The S&Ps are in a topping pattern, a middling head-and-shoulders formation with the potential to send the mini-futures down to 4300 once the neckline at 4500 is broken. Presumably, that would be just the first installment of a full-blown bear market. I seldom pay attention to the H&S because it pops up so often on charts of all time frames, but this one is too shapely to ignore. As noted here earlier, it will take several more weeks to develop a symmetrical right shoulder. This implies there are at least one or two more dramatic swoons to play out, possibly tradeably. I've added a Hidden Pivot pattern to the chart with two immediate trade possibilities: mechanically shorting a rally to the green line (x=4685.63); or bottom-fishing with a 'camo' bid near p2=4577.88. The latter looks somewhat riskier, and that is why I am suggesting that you use a camouflage entry. Nudge me in the chat room if you're interested. I am somewhat surprised that the last rally did not quite reach the 4752 trendline where we were eager to get short, but there is not enough evidence to suggest we were front-run. Regardless, let's continue to avoid patterns that are obvious, since every Tom, Dick and Harry is trying to get short at these levels. _______ UPDATE (Jan 18, 10:36 a.m.): The futures have bounced robustly from within two ticks of p2 pivot noted above. This provided an opportunity to get aboard for a quick profit on four contracts of as much as $2,700. Review the chat room discussion beginning with my 9:53 a.m. post to see how the trade unfolded in real time. If you want to learn how to do it yourself, as many subscribers have, you should attend the Wednesday tutorial sessions and immerse yourself in the
Like so many other stocks we follow, AAPL appears to be topping, setting up a plunge that is more than a year overdue. Because the shares are valued at $3 trillion, and because owning them has been the no-brainer path to success for virtually every money manager on earth, the inevitable takedown is likely to consume years and feature many spectacular bear rallies. That would not be conducive to the kind of butterfly spreading we usually do to leverage big bear moves. However, we're certain to find a way nonetheless, presumably by selling juice at the top of run-ups and by buying distant calls at swing lows. For now, sit back and enjoy the spectacle of portfolio giants getting trapped because there is no one to take them out of the mountainous quantities of AAPL they've been accumulating and hoarding since 2009. ______ UPDATE (Jan 19, 10:30): Bottom-fish the 164.87 target shown in this chart if you know how to cut the entry risk to $0.15 per share. Using the marquee high at 182.94 would produce a lower target at 162.41, but I just don't have it in me to bend the rules that much, since we would be using a too obvious ABCD pattern without a valid impulse leg. _______ UPDATE (Jan 20, 7:40): I've put the 'bastard' target at 162.41 in boldface green, not that I enjoy having my arm bent by reality.
We took an $840 loss shorting four contracts on the rise Friday, learning in the process something we'd already suspected: that this rally is probably going much higher. A titanium Hidden Pivot resistance at 83.87 that had taken five months to achieve showed no discernible resistance, telegraphing the session's strong finish. Since $100 crude seems fated, we'll focus for now on the smaller, tradeable patterns that will get it there. The one shown would trip a theoretical 'mechanical' buy on a pullback to the green line (x=84.07), but I am not explicitly recommending the trade, since it could occur over the weekend. If and when buyers punch through p=84.44, we should look for a follow-through to at least 85.18, a place to get short if you've made some bucks on the way up. ______ UPDATE (Jan 17, 9:48 a.m. EST): In the chat room last night two subscribers reported jumping on the trade detailed above. However, since neither said anything about he got aboard, nor about risk management thereupon, I cannot say whether they may have throw caution to the wind. Here's a chart that shows why the $1,480 profit the trade would have produced at p=84.44 came with almost no pain, since the futures never dipped more than two ticks below the 84.07 entry price. However, they fell in the middle of the night after trading slightly above p, and so the question of how one managed the ongoing risk would determine the amount of the eventual gain. If at least half of the position was exited at p but the rest is STILL held, the net gain is still around $500. FYI, here's a chart for the March contract with a visually logical target at 88.13. A pullback to the red line (75.09) could be bought 'mechanically' if
