The Dollar Index made modest progress last week toward a 108.01 rally target we've been using as an upside objective for the intermediate term. It should take 5-7 weeks to reach this number, assuming it is achieved at all. That is by no means assured, however. Until such time as DXY pushes decisively past the p=104.46 midpoint Hidden Pivot where it stalled last week, I cannot offer you a high-confidence forecast. More immediately, bulls will need to breach the 105.31 'external' peak recorded on January 6 to demonstrate their staying power. _______ UPDATE (Feb 25): The Dollar Index exceeded the 105.31 peak noted above by a penny on Friday. That's as significant technically as $2 overshoot, and it implies DXY will continue toward the 108.01 target. Gold will of course remain under pressure.
The steeply impulsive move begun on Feb 1 from 100.91 warrants a fresh perspective that is cautiously bullish. I've chosen a reverse pattern with a 108.01 target and a 104.46 midpoint Hidden Pivot that can serve as a minimum upside objective for the very near-term. If DXY takes it out without effort and runs up to 106, that would call for an even larger bullish pattern with a 110.95 target. We'll let price action speak for itself, but expect bullion to remain under pressure as long as the dollar is rising.
I've drawn a bullish pattern to begin the week, but only for the purpose of exploiting the midpoint resistance at 4140.75 to get short. Friday's close was ostensibly bullish, but the rally was so lacking in guts that whatever attempt DaBoyz make to head-fake Sunday/Monday's opening seems doomed to fail. Ordinarily I'd suggest getting short with a limit offer at the red line and a very tight stop-loss at 4142.25. However, because I've hung out the trade on the front page, I'll recommend using a 'camouflage' set-up with a less visible entry point. ______ UPDATE (Feb 14, 4:16 p.m.): The test-the-water short got blown to smithereens, albeit with little or no pain for subscribers who followed my real-time guidance in the chat room. The subsequent, psychotic spasms failed by a hair this morning to trigger an opportune 'mechanical' buy, but the 4220.75 rally target of the pattern from which the short was culled remains viable as a minimum upside objective.
TLT took a $2.20 bounce from with six cents of the 104.45 target flagged here for bottom-fishing, but the rally was short-lived. The relapse has further to go and looks likely to achieve the 101.66 downside 'D' target shown in the chart (inset). A pause at p2=102.90 could occur, but the way sellers crushed the 104.14 midpoint support, the respite is unlikely to be tradeable. Bottom-fishing precisely at 101.66 doesn't look promising either, since the herd will be nervously focused on the nearby low at 101.78 recorded on Jan 5. ______ UPDATE (Feb 16, 8:26 p.m.): A minor Hidden Pivot support at 101.33 has precisely contained the latest plunge of this sack of lug nuts, but it remains to be seen whether it has terminated it.
GDXJ took four months to rise to within a penny of the 41.16 target I'd billboarded since November, so we shouldn't be too eager to jump back in while it takes a proper rest. At the moment, the ETF looks unlikely to avoid more slippage to at least p=33.49, but we'll need to find another marker to re-board on the anticipated weakness, since the pattern is spent for trading purposes.
The chart shown is experimental. It is continuous, meaning that it blends highs and lows from different contract months to produce a 4257.50 rally target. The A, B and C coordinates are related, but only as cousins, not siblings. Will the 'D' target still work? The 'p' midpoint certainly did, precisely containing the C-D rally leg, albeit not for long. We've been using the 4233.50 target of the same pattern, except derived 'organically' from the March contract. Last week's short squeeze got within 0.5% of it, but my gut feeling is that the futures have consolidated enough already to blow past 4233.50 on the next upthrust. That target can be used nevertheless to get short with a tightly compressed rABC pattern, but I'm going to suggest using 4257.50 as well, if and when the futures get there. Incidentally, it is 'backstopped' by a 'voodoo resistance' at 4252 that could also be used to anchor an rABC short.
