The S&Ps will be trading above 5000 if MSFT rallies the 15% needed to achieve the 430 target I've ballyhooed in this week's commentary. Even so, I doubt the E-Minis are about to blow through the 'discomfort zone' just above, since it is fraught with prior peaks and voodoo numbers. Accordingly, I've sketched a bearish reverse pattern that would trigger a short if the futures were to fall 75 points from any high. That's an unacceptably large trigger interval, but you can cut it down to size by setting up a 'camouflage' trade on a chart of lesser degree, such as the 15-minute.
My short-term-bearish outlook is more evolved in AAPL than in the E-Mini S&Ps, since the stock already triggered the prospective short noted in the tout for the latter. The trade would have finished the week $2.48 in the red, but I am not advising getting into it belatedly in any event -- at a better price, as it were. It would take but a 1.6% rally to achieve new record-highs, and there is no compelling technical rationale for betting against this. The next attractive buying opportunity based on the chart would come at p=184.60, a midpoint support that we can bottom-fish with an rABC pattern on the 15- or 5-minute chart.
With each new upthrust, TLT continues to pass our tests -- most recently by creating of a fresh impulse leg on the daily chart. This occurred when the rally exceeded a look-to-the-left 'external' peak at 91.61 recorded on September 22. The move topped 11 cents shy of the 93.17 'D' target shown in the chart, so that obstacle remains to be tested this week. Assuming it is exceeded, the next daunting impediment would be the 96.54 peak recorded on August 31. It is important enough that any move above it should be regarded as a sign that a potential bull market is emerging from its infancy.
Buyers impaled the 2073.00 target of the reverse pattern shown, implying the futures are on their way to at least 2152.60, the D target of a lesser pattern whose A & C coordinates are shown in the chart. Given the way bulls consolidated above the smaller pattern's midpoint pivot, the probability is high that D will be achieved with little ado. Since the futures by then will have broken free of gravity at $2,000, we should expect a relatively quick move from 2152 to 2,200, the first round number resistance above the soon-to-be-obliterated one at $2,100.
March Silver has moved into a thicket of prior peaks, but there should be little doubt it will surpass them and head unhesitatingly toward the 27.16 target shown. The December contract we'd been tracking has stalled at p2, but the equivalent obstacle here has been exceeded on a closing basis, attesting to the power of the move. The big pattern has yielded up just one 'mechanical' buy so far, but the rally has steepened since, suggesting that a swoon to the red line, never mind the green one, to set up a 'mechanical' buy is unlikely. In practice, this means we'll need to find a reverse pattern on a chart of small degree to get long enroute to 27.16.
The 42.09 target shown has been with us for a while but only came into focus on Friday with the clean move through, and close above, p2=39.18, the 'secondary pivot'. Since GDXJ shredded p=36.28 as well barely a week ago, the implied finishing stroke to D would seem almost as certain as that the sun will rise in the East tomorrow. The rally has been unkind to doubters and will not become any less so as it traverses the white void just above. Prompt me in the chat room if you've got an idea of your own that you'd like vetted, but it will take diligent attention to the lesser charts in any case to get aboard belatedly.
Crude teases prior highs and lows so relentlessly as to seem hellbent on tormenting everyone who trades it. I doubt the bear cycle begun from around 88 on October 20 will reach the 66.30 'D' target shown, but p2=69.56 certainly seems possible, given the small breach of p=72.93 two weeks ago. In any case, the next buying opportunity would likely come on a marginal breach of lows just to the left of Friday's close. The trigger interval would be $1.39, so check with me in the chat room for risk-limiting ideas before you take the plunge.
The Dollar Index tripped a theoretical buy signal on Friday when it slightly exceeded the green line (x=103.57) early in the session. A hypothetical trade would have finished in the red, but we'll await more evidence next week to determine whether the rally has the moxie to reach p=104.82, the midpoint Hidden Pivot resistance. Although we don't actually trade this vehicle, its gyrations inform and influence our outlook for other vehicles, particularly bonds and bullion. Assuming the latter remains strong, it will be interesting to see whether the dollar and gold/silver are able to rise simultaneously. That would be an important tone change -- something we haven't seen before for a prolonged period of time.
The December contract is about to get interesting, since its steep climb to a 4612.75 target, the attainment of which was never in doubt, will soon generate a powerful new impulse leg. This will happen when the uptrend exceeds the 4597.50 'external' peak recorded on September 1. Although the relatively small push it would take to achieve new record highs never figured into our trading plans, it was always a possibility. If and when it happens, we'll want to keep this old IBM chart well in mind, since it is as perfect an example as I could offer to show you how devious a major top can be. This one trapped bulls and bears alike with an initial high that fell slightly shy of my D target. When the stock sold off from the initial high, bears evidently were so busy patting themselves on the back that they were unprepared for, and unbelieving of, the short-squeeze sneak attack that produced the final high exactly at D. The devastating collapse that occurred thereafter could only have happened if everyone were unprepared for it. I've left some additional notes on the chart, which was designed to teach a key aspect of the Hidden Pivot Method, to wit: Healthy trends produce 'abcd' corrections that do not reach their 'd' targets. This one did, however, thereby warning that when IBM reached D of the dominant (i.e., bull-market) cycle, that would be the last hurrah of the long-term bull.
Following a relentless short-squeeze rally over the last month, AAPL has receded moderately so far from within 43 cents of the 193.36 Hidden Pivot we were using as a minimum upside projection for the bull market. The pullback did not quite reach the green line (x=188.76) on Friday, so there is as yet no theoretical sell signal. This seems likely to occur as the new week begins, and we can use p=184.60 thereafter as a minimum downside target. It can be bought with a reverse pattern trigger when the time comes, but our trading bias should be bearish in the meantime. Were AAPL to head-fake above last week's 192.93 high, I'd suggest using a voodoo number at 194.11 to get short. Tune to the chat room and keep your email 'Notifications' turned on if you want to stay apprised.
