Bitcoin's value has tripled since Covid-19 hit the U.S. in March, a spectacular performance that has earned it a spot on the home page. I've been tracking the BRTI symbol for years because its violent price action is ideally suited to 'mechanical' entries. Nearly all of them have been profitable, and we currently have a paper position in BRTI acquired at 7609 with a long-term target at 21,032. That symbol tracks best-bid/offer data in real time across many cryptocurrency markets. I will be covering GBTC from this point forward, however, because it is affordable and because entry risk can be much more tightly controlled. Most immediately, you should notice that the steep rally leg begun in October is within an inch of a potentially important Hidden Pivot resistance at 18.75. If it is impaled the first time it is touched, that would imply significantly higher prices lie ahead. In any event, it is a time for caution no matter how bullish you are. My decision to track and trade bitcoin is completely detached from my strong feeling that digitally encrypted money is an epic con-job. I don't deny that blockchain technology has enormous value for financial transactions and secure record-keeping. But no one has offered a shred of evidence as to why bitcoin should have any intrinsic value at all, let alone more value than gold, as some have tried to argue. My skepticism is irrelevant where trading bitcoin is concerned, however, especially since this vehicle promises to be one of the great bull trades of these digitally obsessed times. _______ UPDATE (Nov 17, 7:36 p.m.): GBTC blew past the 18.75 Hidden Pivot resistance with such force that there can be little doubt that significantly higher prices lie ahead. Even so, we should be curious to see whether BRTI follows
I've used a long-term chart not only to show an obvious and somewhat ambitious rally target at 3857, but the decaying pattern that produced it. It has already signaled a profitable 'mechanical' buy once at the green line (x) and would do so again if the futures were to revisit it. Although the pattern would have produced a solid profit for 'mechanically'-minded bulls, its strength has deteriorated, along with the prospect of effortless gains on the long side. Notice that the futures were unable to reach the mechanical trade's 'sweet spot' above the red line before relapsing to x. Also, anyone who got long at x would have suffered considerable pain on the pullback to within an inch of the 3197 stop-loss. Another sign of, if not weakness, then reluctance, is last week's failure to reach p2=3693 (the pink line). This implies that weakness and uncertainty are gaining a hold even if there is still a perhaps 70% chance of ES reaching the target. Our trading bias should remain bullish accordingly, but less aggressively so than during last summer's run-up. _______ UPDATE (Nov 16, 7:25 p.. ET): Buying interest has been so relentless that "less aggressive" trading is guaranteed to miss the boat. At least we know where ES is going. ______ UPDATE (Nov 17, 7:47 ET): We'll step back as ES takes the measure of a potential obstacle in the form of p2=3648. A pullback to p=3498 would trigger a 'mechanical' buy with a stop-loss at 3398.00. ______ UPDATE (Nov 19, 8:34 p.m.): Use a low-level rABC set-up to get long once the red line has been touched, but don't attempt it if you're not up to speed with this tactic.
Two potential trades loom for the week: a 'mechanical' buy at p=282.74 that would require a stop-loss at 275.64; and a short initiated at the 304.07 target. The A-B impulse leg of the pattern is ersatz, since it failed to exceed the record high peak at 295.87 recorded just before stocks collapsed. But because it's all we've got, we can try to make the most of it. Even fake patterns yield Hidden Pivot targets and levels that are usable even if sometimes imprecise. My hunch is that the rally target will be achieved because Monday's bullish 'vaccine' gap was so powerful. If the lower is not, however, it would be because bulls are more eager to jump in today than to let stocks fall to relative bargain levels.
A rally to the green line would trigger a mechanical short using the unconventional rABC pattern shown. We can attempt to leverage it by buying puts if QQQ touches the line on Monday or Tuesday. For now, bid 0.80 for four Nov 27 272 puts, contingent on QQQ trading 292.62 or lower. There's a lot of guesswork in that bid, but don't pay up or jump the gun, since I will adjust it as warranted on Monday. We may also have an opportunity to turn the position into a riskless spread if we get filled on the puts and QQQ subsequently falls as expected. I am taking pains to minimize risk in order to provide new subscribers with a positive experience. _______ UPDATE (Nov 16, 10:12 a.m. ET): The puts are getting crushed. I'll recommend a 0.70 bid, which will be closer to fair value if the stock reaches my 292.57 target. It has gotten as high as 292.45. If you bought 'em already, offer half for 1.60 gtc. I tried -- unsuccessfully, it would seem -- to emphasize that you shouldn't jump the gun on this trade. There is no urgency and no need to pay up. Every penny counts, since the deck is stacked hugely against retail customers making directional bets with naked options. ______ UPDATE (Nov 16, 7:34 p.m.): We hold four Nov 27 272 puts for an average 0.70, based on reports in the chat room. Kiss your $280 good-bye and avert your eyes for a few days. We are speculating against one of the most powerfully irrational rallies ever.
