Rick’s Picks

The futures shredded their way past a 4116 'hidden' resistance with such ease that the remaining target at 4256 now seems likely to be achieved. Please note that this is not a Hidden Pivot, but rather an instinctual spot to anchor the 'c' high of a 'reverse' pattern in order to get short. I'll calculate the a-b interval if and when we get there, but my gut feeling is that it will be about 25-30 points, yielding implied initial risk of about $300-$350 per contract. In the meantime, you can use the middling pattern shown to project a tradeable target at 4205.75. There have been no pullbacks so far that would have enabled a 'mechanical' buy on the hourly chart, but D=4205.75 will be shortable nonetheless, presumably using a 'camo' set-up. You can be more aggressive, shorting the target with a tight stop, if you've made money on the way up. _______ UPDATE (Aug 4, 10:45 p.m.): A freaky Friday swoon to x=4118.69 would trigger an appealing 'mechanical' buy, but I am recommending the trade only to subscribers who can cut the $8000 risk on four contracts down to something more comfortable.  Please note that 'x' is neither a support nor a target.

I said I'd loosen up on gold if the December contract popped through three 'external' peaks,  the highest of which lies at 1785.80. It very nearly succeeded, falling just 1.30 shy of my benchmark when the clock ran out on buyers Friday. However, I remain distrustful of gold's rallies nonetheless and probably would not have become less skeptical even if this rally had met my bullish criterion.  Beginning with the July 21 bottom, it has been a shaky, ratcheting affair all the way up. The fact that it couldn't muster the extra inch it would have taken to surpass the small-ish peak at 1785.50 has left my mild skepticism intact. Accordingly, I've used two modest patterns to project unambitious targets. The first lies at 1788.90, just $6 above, and comes from a reverse pattern begun with a low near 1800 in early May. The second, at 1804.60, is derived from a larger rABC tracing back to a point 'a' low made in February. I'll be watching closely to see how much resistance they put up, but either can be shorted using 'camouflage', especially if you've been long on the way up.

Silver's rally has come from a promising place, a hair beneath a 'secondary' Hidden Pivot at 18.06. This has provided the kind of high-octane boost we've come to associate with reversals at p2. I've used a modest rABC pattern nonetheless to project a 21.29 target somewhat more challenging than the one at 1788.90 in December Gold. The target looks all but certain to be achieved, given the fist-pump past p=19.66 last Thursday. The pattern can be used to get long 'mechanically', most obviously via a swoon to the green line (18.84). If 21.32 is eventually exceeded, especially decisively on first contact, I'd raise my sights to  23.20, a 'D' target derived from the  large reverse pattern begun from 22.14 (labeled 'a' in the chart). Please note there is a midpoint resistance at 20.60 associated with that last target, and a precise pullback from it would validate the pattern itself if not necessarily ensure that 23.20 will be achieved. _______ UPDATE (Aug 3, 4:25): The rally missed 20.60 by 9 cents -- not quite close enough to validate the pattern and target, nor to set up a high-confidence 'mechanical' buy if the relapse hits x=19.30.

Much as I'd like to put the knock on last week's rally, it actually looked pretty good -- real, almost. In the reverse pattern shown, buyers showed no awareness whatsoever of what we might have viewed as daunting resistance at p=32.44. Thursday's gap through it all but guaranteed a finishing stroke to D=35.99, but we'll need to see how buyers handle this Hidden Pivot before we literally buy into the likelihood of a move into the wild blue yonder extending up to  early June's 42.19 peak.  This suggests imminent weakness in energy prices that have been holding mining stocks down, perhaps even moreso than the strong dollar. _______ UPDATE (Aug 3, 4:30 p.m.): A pullback to the green line (x=30.66) would trigger an appealing 'mechanical' buy, stop 28.87.

