Last week's push above the red line, a midpoint Hidden Pivot resistance at 85.91, is the most bullish price action we've seen in more than a month. It has given way so far to a shallow consolidation with the potential to push this symbol to the 86.51 target shown. It would also make a pullback to the green line (x=84.60) an appealing 'mechanical' buy. You could do so with a bid there and no stop-loss, since the textbook stop at 83.29 would probably be overkill. For now, use p2=87.21 as a minimum upside projection for the near term. Decisive progress above the pivot would shorten the odds of a further run-up to the 88.51 target.
I've disdained the brute power of a 1200-point rally to focus on a simple target at 6051.50 that could conceivably stop the charge. Of course, it never feels like the trend is about to die when it has come this far and lies within easy distance of the old highs. Even if they are achieved, however I'm going to reserve some skepticism for the question of whether the breakout will be marginal rather than the start of a significant new leg up. I doubt it will prove to be the latter, but there's no point getting heavily invested in outcomes attributable more to mental illness than to the rational actions of investors. The target can be shorted, but only if you know how to control the entry risk so that it stays theoretically below $225 per contract.
I was counting on MSFT to drop the hell dead so that it could lead the stock market lower. Alas, it spent the entire week diddling a 462.26 voodoo number where I still expect the the biggest-cap stock in the world, to make an important top. Although it was satisfying to have nailed the top, within a few pennies, of the vicious short squeeze that followed May 1 earnings news that surprised no one (except shorts), watching the stock go all feeble and aimless since then has been an ordeal of patience. My hunch is that new all-time highs are coming, although I will be very careful not to assume that this will pull the broad averages along with it. In the meantime, I'll recommend bottom-fishing at 451.18 with a tight stop if the opportunity arises.
Gold's bull market remains solidly intact, but it is in no hurry at the moment to push up to the $5000 level as its handlers presumably intend. In the meantime, expect the futures to mark time with a drift down into the $3000-$3100 range, where they could cruise effortlessly for months until it's time to stretch the bullish imagination yet again. Alternatively, a decisive push above $3400 would imply that the sovereign entities that have been doing most of the buying sense a further escalation of geopolitical trouble on the horizon. The 'D' rally target associated with a 3393.10 midpoint resistance lies at 3662.80, the highest target I could foresee over the next 5-7 weeks. (Please note that 3423.20 is the equivalent midpoint resistance for the August Comex contract. It is tied to a 'D' target at 3695.30.) ______ UPDATE (June 3, 12:12 a.m.): An explosive overnight rally has pushed the August contract to a so-far high at 3417.80 that lies just an inch from the 3423.20 midpoint resistance I'd said was key. A decisive move past it will clinch more upside to at least p2=3559.20, and thence to the 3695.30 'D' target given above as my maximum upside objective for the next 5-7 weeks.
Silver's long-term chart has been promising a run-up to at least 39.272 for years, but don't hold your breath. It's been stuck in an $8 range for more than a year, but bulls show little inclination to leave the comfort zone any time soon. Moreover, you can see that even a $7 drop to the pattern's green line wouldn't have much impact on the big picture, even if investors would likely be feeling pretty disappointed by then. The most promising opportunity I can discern for bottom-fishing or augmenting a long-term position would come on a pullback to 30.033, the midpoint Hidden Pivot support of a corrective pattern projecting to as low as 26.058. The trade would be invalidated, however, by an upthrust exceeding 34.008. _______ UPDATE (Jun 3, 1:04 a.m. EDT): I'm just a tad skeptical about today's big rally, which fell six cents shy of the 34.995 'd' target of the super-gnarly reverse pattern shown. Let's stipulate that the futures close for two consecutive days above it, or trade above 35.800 intraday, before we assume they're headed significantly higher.
Sellers have crushed a minor Hidden Pivot support near 106k that had looked promising as a place to attempt bottom-fishing, and now the 104,945 midpoint Hidden Pivot support of the large reverse pattern shown. This means the downtrend is very likely to continue to at least d=97,890. Your trading bias should be bearish until that number is reached, but plan on buying there aggressively, especially if you have profited on the way down and have money to cushion a tight stop-loss. You could also try bottom-fishing at p2=101,418, provided you know how to set up a small-pattern trigger to cut the entry risk by perhaps 90% or more.
Rates on the Ten-Year Note retreated last week precisely to a key Hidden Pivot support at 4.39%. We are likely to know soon whether the downtrend will continue, since the reverse pattern here is so clear and compelling. A two-day close beneath the support would portend more slippage to as low as 4.16% over the next 4-7 days. The bet would become even juicier on an intraday print decisively below the red line -- say, 4.34% or lower. If the downtrend reverses from 4.28%, however, that could indicate an important tone change and the possible resumption of the uptrend that has dominated since early April, when rates bottomed around 3.88%.
Although I no longer expect the June contract to achieve a new record high, it can still be bought 'mechanically' on a pullback to p=5483.88, the midpoint Hidden Pivot of the pattern shown. The textbook stop would be 5266.75, implying a theoretical entry risk of nearly $11,000 per contract. It should be possible to cut that down to around $250, however, by using a 'camo' trigger fashioned from an intraday chart, so that's how we'll plan on getting aboard if the opportunity arises. Nudge me if I'm in the chat room then and we can plot this one together. _______ UPDATE (May 27, 5:08 p.m.): DaBoyz left shorts badly bleeding and hanging on the ropes with today's short squeeze. They were warned when last week's low on Friday narrowly missed touching a theoretical, major sell signal at 5742.00 (see inset chart).
Thursday's stab higher failed by $2 to reach a 462.26 voodoo number I'd advertised here, so we ended the week without taking home a short position. The stock barely held above an 'external' low at 448.73 on Friday, but the obviousness of this structural all but guarantees that sellers will crush it when the new week begins. That would create a bearish impulse leg on the daily chart, the first since late March. If bears are agitated enough to push the futures below a second 'external' low at 431.11 notched on May 7 without any upward corrections, that would double the putative power of the impulse leg. _______ UPDATE (May 27, 6:18 pm}: MSFT's rally from a too obvious low on Friday would ordinarily have brought a punitive reversal. But I didn't foresee that DaBoyz would throw the switch to activate short-squeeze conditions. They are already prepping for an ambitious run-up to challenge the old record highs. I have expressed serious doubts they will get there, but I am not about to lay odds. See my chat room comments today regarding Peter Eliades.
Rates on the 10-Year Note gave up little ground last week, suggesting they want to move higher. If so, they'll have a chance to make an important top at 4.92%, the Hidden Pivot 'd' target of the reverse pattern shown. A precise reversal is likely there, given the obscurity of the pattern that produced resistance. We can use it as a minimum upside objective as well. That's bad news, considering the amount of refinancing ($9Tr.) the U.S. Treasury must do this year. There are no guarantees that the 4.92% target will cap the uptrend, but if it gives way, it will put a lot of weight on stocks.
