I've been a hard-core deflationist and dollar bull for decades, and so I've been eager to see technical evidence that the dollar's wrenching correction since March is at an end. Alas, although there are faint stirrings in the greenback that hint of a short-to-intermediate-term rally, I doubt that it heralds the resumption of the dollar's long-term bull market. My expectation is that this will occur in conjunction with a deflationary implosion that will usher in a global economic depression. For the time being, though, the money spigot is wide open, fiscal stimulus is at unprecedented levels and few are worried about a ruinous debt deflation. It is inevitable nonetheless because too many dollars are owed -- including more than a quadrillion of them tied to financial derivatives -- for debtors to slip the noose. The sum is vastly more than the piddling trillions being loaned or gifted to the financially strapped. And although no one thinks they or even the taxpayers will have to repay this money -- meaning it is ultimately inflationary, at least in theory -- the deflationary black hole created by a collapsing derivatives market and falling prices for energy and real estate will suck all debt into the void of singularity. Stochastic Blahhhs Concerning the Dollar Index, its last few, minor rallies have exceeded prior peaks on the intraday charts, and this is bullish. However, stochastic indicators do not suggest that a major reversal is at hand. Notice in the chart (inset) that DXY's descending lows since March have generated correspondingly descending lows in the weekly stochastic. Although this 'non-divergence' is not bearish per se, it is not the kind of chart action we should expect at a major low. In contrast, notice how just before the dollar took off at the beginning of 2018, we
AAPL still has a rally target outstanding at 490.97, a 6% move from here. If the stock achieves it, the stock market, particularly the tech stocks, are certain to move higher in sympathy. How likely is this? Very, I'd say, given the ease with which buyers gapped through Hidden Pivot levels represented by, respectively, a green line and a red one. Even so, the stock has looked heavy for the last few days and may need to pull back to get some running room. The first hint that a more significant decline is under way would be signaled by an unpaused drop below 452.18, a number that is equal to a technically important low recorded last Friday before the stock's most recent advance. Minor trouble would come on a print at 460.59. ______ UPDATE (Aug 20, 5:12 p.m. ET): AAPL remains the only stock we need get right in order to predict the stock market's important swings correctly. At the moment, it is keeping us from getting distracted by a bearish drumbeat based in part on a Bradley turn date yesterday. Because of this stock's crucial importance, I am focusing on lesser ABC patterns in order to get a very precise read on the stock as it makes its way toward a potentially important top just above, at 490.97. Subscribers who shorted p2=472.99 in this chart could cover right now for a $124 profit on four round lots, but as I noted in a chat room post at 3:24 pm., the trade was not intended as an overnight hold. You can short at D=479.92, but this is also being recommended as a day trade, very tightly stopped.
I'll be tracking AAPL more closely than ever in the days ahead, since it is closing on a Hidden Pivot rally target with the potential to create a major top. If one occurs, the stock market will be topping as well, since Apple shares, valued at nearly $2 trillion, are the most important market bellwether of them all globally. The target lies at 490.97, and it is all but certain to be achieved, given the gap-up moves through x and p (see inset). I cannot guarantee that this will be THE top, since the pattern's point 'A' low is not very compelling. But there is just one logical alternative at 519.50 that would remain if 490.97 is easily exceeded. It comes from sliding 'A' down to the 236.90 low recorded on April 2. However, the pattern shown is sufficiently clear that a tradeable pullback from 490.97 is extremely likely. This scenario will make an excellent bet, presumably using put options priced below $1 that expire in about 8-12 days. _______ UPDATE (Aug 17, 7:15 p.m. ET) Buyers have turned uncharacteristically lugubrious, doing a Parkinson's shuffle atop the 457.37 'secondary' pivot rather than a sprightly jig. This implies AAPL may need to swoon in order to get a running start on 490.97. Traders please note: If the stock were to fall to p=423.78, that would trigger a mildly enticing 'mechanical' buy, stop 401.38. _______ UPDATE (Aug 18, 5:48 p.m.): AAPL needs to close above the 464.36 top of the pooch-screwing range of the last three days to get back in gear.
