[DEC Silver] Bulls and bears have been locked in a deadly battle of tiddlywinks for a month, oscillating gratuitously in a $4 range. The tedium eventually will give way to a thrust to at least 31.285, a longstanding Hidden Pivot target shown in the chart (inset). It is always possible to take a small position using an entry pattern on a chart of lesser degree, and to take profits on most of it while leaving one or two contracts for a swing at the fences. In this case, however, the potentially interminable wait makes the strategy unpalatable, but also vulnerable to occasional swoons. We might consider a 'mechanical' buy on a pullback to x=25.671 nonetheless, but the $9,355/contract stop-loss demands a modified entry method to minimize risk. ______ UPDATE (Sep 20): The tiddlywinks marathon stretched on for yet another week as bulls awaited the right opportunity to demolish bears. A gratuitous swoon on Thursday was just Mr Market's way of reminding bulls that even being right is certain to be painful at times. _______ UPDATE (Sep 21, 8:55 p.m.): The futures would need to touch 27.90 to undo the technical damage wrought by today's plunge. That's a tick higher than a small but significant 'external' peak recorded on 9/2. In the meantime, the 23.385 target shown in this chart will remain theoretically viable. _______ UPDATE (Sep 23, 10:42 a.m.): A 23.40 midpoint support is breaking down, opening a path to as low as 21.50. Here's the chart. ______ UPDATE (Sep 23, 10:12 p.m.): The futures bounced sharply after plunging to within 36 cents of the 21.50 target. We'll repair to the sidelines, since I'd rather not mess with mister in-between. The target remains viable nonetheless.
I am leaving a GDX tout on the home page as a place-holder, having outsourced the trading of this vehicle to anyone in the chat room who is interested. It is too flaky and tedious to warrant the attention I'd need to give it in order to catch an important low or high. There have been none of either since early August, and although that could change without warning, monitoring the 15-minute chart to discern the instant of opportunity is more trouble than it's worth. That said, if the constipated correction pattern shown in the chart were to fall to the 37.64 target, I'd be an eager buyer there. Subscribers will have learned by now that moves in the opposite direction -- i.e., up -- have failed on a dozen occasions to produce the sustainable breakout we've long anticipated. Even so, a print at 44.28 should not be ignored, since it would signal the start of an upthrust to at least 47.80. ______ UPDATE (Sep 15, 5:03 p.m.): I'll lower the bar somewhat with this chart. If GDX can close for two consecutive days above p=43.35, that would be good evidence of an impending move to the 47.80 target. _______ UPDATE (Sep 20): Here's an updated chart to remind you of what could happen if sellers were to seize the advantage, however briefly. The 37.64 target was first broached a week ago (see above) and remains viable, as does the upside target at 47.80. _______ UPDATE (Sep 21, 9:01 p.m.): Today's plunge stopped just shy of negating the bullish target at 47.80, but for the time being we'll focus on the unachieved downside target at 37.64, which seems more likely to be reached than the former at present. _______ UPDATE (Sep 23, 10:15 p.m.): The downdraft overshot the 37.64 target
Gold has been screwing the pooch all summer, so there's no point in my trying to say something interesting. The December contract settled on Friday at the same price where it was trading on July 26, and that's the story. The dramatic plunge in the second week of August proved to be inconsequential, a gratuitous bit of nastiness intended by Mr Market to disillusion bulls who may have begun to imagine that quotes would be basing above $2000. Bears have been disappointed repeatedly as well, since they've failed to push the futures down to p2=1884.70 (see inset), let alone to the D=1838.00 target of the corrective pattern shown. I've set a wake-up call at 1980.50, since that's where the bullish story would start to become interesting again. A longstanding target at 2142.50 remains valid but is not worth pondering at the moment. The general impression is that bullion has been biding its time, albeit with an upward drift, waiting for the financial crisis that everyone knows is coming. _______ UPDATE (Sep 16, 5:18 p.m.) : A timid, fleeting poke to 1983.80 woke me but has left me groggy. A subsequent $23 pullback was less than inspiring, although hardly a disqualifier of the bullish outlook. _______ UPDATE (Sep 20): Zzzzzzz. _______ UPDATE (Sep 21, 9:51 a.m.): Gold is breaking down from the pennant formation I featured in last week's impromptu 'disaster' presentation. Here's the bearish pattern to watch now, with likely minimum downside to p2=1885.40. If bulls are going to turn things around before then, it would occur near 1910-11. _______ UPDATE (Sep 21, 9:05 p.m.): The futures bounced to-the-exact-tick off an 1885.40 downside target that I posted in the chat room when the futures were trading around 1917. This dead-center bullseye allowed numerous subscribers to report winning trades from the
