Energy markets have grown bored of excitement, and that's why crude prices are likely to fall even lower, despite the fact that the world's supply has been in chaos for months. It would appear that traders have grown fatigued trying to discount Trump's daily hubris. The war may be over, at least on paper, by the time you read this. But whatever happens in the real world, look for July Crude prices to ease until the futures hit the 80.80 Hidden Pivot support shown. A tradeable bounce there is likely, and I would encourage you to take advantage of it if you know how to get aboard with a 'camo' trigger. Trickier still will be trading the remaining $6 to the target, but it looks 75% likely to be achieved.
If you got long at or near the green line as I advised here last week, your theoretical, unrealized profit on the standard four contracts would be around $71,000 -- more than enough to pay for your subscription and a luxurious week in your favorite destination. Typically, I advise taking off half the position at the midpoint Hidden Pivot, shown here as a red line at 4636.80. At that point, you would have a realized gain of slightly more than $50,000; plus, two contracts left, each showing an unrealized gain of about $25,000, for swing at the fences. The 5144.00 rally target we've been using for months will remain valid unless the pattern's point 'c' low is violated first. But, yes, you're right: Who cares, as long as we can continue to exploit this tired pattern for all it's worth. ______ UPDATE (Jun 1, 9:52 a.m.): Easy come, easy go. A 'dynamic stop'-loss set at 1:3 would have stopped out the trade at 4576 for a fat gain, and an 'impulsive' stop on the hourly chart would have done the job at 4512. However, I will continue to track the position as though bulls are still holding the bag, frozen with fear by this morning's gratuitous plunge. Both of these risk-management tactics are covered in the Hidden Pivot Course I've made available free to subscribers. I will switch to the August contract shortly.
July Silver recently flashed the same buy signal as Comex Gold, but so far the result has been a thudding flop. Silver's failure to get off the launching pad suggests that gold's robust liftoff will not get very far. (Even so, a limited move could still produce a theoretical profit of $100,000 or more, based on a traded recommendation contained in last week's gold tout.) I'll be looking for silver to drag June Gold down after the latter has achieved a 4636 objective that lies about $70 above Friday's settlement price. The corresponding target in July Silver is 88.01, a big leap from here. The pressure on gold is not likely to ease up soon, since it is being caused by liquidations by countries strapped to pay for soaring energy costs.
The week finished with a strong kick, but it was probably a fake. That's because the A-B leg of the pattern in which the rally occurred wasn't even impulsive, at least not on the daily chart. Notice how the point B high failed to surpass the 142.40 peak recorded in March. I expect the rally to fail at the red line, a Hidden Pivot at 124.75, and the subsequent relapse to hit 97.03 before this casualty of Hormuz resumes its long-term bull market.
Rates pulled back so sharply from menacing heights last week that one suspects Trump's "team" was working its magic from the shadows. The president may not be able to control interest rates, but there is little doubt he can jostle them around for a little while when things start to get ugly. The week finished with a small bounce from slightly beneath a correction target at 4.43%. Although it's hard to tell whether this will prove to be the beginning of another scary run-up, a relapse exceeding Friday's low would portend more slippage to as low as 4.33%.
