Friday's short-squeeze tripped a 'weak' mechanical short at p=3275.50, stop 3323.50, but there was no compelling reason to get short ahead of the weekend. Another short of comparable risk would be signaled if the bounce continues to the green line, x=3347.50. This is a so-so opportunity because the A-B impulse leg created between 9/3 and 9/9 was not especially strong. In practice, we can do the trade anyway, but using an rABC set-up on a chart of lesser degree to trigger an entry. As it stands, the theoretical risk using a full-level stop-loss is about $2500 per contract. The goal is D=3131.50, and it still looks like no worse than an even shot to be achieved. However, all bets are off if the futures take a lunatic leap exceeding 3363.00 Sunday night or Monday. That's equal to an 'external' peak recorded 9/18 on the way down. ______ UPDATE (Sep 29, 4:24 p.m.): Ha-ha. The little wiseguy popped to 3363.00 exactly, implying that a 'mechanical' short at the green line was still not a bad bet to hit 3131.50. We'll shun the E-mini's rattlesnake charm for now while retaining a mildly bearish bias. Alternatively, a move above 3363.00 and bears would be toast. _______ UPDATE (Sep 30, 6:07): Looks like bears are toast, although the 45-point pullback from an intraday peak at 3384.00 well above our toast threshold suggests there are too many bulls to make this hoax waft higher without occasional labor-intensive inputs. The best bears can hope for is for the futures to merely flail around before the next short squeeze. ______ UPDATE (Oct 1, 6:13 p.m.): There are still too many bulls, and they wheezed all day, failing to improve much on the short-squeeze rally they'd been gifted with overnight. That's why my bias for Friday will be
The upward blip at week's end did little to alleviate gold's distress. Continue to use D=1838.30 as a minimum downside objective -- and yes, you can attempt tighty stopped bottom-fishing there, especially if you've made a few bucks on the way down. December Gold's interaction with D is bound to be telling, since the target is so clear and compelling. A decisive penetration to the downside would be bearish, and a two-day close beneath it still moreso. Alternatively, if bulls are about to turn things around, the process would begin with a pop above 1898.30. This is equal to an 'external' peak a tad higher than the one given here earlier.
Thursday's upthrust had subtle power, surpassing no fewer than three minor peaks without a pause. However, bulls expecting a quick second leg up got stopped out twice on successively lower lows. This weakness should be regarded as less worrisome than if the rally had simply sputtered out and died. Both gold and silver are waiting for a sign from the dollar, which has been their unrelenting nemesis lately. My short-term expectation for the buck is mildly bullish, but we'll just have to wait and see. If the week begins with a Sunday night/Monday morning lurch above the 23.885 'external' peak recorded last Wednesday on the way down, it would give bulls a good shot of reversing the nasty slide of the last five days.
Shorts panicked Friday afternoon, sending this ETF into a bullish spasm that tripped a theoretical short at 270.29. Since we don't know how DaBoyz will open index futures Sunday night, there was little justification for bold action. If DIA were to gap higher Monday morning, following the lead of a rampant E-Mini Dow, a move exceeding not merely C=274.59, but the 'external' peak at 277.40 recorded two days earlier, would be warning bears not to get in the way aggressively. Alternatively, if the week begins with pronounced weakness, use p2=261.70 as a minimum downside target, and thence D=257.41. Both can be bottom-fished with as tight a stop-loss as you can abide. An rABC set-up on a chart of lesser degree will likely be the best way to do this. _______ UPDATE (Sep 29, 5:46 p.m. ET): Buyers chickened out just shy of the 277.40 peak noted above, but they appeared to be staging for a second try after dipping halfway into the gap created by Monday's short-squeeze opening. If Mr. Market is as devious as we know him to be, he will pop DIA above the recent 277.12 peak and then pull out the rug. Here's the chart. _______ UPDATE (Sep 30, 6:13 p.m.): Well, we had the breakout and the possible beginning of a big correction. Now let's see what bears are made of.
The bearish pattern shown, with a 10,445 target, looks quite serviceable and should have worked perfectly. The trouble is, after tripping a theoretical sell signal at 11,413 way back on on September 6, the futures have spent three weeks avoiding the target as though it were a tar pit. It remains valid nonetheless and should work nicely as a back-up-the-truck support for bottom-fishing if hit on Monday. I should also mention that virtually every 'mechanical' short signaled on this chart since Sep 9 would have produced a profit of around $6500 per contract, albeit it with commensurate risk. The next 'mechanical' short would be signaled on a run-up to x=11,413, but this would be, not sloppy seconds, but sloppy thirds, and so I am not recommending the trade. The many failed attempts to go lower would seem to argue for a bullish bias, and that is indeed where we will point when the new week begins -- on the lesser charts, perforce, since the larger ones all say NQ is still a sale. ______ UPDATE (Sep 29, 6:33 pm. ET): The very sloppy price action of the last three weeks has not yet invalidated the bearish target at 10,445, but we will pass up this foul-smelling temptation to get short nonetheless. _______ UPDATE (Oct 1, 6:20 p.m.): The rally feels unstoppable, doesn't it? If this one's going to fail, the logical place for it to happen would be just above C=11,735 (see inset). We'll be waiting with a small-interval rABC pattern to get short with a penny-ante stop-loss..