News out late Friday afternoon that Buffett had taken a $563 million stake in Barrick Gold (GOLD) was greeted with proper enthusiasm, although it remains to be seen how much of the gusto will spill into Sunday's opening. The stock rocketed more than $2 in after-hours trading to close at 29.18, the intraday high. Comex futures had stopped trading by then, but they should see a boost when activity resumes Sunday evening. At the very least, buyers should be able to push the December contract to the p=2008.90 midpoint Hidden Pivot shown in the chart (inset). Any higher, especially a two-day close above p, would shorten the odds of a further move to the pattern's 2143.50 'D' target. This number was broached here earlier and can serve as our best-case scenario for the week ahead. Even so, I plan to lay out a small, tightly-stopped short near 2008.90 if buyers do not demolish the resistance on Sunday's opening. This is just a straightforward, buy-the-rumor, sell-the-news bet. _______ UPDATE (Aug 18, 5:54 p.m. ET): A gratuitous mid-morning swoon was recouped quickly, but bulls were subsequently unable to take out the earlier high. If the futures go nowhere for another day or two, they made need to pull back for a running star at 2143.50. P=1930.40 of this pattern would be a logical place for a bottom and a good place o try bottom-fishing. _______ UPDATE (Aug 19, 8:21 p.m.): The 1930.40 target drum-rolled above caught the low of today's $80 plunge within a dime. If you bottom-fished there as I'd suggested, the trade could have produced a quick gain of as much as $6,400 on four contracts. Since no one mentioned having done the trade, I have not established a tracking position. Further slippage would put the 1837.10 'D' target in
The futures spent an entire week screwing the pooch, unable to surpass the 3392.75 Hidden Pivot we've been using since June to stay aggressively on the right side of a senseless trend. I'd suggested taking a small put position in DIA or SPY over the weekend, but I'll wait till I hear from a few subscribers in the chat room before I decide whether to establish a tracking position. The failure of bulls to take flight last week can be attributed to more than just a Hidden Pivot resistance; for in fact, it closely coincides with the all-time high at 3396.50 recorded on February 20. Bulls were bound to be skittish at these levels, and last week's nervous behavior may require an emetic and a running start to vault the futures into record territory. Although there are good reasons to expect this, we should be alert to the possibility that the wild stampede since March 23 is at or very near an end. _______ UPDATE (9:32 p.m.): Moments ago, the futures popped to my number exactly: 3392.75. Rather than pretend a target I've been drum-rolling since June is going to stop this frothing-at-the-mouth beast precisely, or that a day of consolidation has been squandered on creating a slightly higher high than the intraday peak, let me offer you a fresh perspective that could prove more useful. Specifically, I've redrawn the graph to show two very-closely spaced Hidden Pivot targets that lie, respectively, at 3999.25 and 3402.75. The first is the 'D' terminus of a small ABCD; the second, the midpoint pivot of a much larger pattern tracing back to July 31. I strongly expect a tradeable top to occur at one number or the other, or perhaps midway between them; but if I had to pick one, I'd say 3402.75,
A fall to x=25.281 would trigger a 'mechanical' buy, stop 23.575, but if we are not gifted with such a juicy opportunity, we could try again at p or even p2 on a future retracement. In any event, the pattern's D target at 30.385 is in play following last week's decisive push past p=26.983.The futures slumped moderately on Friday, but this was before Buffett's apparently newfound interest in bullion was divulged after the close. Berkshire has taken a $563 million stake in Barrick, and this cannot but put a spring in the step of gold and silver for the foreseeable future. _______ UPDATE (Aug 18, 6:03 p.m.): A pullback to p=26.983 would trigger a 'mechanical' buy, stop 25.850. ______ UPDATE (Aug 19, 8:40 p.m.): Anyone do the trade? _______ UPDATE (Aug 20, 6:25 p.m.): It turns out that a few subscribers actually did take the trade. All would have made money, but I closed it out myself for a profit of around $3,100, notifying the room of this at 9:53 a.m. The trade is currently showing a profit of about $2,300 per contract for anyone still holding a position. My decision to exit was based on the strong look of the dollar's hourly chart. It could go either way, but the trade was predicated on a ride to p2=28.684, for a theoretical gain of about $8,500 per contract. For those of you who still hold a position, a stop-loss should be maintained at 25.840. This would yield a loss of about $5,200 per contract, excluding any offset from profits already taken.