DIA still has an outstanding target below at 271.71. If it rallies to x=279.80 in the meantime (see inset), that would trip a theoretical 'mechanical' short. This one is for experts only, however, since the signal would be a weak one. Signs are slightly bullish, though, since two days of trying could not bring DIA down to p2=274.40. In addition, the bearish impulse leg from the 292.36 high recorded on September 3 is weak. My hunch is that bulls and bears alike will get racked by Mr. Market this week and that any decent trading opportunities will come from intraday signals on the lesser charts.______ UPDATE (Sep 14, 8:31 p.m.): The day began with a gap-up short squeeze and ended with shorts looking like dead ducks. If more of the same send DIA above the 285.79 peak from 9/4, bears had better dive for cover. _______ UPDATE (Sep 15, 5:11 p.m.): Mr. Market, friendly as a rattlesnake, head-faked DIA above an important peak on the opening bar, then it receded for the remainder of the day. This was meant as a reminder to bears that even when they are right, which seems to be the case at the moment, it is still extremely difficult to hold onto a well-timed short position. We shall see. _______ UPDATE (Sep 16, 5:22 pm.): Distribution, anyone? Pretty feeble, at that. _______ UPDATE (Sep 17, 11:05 p.m.): The gap through =278.76 on the opening bar means DIA is headed down to at least D=273.29. You can get short 'mechanically' with put options if this hoax rallies to the green line, 281.50. Stop yourself out at 284.24.
I've been looking for signs that the upturn from 91.75 on September 1 is the start of a major bull run, but so far the evidence is inconclusive. The impulsive rally since then had a chance to demonstrate exceptional strength by surpassing the three 'external' peaks shown in the chart. In the actual event, it got past only the first before correcting significantly as last week ended. Bulls could make amends with a thrust this week that vaults the other two peaks, but until that happens, we should view the rally with caution, if not quite skepticism. _______ UPDATE (Sep 16, 5:25 pm.): The lack of follow-through to the rally begun on September 1 from 91.75 has been dispiriting, but don't give up yet. It would take but an unpaused thrust exceeding peaks #2 and #3 to change the picture dramatically. ______ UPDATE (Sep 21, 10:12 p.m.): With just a modest upthrust, the Dollar Index will take out two 'external' peaks, generating an impulse leg on both the intraday and daily charts. Its imputed power will depend on whether it can do so without any more pullbacks, even minor ones, and the move would be even more bullish if DYX doesn't trade beneath the higher peak (93.99) for at least a week or so after exceeding it. Here's the chart.
The pattern shown is gnarly perfection, and it could spell easy opportunity on Friday. Everything about it is textbook, and although the external low surpassed by the point 'B' low is well to the left and not shown, it is most definitely there and distinctively so. The key here is that virtually no one but us sees this pattern. This implies that 'mechanical' longs or shorts will work from x, p or p2, and that D= 3242.50 can be bottom-fished with a very tight stop-loss (or an rABC set-up). Stay tuned to the Trading Room for details, since anyone who posts with a blue 'handle' should be able to navigate the set-up mechanics. Lately, I've remained inured to the noise of strong rallies and nasty sell-offs, since they are setting up a bigger deception. I detailed one such scenario here the other day, illustrated with a chart of IBM's crash in 2007-08. The takeaway is that if this selloff continues, we should be prepared for a wicked turnaround that will send the broad averages to new record highs. Things might not play out exactly that way, but however they develop, the effect will be for the bear market to take as many investors down with it as possible. Right now, there is a mix of bulls and bears; however, for a proper top, EVERYONE -- including short-covering bears -- will need to be crazy-bullish.
Short-covering provided a strong finish to what might otherwise have been a dispiriting Friday. However, when the rally touched the green line (3442.81), it triggered a moderately appealing 'mechanical' short. I did not recommend the trade, however, because the implied stop-loss at 3483.00 would have risked $2000 per contract, and because taking a position over the three-day holiday weekend would have been unnecessarily stressful. We'll watch from the sidelines when index futures resume trading, but please note that, like AAPL, the E-Mini S&Ps would need to rally only moderately to surpass two external peaks, creating a strong impulse leg. The higher of them lies at 3493.00, and if it were to be surpassed in the first 90 or so minutes, the breach would be warning bears to dive for cover. _______ UPDATE (Sep 8, 8:39 p.m. ET): Far from rallying past prior 'external' peaks, the futures look leaden. The easy breach of this 'D' downside target at 3323.00 today is bearish and telling us that the next strong rally is likely to be a trap. _______ UPDATE (Sep 9, 10:44 p.m.): Now let's see if Wednesday's strong rally was a fake. If it was the real deal, buyers should be able to pop the futures above 3452.25 by week's end. That's an 'external' peak recorded September 4 on the way down.