The week ended with a very real profit of as much as $8,000 for anyone who followed my explicit instructions. Can we do it again, you ask? Probably, although trading this particular vehicle successfully will always be akin to extracting opportunity from a hacking cough. Our winners are necessarily leveraged at the tops of disappointing rallies and at the bottoms of gratuitously scary dives. That, after all, is what gold does -- has been doing for years. Between these extremities lies the aforementioned hacking cough, and although its volatility should make for bountiful trading in theory, it is too much work to concern ourselves with here. The pattern shown has rewarded 'mechanical' buyers twice, but I doubt a third winner will be so easy. Even so, you can use the 'reverse' pattern shown, with an 1873.90 rally target, to plot your strategy or merely assess the strength of the uptrend, such as it is. The bad guys seemingly lack the guts to push the futures below C=1753.00, but I hesitate to use this observation to greenlight any old 'mechanical' buy set-up that comes along. ______ UPDATE (Jan 19, 10:40 p.m. EST): This evening's vertical spike has stalled very precisely at p2=1843.70 of the bullish pattern that has guided us for the last month. A decisive push through it would clinch more upside to the 1873.90 target, but it will be more interesting if this Hidden Pivot gives way easily. That would set up a test of the key 'external' peak at 1922.80 recorded on June 1.
The bull trade explicitly detailed here as last week began could have produced a profit of as much as $9100 with relatively little stress. And here's more good news: The tradeable pattern has continued to evolve into one that can probably be used successfully again. For starters, a pullback to the green line (x=22.46) would trigger a very appealing mechanical buy. This gambit will work best for those of you who are familiar with camouflage set-ups, since the straight-up risk from a conventional entry would be around $10,000 on four contracts. A short initiated at D=24.01 looks enticing as well, although the obviousness of the pattern could make it a tricky play. The target is a strong bet to be reached, given the way buyers impaled p=22.98 on the first time they came in contract with this 'hidden' resistance. ______ UPDATE (Jan 29, 10:50 p.m.): Buyers speared the 24.01 pivot we were using as a minimum upside target, foreshadowing a test of November's imposing peak at 25.40. A vast void separates the two levels on the chart, creating a a formidable discomfort zone for us to play with. Stay tuned to the chat room if you're interested.
Bertie has turned leaden, transforming a once-exciting chart into one that might be mistaken for that of a company in the hosiery business. The bitcoin proxy bounced nearly $5000 from within a split hair of a Hidden Pivot at 39,805 that I'd drum-rolled, but the move lost steam last week, portending a possible test of the 39,666 low. ETHE, a vehicle traded in lieu of this one, looks even worse, having broken the neckline of a head-and-shoulders pattern projecting to as low as $20; it currently trades for around 27.50. The subsequent rally has been weaker than we might have expected, but we'll give DaBoyz another crack at it this week, since all they've got to do to make bitcoin scream is step away from the offer for a day or two. ______ UPDATE (Jan 20, 7:54 p.m.): Here's a fresh view with a 37,275.61 downside target. The pattern is sufficiently gnarly that you can expect it to work no matter what your purpose.
February Crude is in a crucial place, just shy of an 83.87 rally target that has taken nearly five months to reach. Tradeable resistance there should be fairly exact, given the way the futures pulled back so dramatically from within just six cents of p=73.07, the pattern's Hidden Pivot midpoint resistance. I'd still suggest using a tight 'camouflage' set-up to reduce entry risk on the implied short, since the pattern, obvious as it is, can hardly be regarded as 'our little secret'. However much the futures retrace after hitting D, we should be open to the possibility that the next leg up, assuming there is one, will hit $100. If there is no pullback and the February contract simply blows past 83.87, then $100 oil will not only become certain, it will come quickly. That would be yet another body blow for the psychotic bull-market-that-wouldn't-die-but-seems-to-be-dying-nonetheless.
