Sellers were subtly unimpressive last week, implying bears could find themselves running for cover when the new week begins. Notice in the chart how three successive down-legs on Thursday and Friday failed to exceed 'external' lows to the left of them. The shortfall in each case was only a tick or two, but that was enough to categorize the legs as corrective rather than impulsive. This suggests that bears were lacking in confidence, even though tech stocks were getting hammered brutally at the time. If index futures open higher Monday evening, we should focus on the 268.40 'external' peak shown in the chart, since an easy move past it, especially early in the session, would suggest buyers mean business. However, even if the Mini-Dow were to open lower, a midpoint Hidden Pivot support at 27,889 would be an opportune place to try bottom-fishing with a tight stop-loss. Here's the chart. _______ UPDATE (Sep 9, 9:10 p.m.): DIA not only gapped through the green line on the opening, it also crushed a midpoint Hidden Pivot support at 276.21. This implies more downside over the near term to at least p2=272.37, or to =268.53 if any lower. Here's the chart. _______ UPDATE (Sep 9, 11:33 p.m.): This morning's gap-up short squeeze began with promising viciousness but ultimately died well shy of the imposing 'external' peak recorded last Friday at 283.88 on the way down. The burden of proof will be on bulls when the day begins. _______ UPDATE (Sep 10, 10:18 p.m.): Look for DIA to continue down to at least 271.71 as the week ends. An overshoot of more than 0.50 points would give bears a head start next week. Here's the chart.
December Silver appears bound for the 31.285 target shown, a 15% rally from here. The target has been in play since August 12, when a strong upthrust first touched the green line. But it has been a trying slog for bulls ever since, even if the gratuitous ups and downs have provided ample sustenance for traders. Last week's ratcheting downtrend tripped a weak mechanical 'buy' at the red line, stop 26.30, but I didn't trade it 'mechanically' myself because Silver's rebounds from Hidden Pivot levels have lost much of their vigor. Under the circumstances, the futures could easily drift down to the stop and regain their lazy energy for another rally. The workaround is to bottom-fish with rABC patterns, and so I did: with small -a-b segments fashioned from the 15-minute bar chart. The small rallies were profitable in a small way, but they went nowhere. Now, if the futures were to fall to x=25.671 (the green line), they would signal a 'mechanical' buy somewhat more appealing than the one last week at the red line. The stop-loss would be at 23.795, implying a theoretical entry risk of about $9400 per contract. Although I would rate the odds of this trade working as excellent, the dollar risk is obviously much too high to employ a straight 'mechanical' entry. Again, the workaround would be to fashion small-pattern rABCs if and when the December contract falls to 25.670. I would encourage most of you to simply paper-trade this one, since it's a good way to increase your confidence in 'mechanical' set-ups. These trades provide the easiest way I know for relative beginners to make money consistently. I haven't kept close track of our winning streak with posted 'mechanical' set-ups, but anyone who has could attest that the streak has been formidable and
When AAPL slightly exceeded a 135.96 Hidden Pivot target on the weekly chart Wednesday, I took it as mildly bullish. Although I missed nailing the top by just 1.5 %, I've gotten so used to hitting the big swings within a dime that I brashly assumed bulls were still in charge and simply taking a breather. That could still prove to be the case, although it may be a few weeks before we can judge. In any event, Thursday's 12.7% plunge has altered my perspective, since it increases the odds that a major top is in. You can see in the graph that the record high achieved earlier this week maxed out bullish possibilities on the weekly chart. There are no alternative patterns to the one that projected to 135.96, and the only way to create a new one would be for AAPL to effect a healthy B-C corrective leg from the recent, record high. It would need to be followed by a rally of exactly $12.21 to revive the bullish case. This could take four to six weeks to unfold, and it would be surprising if it were to happen in significantly less time. For related reasons that I made clear here earlier, it is very unlikely to happen all if the dollar is carving out a major bottom right now, as seems possible.
There are still unfulfilled rally targets well above the recent highs, but we'll focus for the time being on the downtrend, since it has begun with such brio. Notice how the lows of Thursday's selloff failed to penetrate the midpoint Hidden Pivot support at 3426.50. This is not bullish per se, but it suggests that sellers lack the moxie to finish the job. How can they demonstrate otherwise? For starters, they'll need to push the futures below p to the D target at 3360.00. It'll take a close on Friday below that number, and another on Monday; or a decisive breach of it intraday, to suggest bears have taken charge.
AAPL went all spastic on Wednesday, apparently because the quasi-criminal monopoly of its app store is drawing intense scrutiny from eurolands's notoriously zealous regulators. They've proven time and again that they can be bought off, but there is understandable concern that any bribe paid these extortionists will be in painful proportion to AAPL's $2 trillion-plus valuation. The wack-jobs powering Apple shares higher, famously including the central bank of Switzerland, will shrug it off in a day or two if not sooner so that AAPL can return in earnest to the urgent mission chosen for it by the U.S. Government: making all the pension funds that hold the stock appear solvent for as long as possible. From a technical standpoint, it is mildly bullish that the top of Wednesday's schizoid spike slightly exceeded a very clear Hidden Pivot target at 135.96. Let's see how long the correction lasts before we bull up with gusto for the next stab higher.
We're using a 3769.00 bull market target that comes from the weekly chart, but more immediately, the 3651.75 target shown in the thumbnail inset can serve as a minimum upside objective for the near term. A pullback to the green line would trip a 'mechanical' buy, stop 3484.00, but it seems unlikely, given the very steep pitch of the futures' ascent. Even allowing for the fact that this is the most powerful rally in history, I was surprised nonetheless to see it take out double resistance I'd noted earlier about 30 points below. It were as though the two pivots were chopped liver. Chalk it up to mass mental illness that is equal to some of the most famous outbreaks of craziness in history, including the South Sea Bubble of 1720 and Tulipomania. The dollar consequences of this episode undoubtedly dwarf all of the others put together, mainly because it is global in scope.
