Subscribers have reported doubling out of put positions initiated at or very near the recent, precisely predicted high, presumably leaving themselves with enough contracts to swing for the fences. Please let me know in the chat room where you stand, since that will allow me to fine-tune my guidance. Regardless, the immediate downside target is the 370.30 Hidden Pivot support shown in the chart (inset). Judging from the decisive penetration of the pattern's midpoint pivot at 374.60, sellers have enough steam to get it to D. FYI, a pop up to x=376.75 in the meantime would trigger a theoretical 'mechanical' short, stop 379.00. _______ UPDATE (Sep 20, 1:04 p.m.): There is no avoiding a test of the 359.96 low recorded on Aug 19. This will create a tradeable opportunity, so nudge me in the chat room when the time comes if you are interested. In the meantime, your trading bias should be short. Here's the chart. ______ UPDATE (Sep 21, 10:08 p.m.): Short-covering bears hit the panic button well shy of the 359.96 low noted above, implying they were all but certain the Cubes would bounce from near there in a big way. Their certitude means a test of the low is likely, but even so, we should not get in the way of the bounce, which looks headed into a gap between 369 and 372. _____ UPDATE (Sep 23, 9:53 p.m.): Bear buying filled the gap, but without surpassing any prior peaks. We'll hang back and see what Friday brings.
Silver has fallen Sunday evening to the 22.11 secondary Hidden Pivot of the pattern shown (inset), but the weak bounce so far implies that if and when the support gives way, the selloff will continue down to at least D=21.165. The pattern is a little too obvious for high-odds bottom-fishing , but it will still make it difficult for December Silver to take another leg down without an upward correction first from D. Accordingly, I"ll recommend a 'camouflage' set-up on the 5-minute chart or less to get long, using an 'a-b leg' small enough to limit theoretical entry risk to no more than $750 per contract. Nudge me in the chat room when appropriate if you are looking for further guidance in real time.
Friday's closing bar ruptured the 'D' support shown, suggesting the December contract will grope its way lower in search of a temporary bottom. The week was hard on bulls and bears alike, but it is the latter who seemed to have gotten the worst of it. This suggests to me that the stock market is building a major top, a point of emphasis here over the last month or so. The actual bull-market high may have occurred two weeks ago when the December contract hit 4549.50, but there are too many bears that I respect who agree for me to be confident it's going to be that easy. My hunch is that index futures will open with a thud Sunday evening, and I am publishing this tout a couple of hours earlier than usual in order to put that prediction to the test. For a bigger-picture view of a 4503.50 bull-market target that has been very slightly exceeded, check out the chart and commentary accompanying the latest The Morning Line. _______ UPDATE (Sep 20, 1:16 p.m.): The futures have fallen into a gap between major lows recorded, respectively, at 4339.75 (Aug 19) and 4215.00 (7/19) that is too big to extrapolate a high-odds low. When the turn finally comes, we can assess the underlying bullishness/bearishness of it based on its location relative to the two lows. In any event, the impulse-leg idea obtains here: The farther the collapse goes without an upward correction, the more bearish. ______ UPDATE (10:36 p.m.): The bounce came from roughly midway between two lows, the second of which was a compelling one-off. This suggests it is doomed, but that we shouldn't try to intercept it too aggressively. Let's see what the first bear rally in more than 12 years looks like before trying anything fancy.
Bears had a rare chance to get short with impunity last week -- arguably the first such free-money opportunity since the bull market began more than 12 years ago. With the Evergrande saga unfolding in real time, shares appeared to be doing a Wile E. Coyote ahead of Friday's opening. Their gravity-defying behavior reflected one of those deft manipulations where DaBoyz greet whatever fragile bids show up in the early going with a feather-light touch. On Friday, playing it by the book, they scaled back their offers until the very last of the idiots from Mars doing the buying were fully satisfied. The result was that stocks hovered aloft for just long enough that traders who had gotten things exactly right -- i.e., realized that Evergrande's failure could make the 1998 collapse of Long-Term Capital Management look like a furniture-store liquidation -- must have begun to doubt themselves. It was only after the opening bell that they came to their senses with the apparent realization that any selling done on Friday was all but certain to look fortuitous come Sunday evening. Stocks began to fall, but not nearly as steeply as they are likely to fall in the days, weeks and months ahead. Indeed, I am publishing this commentary ahead of Sunday's resumption in trading to drive home my point, which is this: Evergrande's imminent implosion could turn out to be the biggest speculative collapse in history. It is going to take down many big players, causing a chain reaction that will definitively end the buying mania that has gripped shares since Covid-19's "bullish" failure to put civilization into eclipse. Up to Their Eyeballs For now, don't believe talking-heads blather about how Black Rock, Goldman Sachs et al. hold only relatively small stakes in Evergrande. The truth is, when you
This was the worst week the S&Ps have seen in a long while. They looked so enfeebled, actually, that bears for a rare change acted unthreatened by the rallies. Half-hearted upthrusts repeatedly failed, and even the impulsive head-fakes showed no follow-through. In the end, with a steep, downward finishing stroke ahead of Friday's closing bell, the futures created a robustly bearish impulse leg on the hourly chart. Although Pivoteers can try bottom-fishing in the discomfort zone near 4410, my expectation is that the December contract will grind lower, seeking support from the August 19 low near 4340. ______ UPDATE (Sep 14, 1):55 p.m. ET): The jagged downtrend looks like no other that we've seen for years, suggesting something has changed. When was the last time the S&Ps declined for four straight days? That is one reason the pattern is so unusual. However, bears have gotten the worst of it, since the rally spikes all the way down have exceeded the incremental gains from any short position held from one low to the next. This is nasty price action, but bears may be tested even further before they get a two- or three-day freefall to enjoy. _______ UPDATE (Sep 16, 8:55 p.m.): Bears have been getting brutalized by short squeeze rallies that have been too fleeting to go anywhere, but too vicious to endure. If they lose again on Friday, DaBoyz will be in good position to pop this hoax to new record highs next week.
