Rick’s Picks

Groping for a bottom, the Dollar Index has already triggered one false 'buy' signal this month. A new signal would be generated by a 106.06 print, but we'll need to monitor the lesser charts if and when it gets there to determine whether the rally is for real. If so, that would imply minimum upside thereafter to at least 107.46, the midpoint Hidden Pivot resistance of the pattern shown. If the trend pushes easily past it, we could be looking at new highs by mid- to late September. _______ UPDATE (Aug 15, 8:00 p.m.): The decisive pop through 106.06 implies the rally is bound for a minimum p2=107.46.  _______ UPDATE (Aug 18, 9:41 p.m.): And now today's pop through p=107.46 strongly implies that p2=108.87 will be reached. That will of course set up a test of July 14's importnnt peak at 109.29. Keep D=110.27 in mind if and when p2 gives way.

With just a couple of survivable downdrafts along the way, GDXJ has made steady progress toward the 35.99 rally target of the pattern shown. Price action at the midpoint strongly implies the target will be reached but provides no strong evidence that it will be exceeded, let alone easily. We'll have to wait and see, but a a decisive upthrust would put this miner ETF on track for a likely test of early June's peak at 42.19. _______ UPDATE (Aug 17, 11:26 p.m.): In theory, GDXJ would become a 'mechanical' buy if it touches the green line (x=30.66). The trade would probably be good for just a one-level move to p=32.44 or close to it, however, since I'm no longer optimistic that D=35.99 will be reached. 

Is everybody happy?  The reverse-pattern short sent out to subscribers Wednesday night could have produced a profit of as much as $8400 if you followed my simple guidance. The set-up utilized a 'voodoo' target at 4256 that I've been drum-rolling here for a while. It was slightly exceeded when the futures ran up to 4260.50 in the first hour, but I allowed a smidgen more room with a chat room update 30 minutes before the trade triggered. The subsequent reversal and 60-point plunge could have produced a quick, juicy gain, but if you covered two contracts at p=4227 and let the rest ride, you'd be showing a profit of at least $4500 at the moment. Numerous subscribers reported jumping on this one, but I've left risk management, well cushioned by profits, to you. Please let me know how you handle it in the chat room, so I can tailor the next more closely to you needs.

A shelf of resistance created back in June looks primed for a challenge. Short-covering bears have been the sole driver of this presumably doomed rally, now entering its ninth week. Much of it has occurred into airless gaps, with economic 'news' as the catalyst, and thin, off-hours markets offering almost no resistance. A push past early June's thicket of supply looks all but certain, since the approach path has been a methodical, ratcheting process of stair-building that has consumed nearly two weeks. Once above the resistance, it's anyone guess how far DaBoyz will be able to take this hoax. I'm going to drop a 'c' anchor for a reverse-pattern short near 4256, not because it's a Hidden Pivot, but because it is in the middle of the ocean, so to speak, where bulls, bears and even chartists will be at their queasiest. ______ UPDATE (Aug 8, 11:21 p.m. ET): Dave Isham posted this pattern in the chat room today, with a bear-rally target that pessimists should keep well in mind. The D target at 4418.00 is 26.25 points higher than his, since I used a slightly different point 'A' low. In either case. the midpoint resistance got shredded so badly that 'D' should be regarded as an odds-on bet if the futures get past the middle-of-the-ocean number at 4256 noted above. _______ UPDATE (Aug 10, 7:54 p.m.):  To get short, use this rABC pattern, anchoring the 'C' high in the range 4254.90 - 4257.70, with an implied trigger 15.73 points off a high falling within those numbers. If you get a chance to cover half 15.73 points below the price where the trade was initiated, you'll be on your own. Please note that theoretical entry risk is about $800 per contract and that it is sufficiently cutting-edge to be labeled experimental.