Gold's bull market has been plagued by mischievous interventions, to put it mildly. With last week's 'Pfizer takedown', DaBoyz demonstrated yet again that they can make bullion move violently against common sense and logic whenever they please, albeit usually only for short periods. The 100-point selloff was triggered ostensibly by news that the drug maker has developed a Covid vaccine that is 90% effective. Is there any obvious reason why that should be bearish for gold? None that spring to mind. But with stocks in a spectacular rally that reversed sharply, investors' anxieties appear to have infected gold, exacerbating what might have been a day of ordinary weakness for the precious metals sector. The beneficiaries of the selloff would have been commercials who reportedly had amassed large short positions. In this case, they seized an opportunity that they themselves had created. The fact that the selloff was likely a fright-mask fraud will not make bulls' climb up the steep wall it created any easier. But they got a good start ahead of the weekend, and this will make gold more responsive to any news that could be construed as bullish, or possibly even to a short squeeze. That would lessen the effort required to trigger a 'conventional' buy signal at the green line (1947), putting a 2247.10 target theoretically in play. That's just $3 lower than our previous target, implying that the selloff, though scary, did almost no technical damage. _______ UPDATE (Nov 19, 9:17 a.m. ET): December Gold is breaking down and looks bound for the 1809.60 target shown here, at least. The A-B impulse leg lacks a one-off 'A', but the pattern should be good enough for government work -- in this case, bottom-fishing with a small-interval rABC set-up.
Silver's daily chart looks even less disturbed than gold's following last week's hit-job on bullion. The commercials reportedly were heavily short, and they used an extremely volatile day in the stock market to make traders think news of a Pfizer vaccine was somehow bearish for precious metals. Their ploy worked for all of a day, but buyers were back at it the next, struggling to recoup lost ground. A theoretical buy signal remains in effect, predicated on minimum expected upside to p=28.22. We'll have to see how the uptrend interacts with that Hidden Pivot if and when it is reached, but an easy move through it on first contact would shorten the odds of a further rally to as high as D=34.62. ________ UPDATE (Nov 18, 8:44 p.m. ET): There's a midpoint Hidden Pivot support at 23.93 that looks opportune for bottom-fishing with a tight stop loss. To reduce the entry risk, I'd suggest using an rABC set-up with the coordinates shown to do the trade. Initial risk would be about $700 per contract. A comparable support in SIL lies at 41.62. _______ UPDATE (Nov 19, 10:13 a.m.): Using the rABC pattern sketched out above, you'd be up about $1300 per contract at the moment. The first entry stopped out for a $700 loss; the second, for a $700 gain; and the third is still live, just shy of p2=24.07. Based on four contracts, the third should be exited at p2, and the fourth at D=24.215 of the rABC. I would NOT be swinging for the fences here because p=23.93 of the big pattern -- my original 'buy' level -- has been badly mauled. This implies SI will fall o at least p2=23.318 of the big, bearish pattern against which we are trading; or even to D=22.70.
The Russell Index gave back surprisingly little of Monday's vaccine-powered lunatic leap, all but clinching an eventual move to the 184.73 target shown in the chart. It looks sufficiently clear and compelling to suggest it may be a good place to attempt getting short, but I'd suggest doing so only if we are able to profit from the implied rally. Ideally, we'll have a chance to get long on a retracement to p=163.41. A 'mechanical' bid there would require a 156.30 stop-loss. It may be possible to cut the entry risk using an 'rABC trigger' on a lesser chart. _______ UPDATE (Nov 18, 8:50 p.m.): The selloff in the final two hours offered a glimmer of sanity. It also could be taken as evidence that the dirtballs who have been working tirelessly to distribute shares before the wall of worry collapses are finding it increasingly difficult to complete the job. _______ UPDATE (Nov 24, 9:17 p.m.): Several subscribers appear to have gotten short after I posted a timely alert in the chat room. IWM went on to slightly exceed the 184.73 target before closing a hair below it. This is a longshot bet, since we are fading one of the most powerful rallies ever. Even so, a modest speculation was warranted because the target is so clear and compelling. I have not established a tracking position, but informally I'd suggest covering if this rabid little scumsucker pushes above 185.50. _______ UPDATE (Nov 25, 3:52 p.m.): IWM fell this morning to a low at 181.99 that would have produced a profit of as much as $520 per round lot for anyone who got short Wednesday at my longstanding target. A commensurate profit could have been reaped if you'd bought TZA, an ETF vehicle equivalent to being 3x short the Russell 2000.
