T-Bond prices further distanced themselves from mid-June's lows, adding to the evidence that interest rates may have made an important top. On Friday, this proxy for the long-term Treasury Bond took a leap on the opening that exceeded not only the highest target I could have projected using the hourly chart, but also surpassed a series of 'external' peaks recorded in June that had promised to offer daunting resistance. A selloff subsequently erased most of the gains, but this did not diminish the technically bullish signs adduced above.
Sellers ran out of steam precisely at the 104.42 target shown in the chart. This implies the so-far one-day bounce could travel a bit farther or even get legs, since the pattern took fully two weeks to play out. I'd proffered a 105.52 downside target initially, but when it was somewhat exceeded, a new target was warranted. The one in the chart was calculated simply by sliding 'A' up a notch above the original one-off. Now, if the uptrend exceeds c=114.05 of the reverse pattern, we should infer 116.29 as a target. Here is the chart from which it is derived. Please note that one coordinate was slightly off and that the corrected target, as implied above, is 116.29, with p=110.43. (I have not corrected the actual chart.) _______ UPDATE (Jul 5, 9:21 a.m.): Last night's vicious little head-fake above p=110.82 reminds me of NatGas, which is always out to cripple and maim those who are capable of getting the trend and the swings right consistently. In retrospect, and in this particular instance, this behavior justifies using an ABCD pattern anchored at 101.53, a 'marquee' low. It yields a D target at 117.08 that is about to become moot with a presumptive feint below C=104.56. Incidentally, I am not buying into the bullish story that the resurgence of China's manufacturing sector is about to drive energy prices to the moon.
AAPL has been so quietly boring and disappointing that one could almost forget that it is the most important stock in the world, a true bellwether for...everything. It's on a 'mechanical' short at the moment, triggered last week by a rally to the green line (143.27). It shows no eagerness to do the right thing by falling to D=117.87, but it's going to get there sooner or later. How can it be avoided with sales of the company's overpriced cell phones facing the deepest recession since the 1930s? There is mountainous supply every inch of the way above these levels, so it'll be interesting to see how the stock's evil-genius handlers hold it aloft for distribution. The time-honored tactic in bear markets is not a lengthy slide sideways, but rather a nasty goosing of shorts just when things are quietest. Let's watch to see how they do it.
The dollar looks bound straightaway for the 106.49 rally target we've been using for the last month or so. I'd expected a correction down to the green line, but it was not to be. Although my long-term forecast calls for significantly higher prices challenging peaks near 120 recorded decades ago, we should pay close attention to price action at 106.49, since this Hidden Pivot resistance looks sufficiently clear and compelling to thwart the dollar's strong ascent. I'll continue to track DXY in any event, since an increasingly strong dollar poses a grave threat to the global economy and financial system. ______ UPDATE Jul 5, 8:20 p.m.): Today's ballistic rally slightly exceeded the 106.49 target billboarded above. Given the way it speared p and p2, more upside to at least 107.57, (shown in this chart) over the near term appears all but certain. A question for the dismal scientists and pundits to ponder: How inflationary is a runaway dollar??
I've been so down on gold lately that I should probably recuse myself, but here we go anyway: The trampoline rally off Friday's heavily manipulated low is likely bound for at least 1828.80, the D target of the reverse pattern shown. It is not quite a done deal because of the hesitation at p. That's why bulls should be careful if and when the move hits p2=1817.30, where a tradeable reversal could occur. Meanwhile it would take a print exceeding 1882.50 to negate the 1756.90 downside target that has been in play for nearly a month. ______ UPDATE (Jul 5, 11:20 a.m. EDT): So much for giving gold the benefit of the doubt. Today's freefall looks bound for D=1746.30, a back-up-the-truck spot for bottom fishing as far as I'm concerned. Here's the chart, with a pattern that caught a beautiful mechanical short just head of what eventually will have been a $136 selloff.
Sellers cracked a clear and compelling midpoint support with such force on Friday that we should assume August Silver eventually will make its way down to the 16.53 target shown in the chart (inset). For now, though, let's use p2=18.06 as a minimum downside objective, even if the futures managed to close Friday above p=19.59. What would it take to mitigate the severity of this outlook? At the very least, I'd say a run-up exceeding 21.57, where a double-top was created on the hourly chart on, respectively, June 23 and 26. To be even more sure, we should stipulate that the rally hit 22.07, surpassing a peak recorded on June 16 just ahead of this continuing cascade.
Even springboarding off an engineered low in the first hour on Friday, DaBoyz were unable to achieve the modest red-line target shown in the chart. The thugs who work the night shift will get another crack at it Monday evening, or whenever it is that stocks re-open for a short while to avoid a legally forbidden four-day hiatus. I won't suggest placing any bets until we've seen how this bear rally does when pitted against the 3843.38 Hidden Pivot resistance. As always, a decisive move past a midpoint would imply more upside to p2 (3894 in this case) at least, or possibly to D (3945). However far it gets, I seriously doubt this rally is destined for greatness. Bears will need to be on their guard nonetheless, since feel-good delusions from a celebratory Fourth weekend could persist into the new week. ______ UPDATE (Jul 5, 8;33 p.m.): Today's excruciating 'Braveheart' short-squeeze did not amount to much, even on the hourly chart. But it did breathe new life into this conventional, bullish pattern with a 3998.00 target. As always, it's all about how buyers handle p=3869.63, which has yet to be touched.
