Buyers drove AAPL through a long-term midpoint resistance at 189.07 with such force last week that there can be little doubt they are capable of achieving the 253.96 'D' target of the pattern shown. Like most powerful rallies in this stock and other lunatic-sector faves, this one achieved most of the gains on gaseous volume and without requiring a large infusion of fresh cash. That's because the thimble-riggers who control the stock allowed it to waft higher overnight, creating a short-covering gap of nearly $3 at the opening bell. An unexpected swoon to x=156.62 would trigger a juicy 'mechanical' buy, but that's why we shouldn't count on it. ______ UPDATE (July 5, 7:21 p.m.): So far, AAPL is just filling a gap from last Friday. However, a print below 189.11 would generate a minor impulse leg on the hourly chart that we should take note of.
The stock market remains in the grip of mass psychosis, leveraged by con-men who know how to exploit investors' stupidity and greed. Look at how DaBoyz handled a tough Hidden Pivot resistance at 4471.00 last week that had been nearly nine months in coming. Ordinarily we might have expected a correction of perhaps 5-7 weeks to give the futures enough time to recharge for a push to new record highs. Instead, the mindless herd chomped through the resistance on first encounter two weeks ago, then returned on Friday to devour what was left. The implication is that the 4819 target shown in this composite weekly chart is in play and can be used by traders as a minimum upside projection. Meanwhile, a voodoo number at 4562 is the first place we might expect a significant, tradeable reversal.
August Gold turned from nearly exactly where expected, a 1903.90 Hidden Pivot support of middling importance. The actual low occurred at 1900.60, strongly suggesting that our bid was front-run by others using the same, visually obvious pattern we employed to project a downside target. If it turns out that too many smart guys got aboard for this reason, we should expect the futures to screw 'em all by stopping out the 1900.60 low before embarking on a sustained rally. This should have a positive impact on our ability to trade this vehicle profitably, since exploiting fake-outs is our forte. In any event, an alternative target at 1875.00 will remain viable, at least in theory, until such time as 2000.70 (i.e., an alternative 'C' high) is exceeded to the upside.
The way sellers crushed p=22.92 on June 21 leaves little room for optimism that this correction will somehow avoid falling all the way down to the 21.21 target of the pattern shown. In fact, even a strong rally to the green line (x=23.77) would set up a 'mechanical' short that we should not pass up. The pattern meets all of our requirements for legitimacy but is perhaps a tad too obvious to produce a tradeable low at exactly 21.21. We'll attempt to bottom-fish there nonetheless if and when the time comes, but with a 'camouflage' trigger that allows for some skirmishing ahead of the expected turn. We'll also need to consider an alternative target at 20.98 that would result from treating the somewhat higher 'A' at 26.43 (May 5) as a one-off peak. _______ UPDATE (July 3, 5:55 p.m.): The equivalent downside target for the September contract is 21.44, and a rally to 23.98 would trip a mechanical' short.
If pigs could fly, this sorry old sow would still be trailing its hind quarters in the mud. What a disappointment it has been! Even so, and much as I'd enjoy trash-talking a favorite gold-miner proxy, it is actually on a 'mechanical' buy signal that triggered when it touched the green line (x= 35.58) on June 21. Ordinarily, that would give rise to expectations of a rally to D=45.56. In this case, however, assuming GDXJ can come out of its death spiral from a low exceeding C=32.25, I would lower my expectations to p=38.91 -- a mere one-level ride -- for trading purposes. Set an alert at 37.68 for now, since that is where a rally would generate an impulse leg on the daily chart, There are ways to get long before then, but you'll need to nudge me in the chat room if you want to discuss them.
The bullish pattern shown is so fetchingly gnarly that we could expect it to work a second time for a 'mechanical' buy if the futures revisit the green line (x=69.78). Another feature of the pattern is that it looks likely to reach the D target at 72.31, notwithstanding that the initial upside penetration of the midpoint Hidden Pivot was feeble. A run-up to the target would be a shame, especially if it is merely prelude to an even bigger rally, since gas prices have recently fallen below the $3 level for the first time in a long while. They hit $2.92 last week in the rural North Carolina town I am visiting, but if my forecast has got it right, pump prices will soon be headed once again above $3.00.