The A-B leg is sufficiently compelling that we can infer rates on the 10-Year Note are on their way down to at least 2.49%, a hair beneath the psychologically important 2.50% level. That would be a good place for a pause, but it is more likely that we'll see a bounce. It's too early to tell whether this would be the start of a strong, bullish reversal, but if so, it holds bullish implications for the big banks, if not for other sectors of the U.S. economy.  Alternatively, if D=2.49% is easily penetrated, it would imply ore slippage down to 2.30%, or even 19.10%. Both targets come from a reverse pattern on the monthly chart.

I'd advised against bidding 'mechanically' at the green line if September Crude should revisit it, but Friday's impulsive thrust was powerful enough to suggest that 'sloppy' seconds could produce another $5000 winner like the one that played out over two days last week. That implies a ride from the green line (x) to the red (p), a climb that doesn't look too challenging when visually imagined. Regardless, and unless there's a swoon exceeding C=88.23, the 108.25 target will remain theoretically viable. _______ UPDATE (Aug 1, 10:48 p.m.): Yes, the plunge to the green line has triggered a mechanical buy, the second such signal from this pattern. My gut feeling is that the futures will achieve p=98.24, good for a one-level ride, but I am not recommending the trade unless you know how to 'camo' the entry risk down to perhaps 5% or less of the implied $20k (on four contracts) if C=88.23 were to be stopped out.  ______ UPDATE (Aug 4, 10:54 p.m.): My gut feeling was wrong, for oil is weaker than I'd imagined. Even so, the September contract should get a bounce from here, since bulls got stopped out with today's dip below C=88.23 of the reverse pattern.

TLT topped last week precisely at the D target of a pattern I'd shown on the 120-minute chart. The pullback was shallow, however, so I lowered the pattern's point 'A' to produce a higher 'D' target at 121.68.  This view affords me two predictions that I can make with very high confidence: 1) 121.68 will be reached, and 2) a tradeable pullback will occur from that price, give or take just a few pennies. Both predictions are based on price action at the midpoint Hidden Pivot resistance, 116.87.  This rally will further affirm that the long bear market in Treasury paper is over and that interest rates on U.S. debt have peaked._______ UPDATE (Aug 5, 10:20 a.m. ET): TLT has pulled back sharply after an off-hours leap earlier in the week to 121.50, a tenth of a percentage point shy of the target I'd provided above. Perhaps price trends these days -- in bonds, stocks, bullion and much else -- get stopped cold at Hidden Pivot targets because the Fed has succeeded in confusing everyone, or at least getting everyone to obsess over Fed policy?  This is quite a trick, considering that the very notion of using larger and larger quantities of debt stimulus to create 'wealth' and sustain the economy is a fraud. This is so because the economy to begin with and in notional dollars is based far more on paper shuffling than producing real goods and services.  The deception arguably ranks as the greatest hoax every perpetrated on humanity,

Although there's a solid consensus in the chat room that a major bottom is in and that my 1665.00 target will not be reached, I have my doubts. They are based entirely on the decisive downside penetration of p=1773.80 on July 5. I have only very seldom seen 'p' obliterated in this way without giving way to a follow-through that hit 'D'. If gold's robust two-day rally is going to be an exception, the first evidence of this would come with an impulsive thrust exceeding three 'external peaks that lie, respectively, at 1744, 1751 and 1771. That's the kind of power rallies typically exhibit when ending bear markets. If this one can vault all three peaks with no visually significant pullbacks along the way, I'd infer it is the real deal -- at long last. (July 27 note: For the December contract, the three peaks lie at, respectively, 1763.70, 1770.80 and 1785.80.)

Silver showed none of gold's feistiness last week, but that doesn't mean it won't follow gold higher if bullion quotes are about to embark on a sustained rally. Silver's relative strength would presumably increase as a bull market pushes toward adolescence, shrinking the gold silver ratio from a current 93 to a more silver-friendly level below 50.  For now, though, we can infer that September Silver's reluctance to punch below p2=18.06 reflects consolidation, not distribution. The 16.53 downside target will remain valid in theory nonetheless, until such time as the C=22.65 high of the bear-market pattern is exceeded. However, it's not yet possible for me to say with high confidence whether it eventually will be achieved.