GDXJ bounce sharply Friday off a major downside target that has been a year in coming. I was reminded by a Pivoteer in the Trading Room that I had characterized the 34.10 'D' target shown in the chart as a potential back-up-the-truck opportunity for bulls who have been patiently waiting for this cinder block to hit bottom. And perhaps it has, since the pattern is far too gnarly to have been queered by village idiots and algos who seem, finally, to have gotten the hang of reading conventional ABCD patterns. This one would not likely have been on their radar, even if it represents radical perfection in our playbook. It helps, too, that I myself had forgotten about the target and haven't mentioned it in a long while. If you bought the low on Friday, please let me know in the chat room so that I can establish a tracking position. ______ UPDATE (Jun 28, 7:14 p.m.): Much as this little p.o.s. would love to keep falling just to make sure every bull has been squashed like a bug, it's going to have one very tough time taking out the 32.68 Hidden Pivot support shown in this chart. Speculative buying, tightly stopped, is strongly encouraged, especially if you made money on the way down. Rookies looking for action can bid 32.71 for 200 shares, stop 32.49. _______ UPDATE (Jun 30, 3:54 p.m.): This turd is really starting to stink up the place. I've given up caring or even believing there has to be a bottom. But for anyone who is somehow still interested, the next logical downside target is 29.92. Bottom-fishing there is recommended if your hobby is losing money. Here's the chart.
The bullish 'reverse' pattern aired here last week served us well, taking the guesswork out of a rally that even at its nastiest was an easy read. The 3969 target can be used this week as a minimum upside objective, but also as a place to get short with the usual risk-squashing tricks if you've made some money on the way up. Short-covering took a while to push the futures past the 3804 midpoint pivot, but once they broke above it Thursday night, the move became sufficiently decisive to turn 3969 into an odds-on bet. _______ UPDATE (June 28, 6:04 p.m.): Even though I'd drum-rolled expectations of a weak bounce, the one we got was even feebler than I might have imagined, falling fully 16 points shy of the 3966 minimum target given in the weekly commentary. This is despite the fact that DaScuzzballs engineered a head-fake on the opening bar that exceeded the previous day's 3948 peak by a hair. The failed short-squeeze trapped bulls in a way that is not going to sit well with them on Wednesday, so don't expect a miraculous recovery. There is also a mountain of bad news weighing on the stock market at the moment, and the difficulty DaBoyz are having stampeding shorts implies another big leg down rather than a big bear rally. _______ UPDATE (Jim 29, 9:16 a.m.): A chat-room denizen posted sentiment figures that put bearishness at its second-highest level in 35 years. I joked that perhaps this time bears have finally gotten it right, but that is most unlikely. In aactuality, it's hard to imagine a sentiment reading so extreme NOT producing a powerful short-squeeze rally. It's coming, so we will need to monitor the lesser charts closely to get the timing right. I'll suggest starting with this chart,
Crude ended the week with an unimpressive rally that exceeded no prior peaks. Accordingly, I'll suggest sticking with our plan to wait for a pullback to x= 98.84 (the green line) before we do any buying. Since the by-the-book stop-loss at 86.88 equates to entry risk of nearly $12,000 per contract, we'll need to initiate the trade using a 'camouflage' set-up on the very lesser charts. There are no guarantees the required pullback will occur, but I'll post alternative ideas for getting long only if chat-roomers demonstrate keen interest. _______ UPDATE (Jun 28, 8:10 p.m. EDT): This chart, with a 113.47 rally target, is the least bullish picture I can draw at the moment. Why so cautious? I am bearish on the global economy is why, particularly China's manufacturing sector, which sets oil prices at the margin. Yes, an exogenous geopolitical shock could send quotes soaring, and we must always be ready to concede that that's possible. It would become a likelihood in my view if the August contract were to blow past 113.47. This squares with my view that market trends and price action determine the news, or at least our perception of the news, rather than the other way around. Whatever happens, the 'conservative' rally pattern I've drawn cannot but tell us whether the uptrend is just getting warned up. If the futures close above 113.47, I'd infer they were bound for a minimum 116.70, or even 121.75 if the lower resistance gives way. That target was calculated by sliding 'A' down to the May 19 low at 100.66, turning a reverse pattern into a conventional one. ______ UPDATE (Jun 29, 6:34 p.m.): Crude means to fool us with psychopathic behavior, but it's all just impulse legs, isn't it? The futures retreated sharply after exceeding the 113.47 target by