AAPL appears hellbent on reaching the top of a channel that has contained its huge ups and downs for more than a year. If the stock gets there within the next two weeks, the line's presumptive stopping power would be felt at around 168. It's reasonable to ask whether the rally is capable of reaching the line, but any progress above it would seem as unlikely as the emergence of a booming global economy from a debt contraction that has only recently begun. We shouldn't assume that this is impossible, but neither should we pass up the several opportunities to get short nearly risklessly that would occur as the stock ascends toward the channel line. _____ UPDATE (Feb 15, 8:30 p.m.): Here's a speculation for Thursday if you've got money burning a hole in your pocket: Buy two expiring AAPL 155 puts if the stock touches 156.30 before 11:00 a.m. ET. I estimate they'll be trading for around 0.73. Stop yourself out if AAPL exceeds 157.38. ______ UPDATE (Feb 16, 8:51 p.m.): The stock touched 156.33 and then crashed, sending Feb 155 puts that could have been bought for as little as 0.53 to 1.90 in less than two hours. All of this happened after 2:20 p.m., when, as I'd anticipated, I was too busy to provide timely guidance. That's why I suggested an 11:00 a.m. cutoff for the trade. Fortunately, some subscribers who ignored the clock and acted on my recommendation (see above) above were rewarded with windfall profits by day's end. Here's a graph of AAPL's delightful plunge -- doubtless a surprise to everyone but us.
The 1858.60 downside target of the reverse pattern shown is probably the best we can hope for, given the way bullion's personal Darth Vader crushed gold on Friday for no great reason. (Okay, it was getting a tad overbought, all right?) You can bottom-fish there with a tightly stopped 'camo' trigger crafted from the 5-minute chart, but if the trade gets stopped out be ready for more slippage to at least 1824.70 or even 1774.50 if any lower. Those Hidden Pivot supports are derived from a larger reverse pattern using A=1848.40 on 8/12. _______ UPDATE (Feb 14, 4:03 p.m.): Although I still expect the April contract to continue falling to at least p2=1824.70, or possibly to 1774.50 (see above), today's bounce from the D target of a smaller pattern raises the possibility that a bottom is in. Here's the chart. _______ UPDATE (Feb 17, 8:55 a.m. ET): The overnight low came within $3 of the touted minimum downside target of 1824.70 -- close enough be considered fulfilled. A further drop to my worst-case number, 1774.50, is NOT a foregone conclusion, as the tout implies, although it would be if the futures relapse and crush p2=1824.70. However, a relapse could conceivably do no worse than bring the April contract down to a low that would more precisely fulfill the forecast. For my own trading purposes, the $3 gap is sufficient to negate rABC bottom-fishing, at least for the moment.
It is concerning that, before it fell apart, March Silver did not quite reach our longstanding target at 24.95, nor one at 25.06 that would have completed the somewhat larger pattern shown (inset). Even so, the futures would be an enticing 'mechanical' buy nonetheless at x=21.85, stop 20.89, for a one-level ride, at least. The implied entry risk on four contracts would be a little more than $21,000, so this trade should be attempted only with a 'camo' trigger capable of bringing that down to perhaps $1,200 or less. _____ UPDATE (Feb 10); The futures bottomed on Friday two pennies below 21.85, the number flagged above. Although they subsequently rallied 37 cents, there was no indication that anyone did the trade, let alone took the partial profit that was possible before the trend reversed. No further recommendations for now.
Last week's hellish dive has brought GDXJ within easy distance of the green line (x=36.30) where I'd suggested bottom-fishing. Like many of the best 'mechanical' trades, this one should have you feeling queasy in the wake of such a determined selloff. This pattern implies it will be short-lived, since there is no mistaking its attractiveness. A stop-loss at 33.88, just below 'C', would risk nearly $1,000 on four round lots, but we'll look to cut that down to size with 'camouflage' when GDXJ triggers the trade by touching x. If you're interested, stay close to the chat room discussion when it gets closer. ______ UPDATE (Feb 9, 4:15 p.m.): The scary trade is now 'live', at least in theory. However, because a few minor supports have been stopped out, I'd suggest paper-trading this one. If the trade doesn't work, I would infer it's because the point 'B' high of the relevant pattern was not impulsive -- i.e., it narrowly failed to surpass the June 16 'external' peak at 37.81. In addition, the subsequent C-D leg failed at p2=41.11, well shy of another important 'external' peak at 42.19. All of this is shown in this chart.
