The dollar spent the week recouping half of the previous week's losses. The bounce came, however, from six cents above a 104.79 low that I'd characterized beforehand as the weakest possible correction. Expect a resumption of a powerful bull trend that will take DXY most immediately to 112.14, and thence to 124.79. Both of these Hidden Pivots were identified here last week and remain our price objectives for the intermediate-to-long-term.
Last week's succession of breakaway gaps was solidly impulsive, having exceeded the required two peaks, one internal, the other external. But in failing to go the extra inch it would have required to get past a third, the 89.49 high from September 29, bulls hinted they are slightly timid about going for the gusto. They could change that with a renewed push this week that takes out the untested peak, but the task will have been made more difficult by the sharp relapse that occurred following the fleeting high. Bottom line: the picture for T-bonds has brightened, but we shouldn't assume THE bottom is in.
Last week's decline was the sharpest in four months and could conceivably come down to the 102.23 target shown, That would amount to an approximately 5% correction, entirely normal considering the steepness of the run-up from 100 to 107 that occurred between mid-July and November. A milder correction that reverses from p=104.79 would underscore the power of the renascent bull market begun from 90 in 2021. Wherever and whenever the pullback ends, upside potential thereupon would be to p=112.14 of this pattern most immediately, and to 124.70 ultimately. It is no exaggeration to suggest that a dollar at that height will have drastically altered the global economy and its fatally financialized infrastructure.
DaBoyz demonstrated with last week's unrelenting short squeeze that they mean business. It was made possible by nervous anticipation of a global war starting in the Middle East. Although this remains an all-too-real possibility, it is exactly the kind of thing Wall Street loves to ignore: a potentially world-ending wall of worry that features a billowing mushroom cloud. For purposes of predicting the extent of this wack-o rally, I see no Hidden Pivot patterns as useful as the round number 4500. That's where this hoax is headed, and because it lies within less than two points of a voodoo number, we might look forward to getting short up there. Trading with the trend in the meantime is bound to be challenging, since everyone else will be trying to do it, too. I am not yet ready to consider the possibility of new all-time highs, but 4500 can serve for the time being as a minimum upside target.
The stock's handlers, undisputed geniuses of the Einsteinian buy-and-hold strategy, did so well keeping AAPL aloft last week that we should assume they can keep this short squeeze going for at least another week or two. They did after all trick investors into stupidly shrugging off the implosion of iPhone sales in China, a remarkable obfuscation that demands our respect. Accordingly, I'll suggest using a voodoo number at 186 as our minimum upside target for the next two weeks. The stock will first need to fake its way above the 182.34 'external' peak recorded on October 12, but that is hardly an insurmountable problem for world-class thimble-riggers who have mastered the art of producing volumeless leaps whenever they need a big rally and there are few actual buyers around.
At last! Friday's heroic leap spiked GDXJ through the upper trendline of a longstanding channel that was featured here last week. Even more encouraging was the close above it, although the rally fell 29 cents shy of an 'external' peak at 36.14 recorded on September 15. It will need to be exceeded to create an impulse leg we could trust. Better still would be a move surpassing a second peak of somewhat higher degree at 37.08 from August 30. But any move above the lower peak would allow us to view even significant weakness subsequently as merely corrective.
We've all been wondering when $2000 will start looking more like support than resistance, an eventuality that showed no sign of happening over the last few weeks with the futures cavorting there and teasing bulls. It was an annoying exercise in tedium as gold slid up and down a greased pole of hopes and expectations. It doesn't help that most of the action took place beneath a slew of 'external' peaks recorded last May and July. My hunch is that the excruciating excess of deliberation is a consolidation for a sustained move that will ultimately leave $2000 in the dust. We'll continue to trade with a bullish bias unless a salaciously appealing opportunity arises to get short temporarily.
Recent price action in silver does not justify a bold prediction at the moment. However, my patiently bullish outlook for gold implies it will drag silver higher when the time comes. The most positive thing that can be said of the latter is that the spike high that occurred on October 20 exceeded an external peak at 23.81 that would likely have trapped many enthusiastic buyers badly. That means the moderate selloff since has been corrective and should be viewed as a buying opportunity. As such, our focus will be on doing so on weakness that meets our criteria for bottom-fishing. Stay tuned.
We ended the week with a nice score in crude futures that is detailed in the chat room. Check out Friday's discussion thread to determine whether you could have followed my simple, explicit instructions to reap a gain of at least $1070. It came by way of a day trade initiated in the early afternoon. This gambit went against the trend, leveraging a presumably minor breakout that died almost precisely at the p2 secondary target of our bullish pattern. So what's next? The selloff from just beneath June's $94 top comes as a surprise, since my recent forecasts have called for a run-up to at least $117. That's still possible, and the target will remain theoretically viable in any case unless the December contract plummets below $63. But the inability of DaBoyz to manipulate the price above the June high diminishes the likelihood of a blowoff. It's possible the 92.48 peak in late September was a terminal move, but the rally could still re-ignite if the Israel/Iran war escalates sufficiently to curtail global energy supplies. _______ UPDATE (Nov 10): Crude got savaged last week as sellers pushed the December contract beneath two important lows -- one internal the other external -- without an upward correction. This generated a strong impulse leg that will require an even more powerful upthrust exceeding 83.60 to undo the damage.
Since triggering a theoretical buy signal at the green line (x=105.89) a month ago, the dollar index has corrected only slightly and not closed below it. This implies that the next significant move will up and that it will take DXY to 112.20, the Hidden Pivot midpoint of a long-term pattern that projects to as high as 124.82. This is bad news for all who owe dollars, although it may eventually force the big spenders on Capitol Hill to rein in deficit spending. I used to think a strong dollar would force an end to Powell's tightening regime, but perhaps the deflationary implosion it could cause is what he intended all along.