Gold has looked so awful lately that I've gone against my gut in drawing the mildly bullish chart shown in the inset. It is a slightly 'reversed" ABC pattern, with a point 'C' just a hair beneath late March's 1683.00 low. The pattern projects to 1916.20, which would represent a 7% gain from Friday's settlement price. A 'mechanical' buying opportunity on a pullback to x=1737.50 is strongly implied, and so that is what I will suggest, at least for now. The trade would take a stop-loss at 1677 , implying about $24,000 of initial risk on four contracts. Since that is way out of our league, we'll use a 'camouflage' set-up if and when the opportunity arrives. Our goal would be to cut the theoretical entry risk by about 85%, to around $3600. _______ UPDATE (Sep 16, 9:04): Gold is garbage once again, diving hellishly just to mau-mau bulls. Since sellers look like they're about to pulverize the green line, I'll suggest backing away from the rABC set-up suggested above. the trade would still enjoy good odds, but at a cost of possibly excruciating pain. Ace Pivoteers can attempt the trade nonetheless with a camouflage set-up pegged to a low near 1700, the sweet spot of the downtrend's discomfort zone. _______ UPDATE (Sep 21, 11:47 p.m.): So far, a bullish prediction made by 'Som' in the chat room is holding up. He called for an upturn after Sep 17, and that is in fact what has occurred. I am skeptical about how far the rally can go, but not so skeptical that I would forego an opportunity to make hay with it, trading with an aggressively bullish bias until weakness becomes evident. In the meantime I'll gladly vet any entry strategies broached in the chat room, so don't hesitate to
I still like the prospect of bottom-fishing if December Silver falls to the midpoint pivot at 23.05 shown in the chart (inset). The a-b segment of the rABC set-up is shorter than I'd prefer, but there are no visually evident 'artificial' segments I can recommend. If you are comfortable with reverse set-ups, you could locate point 'a' about halfway along the rally leg begun from the 23.815 low recorded on September 2. That would make the a-b segment about 60 cents, yielding about $1,500 of entry risk per contract. The shorter a-b would reduce that to around $1100. _______ UPDATE (Sep 16, 9:25 p.m. ET): If you followed my guidance, you hold two contracts with a cost basis of 22.87 and a small paper profit at the moment. The first trade got stopped out and is shown in this chart with 'c' located in its original spot. The second trade was triggered off the subsequent bar's 22.585 low, and half the position would have been exited at p=22.87. You're on your own for now -- I will be traveling on Friday -- but please let me know in the Trading Room if you hold a position and take a profit/loss.
I've been drum-rolling the 382.75 bull-market target for so long that I'm hardly surprised to see QQQ rolling down after making an actual high within a quark of it at 382.72. Nor will I be shocked if Friday's weakness turns into something truly hellish. From a prediction standpoint, the pattern stood to be a good and especially useful one because it is fairly gnarly, and therefore less visible to the herd; and because the droolers and algos who have finally caught on to the magic of ABCD patterns are unlikely to have used the idiosyncratic, one-off 'A' that is the Hidden Pivot Method's secret sauce. For now, let's simply watch and enjoy the show, keeping our fingers crossed that we are witnessing the massive coronary that alone can return the stock market to reality and a chance for better health. If you own put butterflies as advised, or naked puts from the top, cash out half as always if and when they double in price.
The downdraft in the final hour seriously damaged the bullish look of DIA's hourly chart, but it's still possible bears will turn gutless, as they usually do, as the week unfolds. There are so many potential point 'A' highs we could use to plot a 'Richie'-type turnaround, so we won't try. Instead, I'll suggest looking for a low down around 340 with which to set-up an rABC trade. This one's for experts only, since the white space encompassing the trade is as vast as the Pacific.
Earlier, I'd rejected the idea of bottom-fishing if IWM returns to 'x', since it would be the fifth time it's done so within the holding pattern begun in early March. However, there may be an opportunity to get long there nonetheless, provided we are not too ambitious on the exit, which would likely be well shy of the red line. It would follow an rABC entry risking perhaps two points initially. The exact amount will depend on how the other indices fare over the next week or so, since we wouldn't want to attempt the trade if it looks like we'll be catching the proverbial falling piano. _______ UPDATE (Sep 16, 9:38 p.m.): After triggering an rABC short off this textbook beauty, bears couldn't put IWM away. They'll have a second chance as the week ends, but if they fail they could find themselves on the ropes come Sunday night/Monday.
