UPDATE (Jan 12, 5:23 p.m.): The dynamic stop suggested above triggered at 1825.40 after the futures topped at 1828.20. The total profit on the position would have been around $8000. Do nothing further for now.