Although the stock rebounded sharply from the low of Friday's selloff, the rally was technically unpersuasive. The implication is that any base-building for a leg to new record highs will likely occur at lower levels. Two problems related to pre-holiday price action stand out on the intraday charts: 1) the low exceeded a 'D' Hidden Pivot target; and 2) the rebound failed to surpass any 'external' peaks. Together, these factors suggest buyers are more timid than we have seen them in a long while. Despite their lack of gusto, a rally that at least seemed impressive was all but ordained, since there has been no instance in years when AAPL sold off hard for three consecutive days. Bulls will have a chance to turn the tide with a vengeance on Monday, however, since there are two external peaks not far above to taunt them. The higher lies at 125.17, and if AAPL were to pop above it in the early going, it would make a further move to new all-time highs within 4-6 days no worse than an even-odds bet. I said here earlier the stock would need at least a month to shake off the recent damage, but if it shrugs it off in less than a week, that would be clear evidence that DaBoyz feel no need to even pretend that a little moderation might be a good thing. They are hell-bent on unloading as much stock as they can onto the robinhood crowd and other greater fools, and time could be running out. Better to bamboozle them with an extraordinary display of strength than to allow doubts and rational thinking to creep in. _______ UPDATE (Sep 8, 8:50 p.m. ET): Sellers have breached p=111.65 in after-hours trading, implying AAPL is imminently bound for D=100.79. The stock will
A 2142.40 rally target we've been using for nearly a month remains valid, although the wait is becoming an ordeal. Bulls seem in no hurry to get there and are probably even less enthused about trying when they're vulnerable to a smack-down. They usually come on days when Wall Street's energy is focused on pumping stocks full of hot hubris, or when Powell says something that is easily construed as bullish for America. Whatever exuberance spills thereupon into stocks is lost on gold, which gets kicked, like some nerd in the playground, just for the sin of looking weak. Even so, it cannot be lost on gold bulls that these take-downs do not last for long, and that they almost invariably fall short of 'D' correction targets. I can only counsel patience for now, but if one of those silly smack-downs hits 1855.00, be ready to jump on the futures aggressively. Here's a chart with the relevant pattern. _______ UPDATE (Sep 9, 10:58 p.m. ET): This chart corrects the earlier one, which had an erroneous 'B' low. The new price where you could try bottom-fishing aggressively is p2=1884.70. Alternatively, a pop exceeding 2004.10 would put bulls solidly back in charge.
Like AAPL and the Dow Industrials, the Cubes could generate a powerfully bullish impulse leg with a relatively modest rally past the three small 'external' peaks shown in the chart (inset). The highest lies at 291.38, and it is equivalent to a peak at 11,944, basis the September E-Mini Nasdaq contract. On Friday, following two-and-a-half days of hard selling, QQQ rebounded sharply but without exceeding any external peaks. That may or may not happen when post-holiday trading resumes, but we should be ready for it nonetheless and open minded about the very bullish implications it would have for tech stocks, particularly the FAANGs. Alternatively, if QQQ opens lower, it could still be bought with a very tight stop-loss at p=278.10 of this pattern on the five-minute chart; a=288.93 at 9:40 a.m. on 8/4; b=271.80 at 10:45 a.m.; and c= 286.66. _______ UPDATE (Sep 8, 8:59 p.m. ET): The Cubes opened on a gap BELOW p=278.10, telegraphing the weakness that followed. The bottomed occurred exactly at the pattern's D target, but I doubt the selloff is over. Raising the point 'A' to 303.50 yields minimum downside to p2=262.89, or D=254.96 if any lower. _______ UPDATE (Sep 9, 11:30 p.m.): Use the 281.36 'D' pivot shown in this chart as a minimum upside target for the near term. Bulls should have been able to do better, given the shock-and-awe, short-squeeze opening. Is the rally a fake? We should know by day's end. _______ UPDATE (Sep 10, 10:11 p.m.): The double fist-pump to just above the 281.36 rally target in the first hour was sufficient to scare off even the most determined bears before the Cubes tanked. They looked bound for at least D=265.20 (5-min, a= 286.66 on 9/4) at the close.