The futures have traversed a minefield of anxieties since the August run-up to record highs, much of it tradeable if inscrutable. They would become a 'mechanical' buy for a second time on a pullback to the green line (11,193), stop 10,655. The opportunity could materialize next week on pronounced weakness, but more likely would be a continuation of November's steep uptrend to its implied target at 12,804. Getting aboard with-the-trend will be challenging in any case, since it has attracted an eager following. Stay tuned if you care. _______ UPDATE (Nov 18, 8:58 p.m. EST): The futures have grown timid without becoming interesting in either of the ways I'd hypothesized above. What this implies is that they are more like to do "something" soon.
The rally slightly exceeded my minimum projection of 3500, but not by enough to clinch more upside to the pattern's secondary pivot (p2) at p2=3651, let alone to D=3802. Bulls have already used up a 'mechanical' set-up made possible by a pullback two weeks ago to the green line. The result, although solidly profitable, would have taxed traders with a pullback that nearly stopped out the position and put it briefly in a $12,000 deficit. The ups and downs didn't negate the target, although they made clear that investors were especially anxious about the election. And so they shall remain, with little relief in prospect if Biden's victory holds. If the stock market seems stable or even moderately buoyant in the weeks ahead as I expect, we should infer that shares are under deft distribution by smart players. We shall respond accordingly. ______ UPDATE (Nov 9, 8:03 a.m. ET): Overnight, the most powerful rally in history hit the p2 target at 3651.19 (see inset), pulled back 50 points, and now looks eager o go for the next, 3802.25. The targets and trend forecasts work so perfectly that there would be little point in my trying to explain what has happened. You either believe it is rational or you don't -- and even that has no value. _______ UPDATE (Nov 9, 6:08 p.m.): The rally detumesced by half, but not before exceeding the secondary pivot at 3651 by 17 points. That's enough to shorten the odds of a follow-through to 3802 without quite guaranteeing it. A pullback to the green line at 3349, however unlikely, might seem like the end of the world, but keep in mind that it would trigger a 'mechanical' buy, stop 3197. _______ UPDATE (Nov 11, 5:56 p.m.): This minor bullish pattern has delivered two profitable 'mechanical'
I've focused on a lesser rally pattern that is more bullish than the one shown in the ES tout because this vehicle is likely to lead the charge. It would take relatively modest push to achieve the 12533 target, but the futures will first need to close for two consecutive days above p2=12,136 or trade more than 80 points above it before we can assume a move to the target is coming. A pullback in the meantime to p=11738 would trip an enticing 'mechanical' buy, but the entry risk of $13,000 per contract implied by the 11473 stop-loss would necessitate the use of a 'camouflage' entry set-up designed to reduce that by at least 95%. Stay tuned. _______ UPDATE (Nov 9, 8:12 a.m.): When I said it would take a modest push to reach the target, I hadn't imagined this might occur in the space of just half a day. Modest that ain't. The pullback from an overnight high at 12408 was too violent for any swing traders to have survived, but not the buy-and-hold chimps who have ruled the markets -- the tech stocks, actually -- all along. ______ UPDATE (Nov 9, 6:18 p.m.): The 12,533 target remains viable, predicated on a 'mechanical' buy at p=11,738, stop 11,473. A more conservative bet would be to initiate the trade at 11,341, stop 10,943, but there are no guarantees the retracement will get down there. ______ UPDATE (Nov 10, 7:14 p.m.): The 'mechanical' buy on a pullback to x=11,341 has been downgraded to 'unappealing', since the rally leg being corrected came close to achieving its 12,533 target. The near-miss is bearish, even if the target remains theoretically viable. The next appealing buy would come on a pullback into the 'dead zone' between two important lows at, respectively, 10,660 (8/24) and 10,942