It was odd to see this vehicle gratuitously stop out deflationist bets on Friday, trading as though it were a malign, nutty natural gas contract. Such nasty price action in this interest-rate proxy can only be ascribed to the shaky inventiveness of the fraudsters who run the central bank. The old adage 'Fake it till you make it' doesn't apply in their situation, since it is more a case of 'Fake it till you trigger a global depression'. In the meantime, the idiotic will-they-or-won't they game that has been driving the markets for more than a decade may have run its course with the recent 75-basis-point rate hike.  With the country officially in recession and a third consecutive quarter of GDP shrinkage likely to settle the political argument over semantics, more tightening seems almost as unlikely as easing. Does that mean market forces will come to bear more forcefully on rates? That sounds pretty scary, but even scarier is the possibility rates will continue to fall, as they've been doing since mid-June, because the economy is imploding.

After a scorching rally that lasted 14 months, the dollar needed a rest. It could pull back to 97.63, and that would be a mere ten percenter and presumably healthy, as I mentioned here earlier. But the long-term chart (see inset) suggests that even if the selloff were much worse -- say, to below 95 -- that would generate an appealing 'mechanical' buy at the green line. No doubt the talking heads would be proclaiming the greenback's demise. But in purely technical terms it would provide a Hidden Pivot springboard for a shot at the 113.16 target. I doubt we'll see a correction that nasty, and we'll be looking in any case for a 'mechanical' buying opportunity if and when the red line (p=100.71) is hit. In the meantime, let's focus on the lesser charts for signs of an upturn well shy of the worst-case levels identified above. That would imply minor abcd downtrends that do not reach their targets but instead reverse from p.

At the current pace, this anemic uptrend will reach the D target at 1985.40 by next June. Something's got to give, obviously, since no bull market can survive such torpor. We may be spared waiting, however, if the futures pop to p=1840.80 sooner rather than later. A decisive move past that Hidden Pivot would imply the December contract is no worse than an even-odds bet to continue to at least p2=1913.10, if not necessarily to D.  In the meantime, Friday's downdraft tripped a so-so 'mechanical' buy at x- 1789.50, stop 1769.90 (daily, A= 1727.00 on 7/27). I didn't recommend the trade because getting long ahead of a weekend is almost always unappealing.

Silver has performed somewhat better than gold recently, but that's not saying much.  Since the September contract didn't quite reach the red line last week, I cannot recommend a 'mechanical' buy if it touches the green line on Monday.  My gut feeling is that the trade would make money, but there's no compelling reason to cast discipline aside. There's a potential gain of around $6400 per contract on a one-level move to p=20.60. however, so don't feel constrained from trying if you know how to keep theoretical risk down to $400 or less by applying 'camouflage' on the five-minute chart. ______ UPDATE (Aug 8, 11:35 p.m.) With an easy pop through p=20.54 today, and then a relaxed consolidation above it, September Silver looked terrific. If it closes higher on Tuesday, that would strongly imply the rally is destined for a minimum 21.62, the D target shown here. _______ UPDATE (Aug 11, 5:10 p.m.): A drop to x=20.00 would trigger an attractive 'mechanical' buy, stop 19.46. With about $2600 of initial risk per contract, the trade is recommended only to those familiar with 'camo' set-ups who can pare the theoretical risk down to $200 or so,

GDXJ has traversed the 'reverse' pattern shown with such caution that many bulls must be wondering when the obligatory air-pocket-from-hell is coming. It's been a while since a rally in any gold vehicle achieved a 'D' target, even a relatively modest one like the 35.99 Hidden Pivot resistance shown in the chart (inset).  Rest assured, the target will be achieved, even if Mr. Market seems to delight in busting the chops of gold bulls whenever they wax -- here's that fatal word again -- hopeful. In this case, although the pop through 'p' took two tries, the latter was sufficiently decisive to imply that bulls were in charge, even if a little shaky. Our concern in any event is not whether D will be reached, but whether this proxy for exploration companies can fist-pump its way past it, especially on the first attempt.