Here's a view of the precarious ledge I mentioned in the current Morning Line. MSFT has twice pounded on the 415.57 midpoint Hidden Pivot support without penetrating it. The pattern is too obvious to be precisely dependable, but as I have mentioned repeatedly, midpoint pivots often work well even in lousy patterns. This p midpoint is well located to give us confidence in its prescience, since there is nothing structural to the left of it that our dull-witted competitors will conflate with 'our' unique support. If it is breached decisively, or the stock closes for two consecutive days beneath it, expect the selling to continue to at least p2=394.68. Since MSFT is still the world's most important stock, that would have quite bearish implications for listed stocks on exchanges around the world.
Last week's spike surpassed an important peak at 4.74% recorded last April. On its way to a presumptive high at 5.55%, the rally will face additional resistance at 4.87%, a 'voodoo number': and at the 4.99% peak notched in October 2023. If these invisible impediments do not put up a fight, it will increase the likelihood that the 5.50% target will be achieved. The two years TNX spent head-butting the midpoint resistance at 4.01%, then trying to break free of its gravitational pull imply there's a chance the rise in rates will abate somewhere close to the 5.13% midpoint between p2 (47.59) and D. ______ UPDATE (Jan 18): Rates on the 10-Year have rolled down from somewhat below the 4.87% voodoo number, but I'm not ready to infer the uptrend is weakening. Let's see if this presumptive minor correction can catch a bounce from this pattern's 45.22 'D' target.
Friday's move above my 2728.30 target was bullish and implies that a pullback would be merely corrective. I posted guidance that could have produced a profit shorting the retracement from the intraday high at 2735.00, but the position should have been covered before the close. This week, we could see more upside to as high as 2765.80, or even to 'voodoo' 2793.80, but more likely would be a pullback to 2678.60 first. You can try bottom-fishing there with a small rABC trigger to limit entry risk.
Although Silver looks likely to achieve the 32.380 Hidden Pivot rally target shown in the chart (and in last week's as well), it is not quite a done deal. Nevertheless, a pullback to the red line (p=30.763) could be bought 'mechanically' with a 30.244 stop-loss. It is unusual for me to suggest this trade, since we usually wait for a pullback to the green line. But there was such control and confidence in last week's ratcheting rally that we ought not to look for the exceptional opportunity that a retracement to the green line would provide.
The rally could go a little higher, but it would likely be corrective. The initial downside penetration of p=45.62 in December was sufficiently decisive to imply that GDXJ will eventually fall to D=40.21. In fact, the breach was brutal enough to warrant trying a 'mechanical' short from the red line. If so, it would take a stop-loss at 47.42. That trade has already triggered and is slightly profitable, so I'll suggest enjoying it from the sidelines.
The futures narrowly missed triggering a conventional short at 75.26 after Friday's powerful rally. The trade remains viable, but it should be attempted only by traders who can limit entry risk to perhaps 10% of the implied risk of 2.61 points per contract. The trade triggered via a voodoo number whose location will remain a proprietary secret. The chart shown is generic, but I'll mention that half of the position should be covered at 72.6 if your order fills. If you can retro-engineer the chart pattern, you are qualified to trade this one.
The paper-trade I'd suggested last week, a 'mechanical' long from 95,354, is still live, but I'm glad we didn't take an authentic piece of it. Bitcoin spent four days threatening to trigger the stop-loss at 91,270, socking the position with a $4000 loss. I am still tracking it diligently because a failure to achieve the 107,604 would imply that Bitcoin, and therefore all cryptocurrencies, have made their bull market top. It got some lift off Friday's low, but not quite enough to waft it beyond danger. It's hard not to notice the clean look of the head-and-shoulders pattern that has been forming since mid-December. Symmetry would put the right-shoulder collapse somewhere toward the end of the week or early next.
The year-long struggle the Dollar Index had getting past the midpoint resistance at 106.31 argues against giving it a free pass to the 113.02 'D' target that would complete the pattern shown in the chart. Even so, the way the rally picked up steam to pierce p2=109.66 as the week ended was impressive and suggests more headway toward the target is likely. We have still-higher targets outstanding, including one at 124.82 that I reiterated here last week. A middling resistance at 110.08, an inch above Friday's high, will also be shortable and warrants your attention. It is notable that the dollar's strength has not crushed gold, only hindered it. _______ UPDATE (Jan 18): A short from 110.08 as suggested would have caught the top of a nasty swoon. The low of the move did not quite reach a 108.40 correction target, and that is bullish. Look for a push above the recent high at 110.18 in the week ahead.
If the so-far moderate short squeeze off Thursday's 5874 low touches the green line (x=6031.56), it would trigger an enticing 'mechanical' short, stop 6107.75. Since this would follow a record high in early December at a major Hidden Pivot resistance, we may soon have more evidence that a long overdue bear market has begun. Paper-trade this one unless you are adept at using 'camouflage' triggers to shrink entry risk. A relapse to the D target at 5803.75 would not be impulsive, although it would follow an A-B leg that was, unmistakably. ______ UPDATE (Jan 6, 9:34 a.m. EST): The short triggered at 6033.25 and produced a theoretical gain moments later of 8 points ($400) per contract. The trade is still live, with two contracts covered at p=6025.25, and two remaining to be covered at d=6009.50 (15m, a=5965.75 on January 3 at 9:45 a.m.). The stop-loss would be at your discretion now.
MSFT still looks bound for the 393.65 'd' Hidden Pivot target shown. The downside penetration of the pattern's p midpoint was not dramatic enough to guarantee this. Still, the fact that the pivot turned into resistance immediately after it was first penetrated is hardly a bullish sign. Although the point 'a' high of the rABC pattern is too small and nebulous to be regarded as a surefire winner for bottom-fishing, it is nonetheless a 'locked' coordinate that doesn't need additional justification. Odds for bottom-fishing p2=409.05 are not compelling because the pivot coincides with one at 410.29 recorded on November 21.