The thieves, hustlers and arse-bandits who manipulate global oil markets for a living are working 'news' of an imminent peace deal for all it's worth, pulling the July contract down as much as $6, or 6%, on this evening's opening bar. The news itself is the usual Trump blather about how 'close' a deal is, but with enough wiggle room to let the geopolitical world simply shrug it off when nothing happens. The markets have been all opportunism and zero fear lately, screaming higher when oil prices are steady-to-lower, but remaining flat or falling only slightly when oil prices are rising. I've offered a bet in the chart room via a 92.77 trigger for the July contract. The trade was recommended for Hidden Pivot aces only (aka 'Pivoteers'), since a 'camo' entry set-up is needed to avoid the $6,650 entry risk implied by a conventional stop loss at 86.13. The order would have filled easily on the opening bar and is presently somewhat in-the-red if executed conventionally. This is a one-level play, predicated on an exit at 99.41. However, any remaining contracts held for a swing at the fence should use a target of 112.29. That's substantially lower than the 120.62 target we used for the June contract, the difference being accounted for by respective B and C coordinates that are significantly lower. The smallest rABC camo trigger available can be found on the 3-minute chart at x=91.46, where a=91.36 at 18:12. Half would have been covered at 91.68, and 25% more at 92.10. Assuming four contracts were purchased initially, the cost basis for the single contract that remains would be 90.38. That is what I will use in order to provide tracking guidance. For now, use an 'impulsive' stop drawn from the 3-minute chart. At the moment (10:42 p.m.),
Last week's price action left the scribblings of Mr. P.O.S. Market at his most devious on the daily chart. The intraday high on Friday completed a corrective pattern that could easily be taken for a double top. But who would be crazy enough to go home short over a three-day weekend when stocks have been rising eight days out of ten? And yet. I told subscribers nonetheless to take a few puts home, just in case. The completed upward correction is not all that is tricky here. The low of the week appears to have touched the green line, signaling a potentially important sell signal for the psychotic run-up since March 31. But if you look at it with a magnifying glass, you discover that the low did not quite trigger a sell signal: for in fact, because the 7354.19 trigger price must be rounded down to 7354.00, the low actually missed touching it by 0.25 points, or a single tick. If I were in a gambling mood, I would have jumped the gun and shorted the crap out of Friday's high, especially since I'd predicted it. But if I am doing this strictly by-the-book, the short becomes more speculative, hence the recommendation to take home just a handful of puts. However, if the futures fall from the get-go on Sunday and continue down to the green line, I will do whatever it takes to establish a short position, even though it will be more difficult than if I'd placed my bet on Friday, when the rally looked far more menacing to shorts. Because there is such a long drop to the target at 6796, fear and greed will make it a, um, real bear to get short after this brick has begun to plummet. Stay tuned.
Friday's powerful thrust was global, and it put rates on the U.S. Ten-Year note on course for a run-up exceeding 5%, the highest they've been in nearly two decades. It is market forces driving the rise in yields, and although Trump may be able to convince some that the consequences will be short-lived, this can only create a credibility problem for him as mortgages head toward 7%, or perhaps even higher. The highest 10-Year rate I can project beyond the 5.09 'D' shown in the chart is 6.075% on the monthly (A=2.52 in Aug 2022). That would be hard to square with the very deep recession that would occur long before it costs The Guvmint (i.e., taxpayers) that much to borrow. _______ UPDATE (May 23): The long-term chart shows how the 6.075% target identified above was derived. There is so much thrust in this picture that the target seems likely to be achieved. It's hard to imagine how the U.S. economy could avoid seizing up under the burden of rates that high. In any event, the rally faces crucial resistance at the 4.839% midpoint Hidden Pivot (p) shown. I expect it to be decisively breached because the corrective retracement begun from the 5% top in October 2023 failed three times to reach its 'd' target at 3.675%. In the Hidden Pivot system I use to predict price reversals and gauge trend strength, the rule is that strong trends tend to produce weak countertrends. Thus, the failure of a correction to reach its D target usually means the dominant trend is likely to continue.
June Crude has broken above the 104.64 Hidden Pivot Midpoint where I'd told you to expect a crucial test of resistance. The intraday peak on Friday was just marginally higher, but it is sufficient to imply the 120.62 per barrel target is no worse than an even bet to be reached. We'll stipulate that a two-day close above p is needed to confirm the rally is strong enough to reach D. Trump has been pushing the idea that energy prices will drop sharply when things settle down in the Middle East, but I'd suggest putting your trust and confidence in these charts, which I will update as warranted.
The chart imagines that Friday's impressive selloff was just the start of significantly more weakness to come. But notice that the worst case is 6795, a 10% haircut that wouldn't even qualify as a bear market. This scenario is a step ahead of reality, however, since the downtrend has yet to trigger a conventional sell signal at the green line. If that happens, we will have been onboard from within a hair of the top, since we purchased SPY 720 puts for 0.89 near the high of the previous day's rally. Although the options ended the day a few cents underwater, they vaulted to more than twice our cost when stocks opened sharply lower on Friday. Even better, taking some profits off the table early in the session gave us room to buy more puts toward the end of the day, when they 22 May 720s came back down to 1.00. (Please note that Rick's Picks recommends buying options only when we expect them to at least double in price quickly, usually within two hours.) The cherry on top was their exhilarating surge to 1.65 in the final 30 minutes of the session, when stocks dove. A comment I'd made in the chat room an hour earlier explicitly anticipated this: "With crude quotes not backing off as they usually do," I wrote, "can you guess which direction the stock market will take when the obligatory, end-of-week nitwitting commences?" Loaded with cheap puts, we'll be looking forward to Monday's opening instead of dreading the effects of rising oil prices, an ominous breakout in interest rates, and whatever other troubling headlines greet the day.
