The December contract tripped a theoretical sell signal when it dropped below the green line on Friday, but we'll ignore this and give bulls the benefit of the doubt for the time being. Our flexibility is predicated on a test of support at the red line, a midpoint Hidden Pivot support at 67.66. It was exceeded more than marginally on Friday, but if a second closing bar replicates this next Friday, that would open up a corrective path down to d=63.275. If that support, too, should fail, a decisive breach would be the most bearish signal we've seen on the weekly chart since March.
The chart takes a relatively sunny view, showing a pullback to the green line, followed by a bounce to who-knows-how-high. The bearish argument is rooted in the failure of last week's high to surpass April 17's 'external peak at 136.55. The shortfall was only 31 cents, but it left the weekly chart without compelling evidence that bulls really mean business. While it is true that a pullback to the green line would generate the kind of 'mechanical' buy that could be considered free money, we might expect only a one-level bounce back to 124.90 rather than a stampede to 159.87. We'll consider the outlook one step at a time, first by monitoring the retracement that follows Friday's nasty reversal.
Crude has been mired in a $20 range, reflecting the contradictions of Hormuz. Although the channel has yet to swing wide open as Trump would have it, the flow of oil under U.S. naval escort has brought global supplies up to a level that has kept a lid on quotes. Friday's early-morning rally was shortable under the circumstances, and the subsequent downtrend looked bound for the 77.35 target shown. The implied 7% decline from last week's closing price would allow pump prices to recede, providing a break for travelers over Labor Day weekend. But any relief thereof would probably be limited, since there is no likelihood that Comex futures are about to dip significantly below 77.35.
Uptrending ABCDs in every time frame are driving rates on the 10-Year Note inexorably toward the 5.30% target shown. The run-up could accelerate, since Bessent's abortive experiment last week with quantitative easing laid bare the futility of trying to suppress rates in an environment where private credit is rampant and government debt is at $40 trillion and rising. Gold doesn't like higher rates, but in this case, bullion is reacting more to the gathering crisis than to monetary conditions. Yields and gasoline prices are not going to let up before November, and that is why we are about to experience a regime change. The greedy scumwads who control the markets have been quietly distributing as much stock as they can to widows and pensioners before the jig is up. With help from their ignorant shills at all of the major news media outlets, they even managed to short-squeeze the S&Ps and the Dow to new all-time highs in the face of a perfect storm of bear market hazards. That is what bull traps are all about, and why you should shun the party. (See my chat room post about TLT, a solid, dividend-paying alternative that is close to bottoming.)
Switching to the October contract, I've used a conventional pattern and a conservative target to project imminent upside to at least 88.96. The next resistance would be somewhat higher, at 90.70, a Hidden Pivot derived from shifting the point 'A' low down to July's 70.89 print. Any higher would require a pattern derived from a longer-term chart. Here it is, and the highest price it can project is 102.60. If correct, it would imply that the Hormuz standoff will end, although predicting exactly how seems beyond the capabilities of the punditry or even Trump himself.
The chart presents a moderately bearish picture for the near term that is further mitigated by bears' struggle on Friday to hold the futures beneath the midpoint support at 7677.25. They ultimately failed, implying that any additional progress down to d=7516.00 will be challenged by dip-buyers every step of the way. I expect this gasbag to flirt with record highs for the next month or so, buoyed by short-squeeze head-fakes whenever DaBoyz get the chance. At the same time, weakness in the Lunatic Sector will persist, with little likelihood that the egregiously misnamed Magnificent 7 will make new highs. In summary, this describes a 17-year-old bull market ending with a whimper rather than a bang. All that will change when the dip-buyers are confronted with an avalanche that will make the covid sell-off look like tea and crumpets.
The moderately bearish picture shown is congruent with the one accompanying the ES tout (see above). I could have used a larger pattern to project a lower target, but I'll give the bull the benefit of the doubt because I do not believe DaBoyz are ready to pull the plug on this decrepit bull market. Most immediately in MSFT, minimum downside to at least d=461.36 is all but guaranteed, given the way sellers crushed the midpoint support at the beginning of last week. But 'camo' bottom-fishing is strongly recommended there, even if only to leverage a bounce that could be short-lived.
December Gold looks like 90% shot to reach the 4819.30 target shown. But then what? Assuming the rally exceeds the Hidden Pivot resistance and closes above it for at least two consecutive daily bars, that would shift our focus to 5705.90, the 'd' target of a larger pattern begun from 4091.50 on October 28, 2025. A related 'secondary' HP (p2) at 5283.30 would then serve as our minimum price projection, and there would be no reason to doubt that this move in bullion is the real deal. Notice, however, that achieving 5705.90 would leave the futures just shy of the record 5781.80 recorded last January. I cannot guess what that might portend, but we'll consider the possibilities when the time is right.
Last week's poke above the 69.215 midpoint resistance shown in the chart is encouraging, since it shortened the odds of a further push to the 83.430 target. If the futures can make it two weeks in a row, they will be no worse than a 60% bet to reach 'd'. In the meantime. they are already set-up for a 'mechanical' buy on a sharp pullback of around $7. I will signal the opportunity if and when it comes, but it would be telegraphed by a $2.18 decline from any high. That number can be used as a trigger interval (TI) to get short, but you should do so only with a small-pattern (i.e., 'camo') set-up, since a mere $1.00 move against you would be $5,000 down the toilet.
Bulls turned the 124.90 midpoint resistance into tapioca last week, leaving no doubt that the 159.97 target will be achieved. It is congruent with the ambitious target I've proffered for Gold (see above), and bolsters the likelihood that both will hit their marks. A relapse to the green line (x107.37) in the interim would be widely viewed as bearish, but from our perspective it would be a terrific opportunity to augment a long position or get aboard belatedly. Friday's high fell just shy of a voodoo resistance, but a pop above mid-April's 136.55 peak would remove it for good.