The Cubes' ascent has slowed recently, but there has never been much doubt where they are headed: to 283.72, the 'D' target of the pattern shown (see inset). This is a slight upward adjustment from the 283.35 target given here earlier, but the change will have no bearing on how we trade this vehicle. The last 'mechanical' buying opportunity came at p=267.52 on Monday morning, but it required patience and guts to stay with it during the ratcheting move lower over the next two days. We can be confident D will be reached because of the way buyers gapped through the midpoint resistance at 267.52 ten days ago. ______ UPDATE (Aug 17, 7:26 p.m. ET): Well, okay, a trend failure at p2=275.62 should not be ruled out, especially since Monday's bullish effusion stalled a micron above it. We should know within 24 hours whether bulls have the moxie to get past this Hidden Pivot resistance. ______ UPDATE (Aug 18, 6:06 p.m.): 283.72, here we come! QQQ's lunatic sponsors reasserted their dominance, turning the 275.62 secondary pivot from resistance into a launching pad. Short the target using Aug 28 puts priced under 1.00, but don't risk more than you are able to lose painlessly. The trade should be initiated with QQQ within no more than 0.05 points of the target.
Elsewhere on this page, I've explained why the memorably nasty selloff in silver is unlikely to prove fatal. My reasons are technical, based on a recent rally spike that exceeded an 'external' peak recorded seven years ago. Price action in gold corroborates this with evidence that is not so esoteric. Specifically, last week's spike to record highs exceeded a clear target on the weekly chart at 2031.30. Although there were other, higher targets that went unfulfilled, the December contract's upside penetration of a Hidden Pivot resistance we can be certain of is indisputably bullish. The correction likely has farther to go, however, and we shouldn't be surprised if it probes round-number support at 1800, or even 1700, before sellers are exhausted in perhaps 6-10 days. _______ UPDATE (Aug 13, 8:59 p.m. ET): The futures have been struggling for loft, but we can still use p=2008.90 shown in this chart as a minimum upside target for the near term. As always, a decisive push past a midpoint resistance, especially on first contact, would shorten the odds of a finishing stroke to D=2143.50.
Silver suffered its worst one-day drop in as long as we can recall, but this should be viewed as merely corrective rather than the end of the bull market begun in March from around $12. I am optimistic because last week's high at 29.915 decisively exceeded an 'external' peak at 29.32 recorded more than seven years ago. That peak is what we refer to as a 'look-to-the-lefter', and although by definition it is visually insignificant, it offers just enough resistance to help us distinguish between half-hearted rallies and the real McCoy. If the buying driving silver higher in recent weeks had lacked guts, it would have failed to penetrate the long-ago peak. That said, I can only guess right now how low the selloff will go. Somewhere between $23 and $24 seems visually logical on the intraday charts because of late July's consolidation above $23, but to make any headway bears will first have to force the futures beneath $25 on a closing basis to show who's boss. ______ UPDATE (Aug 12, 4:13 p.m. ET): The futures bottomed almost exactly between $23 and $24 as anticipated. Although bulls dominated for the rest of the day, the lows will probably need to be tested before a rally to $30 and higher can begin in earnest. ______ UPDATE (Aug 13, 9:10 p.m.): Silver's energetic rebound from Tuesday's shallow abyss has 'bull market' written all over it. Nasty selloffs are supposed to be recouped quickly, and that is exactly what is happening. Its bounce has outpaced gold's by moving decisively above a midpoint Hidden Pivot resistance at 26.98. This suggests not only that the futures will achieve a minimum D=30.385 (click here for chart), and soon, but that we can expect a close above it with little ado.
Short covering toward the end of the session recouped about 20% of the day's losses, but not before sellers had damaged the intraday charts by overshooting a clear Hidden Pivot support at 3222.00. Looking just ahead, a corresponding failure of minor uptrends to reach their 'D' targets would provide further evidence that the dominant trend may have shifted to bearish. Bulls could remedy that quickly with a thrust exceeding 3361.25 overnight or Wednesday morning, but if they fail, look for the futures to grope their way down to at least 3300 in search of support.______ UPDATE (Aug 12, 4:32 p.m.): What on earth could I have been thinking? A guy would have to be crazy to expect the S&Ps to fall for more than a day. Wednesday's ratcheting short squeeze managed a new record high, a presumptive installment on the 3398.00 target shown in this chart. Look for a tradeable pullback from that number, but don't expect it to last. _______ UPDATE (Aug 13, 11:14 p.m.): I almost forgot about an even more compelling target at 3392.75 that I began drum-rolling in June. It's shown in this chart, and I'll be surprised if buyers turn it into the usual chopped liver. Combined with the lesser 'D' target at 3398.00 noted above, along with February's record high for good measure, and you have a 40-foot thick slab of concrete supply just above. The futures might poke past it briefly, but it seems most unlikely to me that they will simply blow past it and keep going. If they merely pussyfoot in a range between the two targets on Friday, I'd suggest taking home a few SPY or DIA puts over the weekend. We are going up against the steepest, most powerful rally in history, so don't bet more than you could
