The simmering geopolitical crisis has been insufficient to prop up gold against relentless selling ever since prices hit a record 5700 last February. Now the February contract lies within an inch of a 'secondary' Hidden Pivot support that has resisted the downtrend for several weeks. The mildly encouraging news is that a 3822.70 target $200 below could provide support. It comes from a pattern much too obvious to work precisely, but it will work nonetheless, possibly repelling bears with enough vigor to jump-start the bull market. However, there is a more compelling target beneath it at 3630.70 that you should fix in your minds. It is more closely congruent with the 82.46 target we've been using in GDXJ (see below). So as not to leave things too glum, my best-case alternative would be a rally surpassing June 21's 4238.10 'external' peak. That would probably end the bear market, but I don't consider it likely.
With last week's breach of a key 'p2' support at 56.75, the futures look primed to fall to D=43.155. The target would be even lower had I used the marquee 'A' high, but the one I've improvised should be good enough for analytical purposes. Notice that the target is significantly more bearish than the one I've flagged in August Gold (see above). I expect this discrepancy to be resolved via Silver's bullish reversal from a low somewhere above the 43.155 target. The number to watch is 47.720, the D target of A=72.18. If a rally from that price, or from any price above it, achieves 7.11 points, take it as a sign that the bear market is probably over.
Last week began with a doomed two-day rally that left our 82.46 target unchanged. It has now been five months since shorting an upthrust proved to be a bad bet, and that will probably hold true at least until GDXJ finds a bottom at or near our target. It is a Hidden Pivot support too compelling to simply give way. It is also commensurate with a 3630 target I've provided for August Gold where a significant bullish reversal seems most likely to occur. Alternatively, we'll set the bar at 120.06, just above an external peak recorded on May 29, to alert us to the possible ending of the bloodletting. _______ UPDATE (July 25): Unlike gold and silver futures, GDXJ rallied last week to create an impulse leg on the hourly chart. I suspect this is a false alarm, but we'll give it the benefit of the doubt for now. The rally would gain credibility if and when it vaults the midpoint resistance at 101.55 and then goes on to trash D=107.22. We'll monitor these obstacles closely, since a move through them has the potential to lead a similarly bullish move in gold.
A two-day surge pushed rates on the Ten-Year past three prior peaks, two of them daunting 'externals'. This amounts to a quite powerful impulse leg, presumably with enough power to challenge the 4.69% high recorded in mid-May. The usual gallimaufry of 'scholars' will debate how many Fed governors can dance on a cow pie, but that won't alter the fact the market forces are putting significant upward pressure on Treasury yields. The short-term technical picture suggests they will reach a minimum 4.73% over the next 2-3 weeks, but 4.82% is possible,
The week ended with a ratcheting, brain-dead rally inspired by a relative dearth of "news". The Wall Street Journal led with this grabber: Fears Over New Luxury Jet Forced Trump Back to an Old Air Force One After Israeli Warning. The stock market's excruciatingly modest gains didn't quite reach the 7682.25 target shown, but we should expect it to be achieved early in Monday's session. The target is worth shorting with a tight stop, especially if you can do it with a 'camo' trigger to limit risk. If this somewhat obvious Hidden Pivot gives way easily, don't assume that the new record highs that follow will leave the market's shills and cheerleaders groping for superlatives. In fact, we'll turn extra-cautious, since this would be a great opportunity for Mr Market to spring a bull trap worth remembering.
The stock, still a sensible bellwether for the bull market, has bounced 12.5% since bottoming two weeks ago at 349. The low fell somewhat shy of a 339.27 target, but I expect it to be achieved nonetheless before the stock can put in a solid low. That's because sellers made such short work of the 402.80 midpoint Hidden Pivot support the first time they encountered it on the way down. Alternatively, if the stock comes bolting out of the gate when the new week begins and then closes above 402.80 for two consecutive days, take it as a sign that it's headed for a minimum 434.56 (x, the green line).
Last week's strong two-day rally generated a lot of bullish talk, but from a Hidden Pivot standpoint it merely triggered an enticing 'mechanical' short at the green line (x=73.44). The position was theoretically profitable when the week ended, since the futures were trading $2 below the entry point and nearly $7 from the 78.15 stop-loss. There are no guarantees the downtrend will reach D=59.35, since sellers have still yet to decisively penetrate the midpoint support (p=68.75). But the hypothetical trade looks likely to produce a profit with a dip to at least p, or even p2=64.05. _______ UPDATE Jul 14, 8:43 a.m. EDT): The futures this morning have fist-pumped through a midpoint Hidden Pivot at 79.37 associated with a D target at 91.69. Looks like July/August is unlikely to be Trump's -- or anyone else's -- best month.
The futures triggered a 'mechanical' buy signal last Wednesday when they dipped to the green line. This implies they are no worse than an even bet to achieve the 4312.80 'd' target in the chart shown. They'll have to do at least a little better than that to suggest the rally is capable of getting legs. Most immediately, that would mean pushing past the 4403.60 peak recorded in mid-June. That would generate an impulse leg on the daily chart capable of hitting 4746.60, if not necessarily new record highs.
If there is reason to think gold prices are finally recovering, it is Silver's bounce from near a D correction target at 55.56 that took four months to reach. Neither got as close as we should have preferred, but silver's 60-cent miss, amounting to 1.1%, is probably close enough to offer a hopeful sign, even if the jury is still out on gold. Its corresponding low fell fully 4.2% shy of the target, a shortfall that allows less room for encouragement. The next impediment on Silver's chart is a middling 'external' peak at 67.72 recorded on June 21, and an easy pop through it would be reason to take notice -- and heart. _______ UPDATE (Jul 12): Silver offered little to encourage last week when it failed to extend the previous week's moderate bounce. It will still need to surpass the June 21 peak at 67.72 to hint of a turnaround, but getting past yet another at 72.185 would be far more bullish.
GDXJ ended the week with a tentative double bottom at the 96.05 secondary pivot of a large corrective pattern. The rally was not impulsive, however, since it exceeded no 'eternal' peaks. That would require a leap to 120.06, a penny above a high recorded on May 29. This is somewhat more ambitious than what I am requiring of silver and gold futures, but the picture is sufficiently ambiguous to require it. The good news is that if this vehicle relapses to D=82.46, you can confidently load up the truck there. _______ UPDATE (Jul 12): Sellers continued to pound the 96.05 'secondary support' of the pattern shown. A two-day close beneath it would likely clinch more downside to the 82.46 'D' target. Alternatively, it would take a rally exceeding June 17's 118.19 peak to put bulls back in charge.