Rallies are reaching major and minor Hidden Pivot targets consistently and precisely, but without pausing for long before ascending to the next. The pattern shown, with a 3769.00 target, is intended to stretch the bullish imagination, especially if you think the threat of a global depression is bad for stocks. I've used the monthly chart because the weekly and daily bars yield too many possible point 'A' lows to enable a confident target projection. If the futures hit 3769, the Dow would be trading for around 31,000, about 2,300 points above current levels. How likely is the S&P target to be reached? I'd say there's at least a 75% chance, given the way buyers impaled the secondary pivot, p2=3370.25, last week. If there is first a plunge to the 2971 midpoint pivot, although that might seem like the end of the world, the chart says it would offer a great 'mechanical' buying opportunity. Although we're unlikely to see such weakness, it's potentially useful to know that a seeming avalanche would likely be merely corrective rather than the start of a bear market. Everybody has been expecting one, but that's one of the reasons stocks just keep moving higher. We'll look for trading opportunities on the lesser charts in the meantime, maintaining a bullish bias unless corrective patterns on the daily chart start exceeding midpoint pivots and d targets. Please note that the Hidden Pivot levels in the chart will not be as precisely tradeable as usual, since the chart is a composite that uses A,B and C coordinates from contracts of various months and years. However, the 'composite target' should be sufficiently accurate to allow us to stay confidently with the trend until the futures are very close to a potential major top. _______ UPDATE (Aug 31, 4:43 p.m. ET):
AAPL still looks like a lead-pipe cinch to achieve the 537.50 rally target shown in the chart. Whether it takes a few days or a couple of weeks, the broad averages will be moving higher simultaneously, because that's how the game works. The stock will open Monday trading for around $125, since it is splitting four-for-one. The reason for the adjustment is that some big shareholders want out, and the only way they can accomplish this is by lowering the price to attract millions of new greater fools. The Robinhood crowd, for one, but also every small investor who has dreamed of owning a few shares of the institutional world's most cherished stock. At $125 per share, it's not cheap. But the price is low enough that even a millennial living in his parents' basement can probably scrape together enough cash to purchase a round lot. There are surely enough odd-lotters to take hundreds of a billions of dollars worth of stock off the hands of pros who recognize how absurdly overvalued AAPL is. We get a sense of just how many small-timers are out there to bail them out whenever a PowerBall jackpot hits nine figures. Imagine how large the lotto jackpots would be if, instead of buying $5-$10 worth of lottery tickets, the rubes spent $3,000-$5,000 as they absolutely will on Apple shares. Do the math, That's what portfolio managers are counting on, since they know AAPL offers extremely poor value at these levels. For trading purposes, you should stay close to the chat room if you're keen to play. The stock would trigger a 'mechanical' buy if it fell to 488.97. However, the implied stop-loss at 470.12 would risk nearly $1,700 per round lot -- far more than our usual gambit. But it will always be possible
Buyers brushed aside a secondary pivot at 285.16, turning it into an apparent support by week's end. The clear implication is that DIA will achieve the 297.18 target, putting the cash Dow just below 30,000. I wouldn't count on round-number resistance to halt the stampede for long, especially since the bull market projection I've flagged for the E-Mini S&Ps elsewhere on this page would equate to around Dow 31,000. DIA's ascent, although not quite as steep as the Nasdaq 100's, has provided no opportunities to get long 'mechanically' on the daily chart, although there have been several set-ups on the lesser charts. They cannot usually be foreseen a day in advance, however, so we'll have to continue looking for them intraday. Meanwhile, I would not suggest buying naked call options merely because this vehicle is a lead-pipe cinch to reach the rally target. Instead, focus on butterfly spreads centered on or very near the target. The Sep 18 296/298/300 'fly would be a great buy for 0.10-0.15, since it has the potential to return perhaps 1.50-1.80 with DIA trading near the target between Sep 16-18. You might also consider calendar spreading the 300 strike. The Sep 25/Sep 11 for 0.60 would yield excellent odds, since it could widen to as much as 3.00. _______ UPDATE (Sep 2, 9:29 p.m.): The trade ideas suggested above have already produced significant gains, but because they attracted no discussion whatsoever, I have no way of knowing whether dozens of subscribers are keen to jump on put options when DIA hits 297.18, which it will. _______ UPDATE (Sep 3, 10:06 p.m.): Today's big selloff did not significantly alter the odds of DIA achieving the 297.18 target, although a further drop exceeding 275.87 would.
The bull market in tech shares has been trashing Hidden Pivot obstacles with the greatest of ease, so here's a chart that takes a more expansive view. If the rally maintains its steep pitch, the uppermost of the targets, 317.48, should be at least two weeks in coming. There's always the chance it will not be reached at all, since September is a notoriously bearish month, but we'll take the targets one at a time in any event. If intervening corrections on the lesser charts start to exceed their midpoint supports and 'd' targets, we can shift our perspective accordingly. But there is no reason to presume that seasonal bearishness that has obtained over the last hundred years will affect this nutty rally any more than a dozen other time-honored cyclical and technical indicators. For the moment, we'll stay focused on the 297.17 target immediately in prospect. Its easy breach would portend more upside to the next, 305.12. _______ UPDATE (Sep 3, 10:20 p.m.): It could take a week or two for the Cubes to shake off today's body blow, but the plunge paradoxically triggered a mildly enticing 'mechanical' buy at p=284.40, stop 273.37. If the trade gets stopped out and QQQ falls to the green line, that would trip another 'mechanical' buy more promising than the first. Here's the chart.