The chart, with an imaginary rally line extending into the cosmos, is of course facetious, but you get my point: nothing can hold this beast back for long. It continues to benefit from freaked-out bears who understandably lack the guts to stand their ground ahead of weekends. On Friday, they drove the futures up to a level just shy of the point 'C' high of a bearish ABC pattern that served us reasonably well last week. The rally was stronger than in the Dow or the S&Ps, and it would seem to imply that stocks will open with a lurch higher as the new week begins. If DaBoyz are in full command, look for the Cubes to push above the 286.66 'external' peak notched on 9/4. I will be looking to get short nonetheless around 276.40, albeit with risk very tightly controlled. It is a low-odds trade that I am not recommending unless you know how to fashion an rABC stop-loss risking perhaps 8-12 cents. The 252.83 target is still theoretically viable but no longer a great bet. ______ UPDATE (Sep 29, 7:07 p.m. ET): The opening felt too squirrelly to short, so I took no position; nor did I end the day with a strong bias._______ UPDATE (Oct 1, 6:35 p.m.): The Cubes are stealing up on an important resistance, a midpoint Hidden Pivot at 286.20. If they fist-pump past it or close decisively above it, that would hold very bullish implications for next week. Let's see whether buyers can harness Freaky Friday for this heroic task.
Although GDX dipped below the 37.26 downside target we'd been using, the 18-cent overshoot was not necessarily bearish. Even so, we should be prepared for another leg down. As a practical matter, I'd suggested taking our cue from the lesser charts, which in fact yielded up a mildly bullish impulse leg before the week ended. This is not sufficient reason to bet the ranch on a continuation of the rally, but we can at least give bulls the mild benefit of the doubt as the new week begins. At the very least, they will need to push above an 'external' peak at 40.32 recorded last Tuesday if they are to earn more credibility. _______ UPDATE (Oct 6, 8:54 p.m.): Bottom-fish at p=37.33 with as tight a stop-loss as you can abide. If it gets tagged, brace for more downside to as low as 34.60. Here's the chart.
A bull-trap opening greased the skids for the nasty plunge that followed. It caught bulls and bears with their pants down, so there's likely to be follow-through on Thursday. If the selling breaches the 266.00 midpoint support decisively, brace for more downside to as low as 257.41 over the near term. Mechanical shorts can be attempted on snapback rallies to the red or green line, but I am not recommending bottom-fishing with the usual tight stop loss because the A-B impulse leg is low-quality, having failed to surpass any interesting prior lows. _______ UPDATE (Sep 24, 9:20 p.m.): The short trade played out on Thursday exactly as I'd mapped it the previous night. If you did the trade, please let me know and I'll establish a tracking position. In any event, half should have been covered on the selloff that followed DIA's brief pop above the green line.
If the Cubes fall to the 254.96 target today, it will have been three weeks in coming. It has been a tortuous path for bears, even if the gap-down opening on 9/17 all but clinched the ride. The corresponding target for AAPL is 100.99, a Hidden Pivot that at this point looks unavoidable. A secondary 'hidden' support lies at 257.89 (60-min, a= 280.36 on 9/16), and you can bottom-fish there with a stop-loss as tight as eight cents because it is so well located, away from any 'structural' supports. _______ UPDATE (Sep 24, 9:41 p.m.): The rally to the green line (268.02) tripped a mechanical short. No one reported doing the trade, but in any event, half should be covered at p=262.96.
I gave up too early on a soon-to-expire butterfly spread targeted on 100 when the stock rallied nearly $10 this week, but the position appears to have come back from the dead. The original target, 100.99, is now feasible for this week, although the stock has been too squirrelly to be easy pickings. If the target gives way easily, look for more slippage to 95.61, a Hidden Pivot derived from the record high at 137.98 notched on 9/2. It's unlikely to be easy yardage, however, since there are plenty of shorts remaining to be covered from early September's highs above 130. ______ UPDATE (Sep 24, 9:44 p.m.): A reminder: AAPL will fall only when the thieves and pederasts who control the stock want to buy more of it at fire sale prices.
