There were two good reasons for the June contract to have retreated from its recent high at 86.97. First was the daunting resistance from the 88.15 peak recorded nearly two years ago, and second was a coincident Hidden Pivot resistance at 88.31 that is shown in the chart. Together, with help from behind-the-scenes election-year manipulation, they stopped a move into the $90s that still seems all but ordained by the longer-term chart. In the meantime, the so-far moderate correction looks to be in no hurry to get traction. It suggests that quotes could be rangebound-to-lower until mid-summer (or so). Of course, there will always be the possibility of an exogenous event or even a black swan spiking prices outlandishly. Considering that Houthi missiles fired at tankers in the Suez caused barely a blip in quotes, however, we can assume that larger forces of supply and demand are in near-stasis at the moment and will continue to keep volatility subdued. _______ UPDATE (May 25): I'm updating with a chart of the July contract, but the comments above still apply. It has just breached a double support by dipping beneath a midpoint Hidden Pivot at 76.48 and also May's 76.36 low. It has rallied as we might have expected, since crude is the champ of fake-outs that stop out everyone, but I doubt it'll get very far.
Bulls will face a crucial test at 49.02, the Hidden Pivot midpoint resistance shown in the chart. It is congruent with my outlook for gold and silver futures, which although sunny is not limitless. The target seems certain to be achieved, and your trading bias should therefore be aggressively bullish in the interim. This means naked-shorting puts is okay, provided you understand the risks and your account can handle it. Scalping against the trend would be warranted if p=49.02 is hit at the same time gold and silver futures reach their respective targets.
The armpit-sniffing monkeys who believe themselves to be in control of the markets seem to have forgotten what kicked off this too-steep rally. It was the uncannily well-timed announcement by AAPL of a $110 billion stock buyback a week earlier. Ironically, although AAPL appears to have stalled out with a relatively modest 6% gain on news they'd ginned up themselves to cover a faltering outlook, the S&Ps were as revved-up as ever last week, looking like they want to vault the previous all-time high at 5333.50 recorded on April Fool's Day. They made such dramatic progress toward that goal last week that I am not going to insist that the old high will endure. Even so, I will be on Defcon One alert to the possibility Mr. Market will set the hook for bulls and bears alike via an irresistible feint to marginal new highs. Buying power would be supplied mainly by short-covering, so look for signs that bears are getting shredded, defenestrated, mauled, tortured and impaled by oscillations near 5333.50.
The rally off the 389 low recorded on April 29 has exceeded just one 'internal' peak, meaning it is not impulsive, strictly speaking. It also left the stock well shy of the 430.82 high recorded on March 21. Subscribers will be familiar with that number by now, since it was first introduced in 2023 as a potentially very important rally target. I'll be interested to see whether the stock languishes well below the high even as the S&Ps push to a new record. We'll be on our guard in any case, prepared to short this little monster if it shows even subtle signs of topping. A reverse-pattern target at 421.63 still looks like our best bet for this to occur.
The June contract has been routinely generating buy signals on the intraday charts, but the upthrust that ended the week created a strong signal on the daily chart. Judging from the ease with which buyers penetrated the green line (x=2352.40), more progress to at least p=2419.50 seems assured. That would leave the futures somewhat shy of the record 2448.80 recorded a month ago, but it would also 'magnetize' the peak to draw a test of resistance. We should pay close heed to price action at p, since a decisive push past it would put D=2553.80 solidly in play.
Silver stalled Friday precisely at the 29.00 midpoint of the bullish pattern shown. My gut feeling is that it will finish the week above this Hidden Pivot resistance, presumably bound for at least p2=30.37, and thence D=31.75. These are relatively modest targets in comparison to longer-term charts that show upside potential to 36.03 and higher, but we'll take them one at a time, the better to keep risk under tight control as we augment and hedge positions on the way up. If you're keen on trading this vehicle, please be vocal about it in the chat room.
Rather than speculate on whether this vehicle will push above mid-April's 44.70 peak, I've drawn a chart that you can use to trade it knowledgeably. Friday's weakness triggered a theoretical sell signal with downside potential to as low as d=41.47. However, the pattern can be used to bottom-fish at any of the three levels yet to be achieved: p=42.92, p2=42.24 and d. In each case, you should get long with a reverse-pattern trigger that comes from the lesser intraday charts. There's a possibility the downtrend will turn from p=42.92 and go on to surpass the 44.26 high. That's why some call options acquired at p should be held for a possible swing for the fence.
Bertie has seemed too feisty lately to be prepping for a capitulation down to the 54,131 target shown. However, the pattern has been working perfectly in all respects, and the effortless downside penetration of p=60,692 on first contact strongly implies that 54,131 will eventually be achieved. The pattern also telegraphed a 'mechanical' short from x=63,973 that delivered a straightforward, anxiety-free gain of about $3,300 in just four trading days. All things considered, we'll use p2=57,411 as a minimum downside objective for the time being.
ES will become a juicy 'mechanical' shorting opportunity when it hits the green line (x=5194.50), probably on Monday or Tuesday. Entry risk is $7000 per contract, so the trade is suggested only to subscribers who know how to set up a risk-averse, 'camouflage' trigger. I posted an equally appealing trade on Friday, based on a pattern that was gnarly perfection. Unfortunately, I neglected to consider that AAPL's earnings were due out after the close. Ordinarily, I would say the pattern should have 'known' that the company was going to announce a $110 billion buyback that would send the S&Ps, if not the stock itself, into a rabid, short-squeeze. AAPL's reaction so far has been a relatively modest 7% gain, although it's possible DaBoyz will milk the news to produce yet more unearned 'wealth' when stocks start to trade Sunday night. So how did AAPL trash a bet-the-farm trading pattern? I don't know, but the short from the green line that triggered on Friday was performing well until the news hit moments after the bell. If the stock had moved lower, I'd have bet the ranch bottom-fishing the 'D' target as well. The lesson here is that we should be very careful about taking positions ahead of the close, especially if one of the biggest-cap companies in the world is about to report earnings. You should take a close look at the pattern posted in the chat room nonetheless, since it is as fine a specimen of 'gnarly' as I could imagine -- one that should work for you most of the time.
The bullish reverse pattern shown implies that the rally that ended the week is bound for a minimum 421.63 -- still somewhat shy of a major Hidden Pivot resistance at 430.58 that has capped AAPL's bull market since mid-March. We'll wait to see how buyers handle the resistance before we infer that new record highs are coming. If so, let's be alert to the possibility that a marginal feint into record territory would fake out enough bulls and bears to set up a hellacious dive similar to one in IBM that I featured here a while back.
