There are smaller reverse patterns we could use to clock the latest down cycle, but we'll go with the biggest, since we've grown accustomed to 20-point swings in crude, the global carnival midway's featured attraction. The chart implies minimum downside to p=72.57, although lesser patterns would yield p supports at, respectively, 75.57 (Friday's low) and 72.84. All can be bottom-fished with a tight rABC trigger. Just to be on the record, I'll note that the D target of the big pattern is 64.36. We'll be better able to assess the odds of this Hidden Pivot being reached once we've seen how the futures interact with p=72.57.
The top of TLT's leap last week fell a crucial dime shy of an 'external' peak at 88.28, spelling possible trouble for the first turnaround attempt since November. With a so-so 'mechanical' buy in prospect when the pullback touches x=86.25, we'll give the recovery the benefit of the doubt. The picture would brighten if the move off x reaches p=87.61 within a day or two. That would shorten the odds of a further run-up to d=90.32, but a slightly higher would be needed to clear a second 'external' peak at 88.91 from 12/20. _______ UPDATE (Jan 27, 10:38 a.m.): TLT's big and probably phony leap this morning conspicuously failed to surpass any prior peaks. We'll leave our benchmark for the real McCoy at 88.91.
The stock's coy poke above the 434 high from January 6 was bullish, but the rally would need to continue above a second peak at 440.94 recorded ten days earlier to affirm the bullish case. Several profitable 'mechanical' buys have triggered at the green line, but the only one signaled so far at the red line was a loser, hinting that the uptrend, such as it is, has weakened. Watch for DaBoyz to pull out all the stops to distribute MSFT at relatively rich prices. They did it last week with two gap-up openings, and they will likely use the same strategy until it temporarily stops working.
The futures did everything we expected last week, rallying to within easy distance of a 2765.80 target after falling a few points beneath the correction target at 2678 I'd provided. They will face a mountain of resistance when trading resumes, since there is not just the 2761 peak from December 12 to contend with, but also some distributive layers of supply from the record high of October/November. If something out there is capable of spooking gold above all of this, perhaps we should be careful what we wish for.
I've used a 32.380 target for the March futures since before Christmas. Expect a tradable stall there, but if buyers blow past this Hidden Pivot resistance, my minimum projection will rise to 32.715 and thence to 36.285. My long-term projection for a bull-market top is 53.06. That target is tied to a crucial 'midpoint Hidden Pivot' resistance at 32.350 that has yet to be exceeded in this bull cycle. I'd need to see a print at 36.58 or two consecutive monthly closes above 32.35 to be confident that 53.06 will be reached. Concerning the bottom-fishing trade I'd advised, the low fell midway between the green line where we usually do this trade, and the red line (p=30.763), where the entry risk will always be higher. I did not establish a tracking position because no one mentioned the tout.
The rally stalled last week, but we'll give it the benefit of the doubt because it yielded a theoretically profitable 'mechanical' buy on Friday after falling to within a hair of the green line. The ensuing rally barely reached p=46.27, our first profit-taking level, but it was sufficient to fulfill the rule for a partial exit. Now, if GDXJ pokes into the 'sweet spot' midway between p and p2, you can use x=45.11 a second time to bottom-fish, stop 43.95. Otherwise, we can watch from the sidelines as bulls attempt to make their way to D=48.58.
Is this move for real? I doubt it, but we'll let the chart tell us what to think. So far, last Wednesday's bear-trap opening looks only superficially impressive, since the follow-through failed to get past the 87.61 midpoint resistance (p=87.61) shown in the chart. TLT is a lock-up to reach it, but the upthrust would still need to vault an 'external' peak at 88.28 recorded on December 3 to demonstrate staying power. A decisive move through p would shorten the odds that d=90.32 will be reached while also lending credibility to the rally. If it is more than just flash-in-the-pan, performance measured against this pattern cannot but tell us the story.
We've come to expect crude's rallies to go nowhere, implying they will tend to reverse before breaking out. This one came close, though, before it smacked into a voodoo number that sent it reeling. The reversal occurred just a hair short of the watershed top at 81.53 recorded in June 2022. The long-term picture remains bullish nonetheless, and it's only a matter of when, not if, crude pushes above 81.53. So why have quotes held stubbornly above $65 for the last three years? Because it's a dangerous world, would be my guess.
The chart shows a possible path to as high as 6704.25, about 11% above current levels. Although it would seem to flout the solidly bearish implications of a longer-term SPX chart I presented here recently, the two can be reconciled by allowing most immediately for a hard selloff to the green line. That would set the stage for a powerful rally, although not necessarily one that would reach the D target. We'll worry about that when the time comes, but anyone who has watched dozens of 'mechanical' trades unfold in various time frames will see nothing unusual in the way I've drawn this chart. To avoid muddling the two scenarios, let me note that the more bearish one looks like a 70% shot, meaning this is probably THE top, even if it becomes a raggedy one.
The chart shows a timely scenario with details that last week's view lacked. The emphasis is not on the price at which the S&Ps appear to have topped, but on what the first stage of the bear market might look like. It is a single-month chart rather than a blended one, and it shows the March contract falling to at least the green line (x=5589.38) on an initial drop. This would create a 'mechanical' buying opportunity, although we would surely attempt it only with a trigger pattern of small degree (aka 'camouflage'). I've promised you that we have little to fear from violent swings, since the Hidden Pivot Method excels at predicting their tops and bottoms; or even if failing at that, to allow us to trade extreme volatility without risking our shirts. I don't expect the week to start with a rally, but if DaBoyz pull out all the stops to distribute this hoax in the opening hour, don't pass up the opportunity to get short at 5990.38 with a tightly crafted rABC trigger.