The supply-and-demand logic of the chart shown predicts a potentially important top at 4752.00. This is not a Hidden Pivot resistance, but rather a price along a trendline that explains itself. The very gentle slope of the line is determined by two peaks where anyone who bought got crushed by what happened next. All of these losers have been praying for the last month or so to get out 'even', and they may just get their wish. But I doubt they'll come away with much of a profit, since there's a dome of copious supply just above the line (which can be shorted with a stop-loss as tight as you can handle.) There is no way buyers will get past the trendline on the first try, and if their efforts continue for a few more weeks, that would eventually create a head-and-shoulders pattern. It would require perhaps 20-25 days to accomplish this, assuming the right shoulder develops with the symmetry common to H&S formations. The foregoing doesn't negate the 4907.75 bull-market target I've been drum-rolling here for quite a while, but it does give us a more modest objective that could prevent an important downturn from somewhere shy of 4907.75 from catching us unawares. _______ UPDATE (Jan 13, 6:43 p.m.): We got chumped out of an enticing short when buyers failed to push this hoax up to the trendline. The line seems too eclectic to have been front-run, but we'll never know for sure. There's still tons of resistance there in any event, so we'll have to figure out another way to get short if and when the futures rally back up to the line. In the meantime, I expect a tradeable bounce from very close to p=4631.75 in this chart to confirm the pattern and its 4524.00 downside target.
What could possibly go right in 2022? Merely posing this question is courting ridicule from some quarters, since we have grown an asset bubble with the disaster potential of 1929's. Still worse is that it sits on a geopolitical powder keg as big and dangerous as the one that detonated a decade later. Under the circumstances, the best outcome imaginable would be for the Dow Industrials to be trading at or near current levels come December, for that would imply economic Armageddon had been postponed for yet another year and that Covid bloviators had taken our minds off much bigger problems. But at what cost? The Fed already has $8 trillion of manifestly unpayable Treasury debt on its books, and piling up more of it in order to keep stocks and real estate from crashing will only deepen the inevitable damage when the bubble pops. That's why the very idea of a 'taper' seems so ridiculous, even if the mainstream media take this logistical absurdity seriously. Why would Powell & Co. tighten credit when merely hinting about it causes the stock market to dive unnervingly? Worsen the effect with actual tightening and you risk throttling an asset mania that has indefinitely postponed the collapse of the U.S. economy and the onset of a deep depression. ...or Wrong Two assumptions that could go very wrong in 2022 illustrate the treacherousness of the mine field in front of us. First is the notion that a semblance of political leadership will be restored when the Republicans regain control of Congress in November. There are good reasons to think voters will turn out in droves to neutralize the already senescent Biden and repudiate the destructive political agenda of the hard left. But what if a bear market comes first, pitching the U.S. into
I'll be interested to see how well our longstanding bull market target at 187.93 works. On the one-hand, I've drum-rolled it loud enough and for long enough to compromise its usefulness. On the other, the particular pattern is the most reliable of the ones I employ for trading and forecasting, with a relative quick ABC, followed by a very elongated C-D leg that causes Gartley and other 1-2-3 pattern traders to lose sight of the 'D' target. There is also the punitive correction that began a zillionth of an inch from the midpoint pivot. That is usually predictive of an equally precise pullback from the D' target, which became an odds-on bet to be reached when the stock blasted free of the midpoint pivot's gravity in November. The least likely scenario I can envision is a bear market starting without D having been reached. We'll be on our guard for this nonetheless, watching for minor corrective abc patterns to start exceeding their 'd' targets, and for minor abc rallies to start failing at 'p'. _______ UPDATE (Jan 10, 5:20 p.m.): Bears gave it their all but failed to drive AAPL down to p2=167.36, even, let alone to D=167.37. The short-squeeze that ended the session would trip a 'mechanical' short at x=172.66, stop 175.31, but I'm going to suggest sitting this one out, since the squeeze is unlikely to abate overnight. _______ UPDATE (Jan 12, 5:10): Bulls will face heavy supply between 177 and 181, and I'll be as interested as you to see how they handle it. If poorly, the expected push to 187.93 may take significantly longer than I'd originally imagined, assuming it happens at all. _______ UPDATE (Jan 13, 6:52 p.m.): I'm no fan of head-and-shoulders patterns because they are everywhere you seek them, but this one is