The short-term picture is deceptively bullish and also stale, so I've replaced it with a longer-term chart that shows how little there is to hope for. Nothing impulsive has occurred on the weekly chart since the futures made their low last October in the murky depths of the Marianas Trench. Assuming the Fed continues to tighten for longer than most of us would care to imagine, all of the flouncing around in Treasury bonds since then could turn into a distribution that would send TLT down to the low 90s for a test of support. There could even be a breach of the low, although it seems doubtful that the very high real rates that would imply could be achieved without toppling the global financial system. This poses quite a dilemma -- one that for reasons I've long tried to make clear, can only end in a ruinous debt deflation.
This promises to be the longest holiday ever celebrated in the U.S., eclipsing even the eight-day festival holidays that frequently pop up on the Jewish calendar. By the time you read this, the Independence Day celebration will be in its unofficial fourth day, having begun in spirit with a pronounced slowdown in the stock market last Thursday. Because the Fourth of July falls on a Tuesday this year, the usual three-day holiday weekend will get stretched by an extra day. Fireworks, barbecues and unsolemn speechifying will remind us that we are celebrating the passage of the Declaration of Independence 247 years ago. A growing number of editorialists will note that 41 of the 56 men who signed the Declaration were white slaveholders, and it is probably only a matter of time before some town in Oregon bans fireworks and other boisterous displays of patriotism, replacing pyrotechnics with a grim minute of silence for the Declaration's failure to deliver freedom to all. Is Independence Day fated to become an anti-holiday, like Columbus Day? Probably not, and certainly not before gunpowder has been outlawed for 20 or 30 years. It is unfortunately true, however, that no national holiday can be celebrated these days with the innocence that made them so much fun in the good old days. If you have a neighbor who objects to Blue Angels flyovers and 21-gun salutes, don't let the holiday pass without lighting up a string of Black Cats on her doorstep. Melt-Up Will Continue Concerning the chart displayed above, it is intended as a placeholder to keep my holiday comments from growing stale before The Morning Line changes again next Sunday. It offers a clear picture of the power driving the bull market in one of several key stocks. There are a half-dozen other world-beaters with
Once again, we look for AAPL to tell us what the stock market might do next. The chart shows last week's high to have occurred just a hair from a key long-term resistance at 189.07, a Hidden Pivot midpoint associated with an ambitious bull-market target at 253.96. The actual high so far has been 187.56, fully $1.50 shy of the midpoint. That's not quite close enough to warrant buying put options, but it would be no stretch to infer that an important top was made there last week. We'll know soon, especially if the stock's corrections on the lesser intraday charts begin to exceed their p or D supports. _______ UPDATE Jun 26, 11:57 p.m.): This morning's head-fake sevened out $1 shy of the target, possibly because the pattern was obvious enough to attract the attention of riff-raff and mouth-breathers. It could be just organic weakness, though, so be prepared for the so-far modest retracement to pick up tempo. ______ UPDATE (June 27, 9:35 p.m.): With the stock trading just a hair beneath the 189.07 target noted above, subscribers bought July 180 puts expiring 7/14 for 0.50, pennies off the intraday low. Sit tight for now.
The September contract overshot the 4471.00 target shown by a relatively small 22 points, but that's enough to imply that the so-far modest retracement is just that -- a correction to be bought rather than feared. We should not simply jump back in, though, without testing the water. Even if the downtrend accelerates, though, it should be easily tradeable in either direction using the reverse patterns that have become our workhorse. For now, use the 4369.00 target shown here as a minimum downside projection and a place to attempt bottom-fishing as the new week begins. _______ UPDATE (Jun 26, 11:53 p.m.): The futures have bounced 12 points after bottoming just two ticks (0.50 points) from the 4369.00 target flagged above. The low occurred at exactly 4:00 p.m., however -- a time of day when I am disinclined to open a position that would put my peace of mind at risk during the evening. If you did the trade, though, I'd suggest being out of at least half of it at current levels. Please let me know in the chat room so that I can determine whether to provide further guidance. ______ UPDATE (Jun 27, 9:43 p.m.): The futures extended the rally with a wilding spree that topped 55 points above the 4369 low where I'd suggested bottom-fishing. With the Fourth of July holiday approaching, bullish seasonality will be at gale force.
