The rally halted almost exactly at the 3275.50 'secondary' pivot of the pattern shown. It would be surprising if a garden-variety pink-line, p2 pivot were to turn back the stampede begun in March, but we should be prepared for it anyway, since p2 has slain many giants in the past. My expectation, however, is for the move to hit D=3392.75, although 3370.25 could show some stopping power, That last number is the secondary pivot of a large bullish pattern begun in 2016. It comes from a continuous chart, however, and should not be expected to work with the usual decimal precision. All are shortable with tight stops. There are corresponding numbers given for the S&P 500 cash index in the tout above.
Against a backdrop of horrendous news last week about the resurgence of Covid-19, the broad averages still managed to hold aloft, demonstrating yet again that the psychosis that has afflicted investors is worse than merely mild. The August contract looks like a better-than-even bet to reach the 3392.75 target shown in the chart. It appears to be consolidating above a midpoint Hidden Pivot at 3158, presumably for a thrust at least 3275.50, the secondary pivot. However we attempt to get on board, our trading bias should remain bullish until such time as minor abc corrections start exceeding midpoints and 'd' targets. I will signal in the chat room if this occurs to any significant extent. _______ UPDATE (Jul 20, 8:47 p.m. EDT): As anticipated, the futures have rallied sharply and are closing on p2=3275.00, my minimum upside target for the near term. I'll recommend shorting there with a tight 'rABC' pattern to those who are familiar with the tactic. By 'tight', I mean risking no more than 3-4 points theoretical per contract on entry. _______ UPDATE (Jul 21, 6:48 p.m.): I am only half-kidding when I say that all trends, up or down, in all times and all vehicles, reverse at p2. This one did, just two points shy of the pivot, at the top of a 40-point rally. The short could have produced a quick profit of as much as $1500 per contract, but because no one mentioned having done the trade in the chat room, I have not established a tracking position. Now, a decisive thrust past p2 will all but clinch more upside to D=3392.75.
The 1838.10 target we used last week to stay on the right side of a challenging uptrend still looks like a good bet to be reached. Even certitude about this is no license to use a buy-and-hold strategy, since the risk/reward ratio stinks most of the time. The best way to get onboard when trading a vehicle that is as crazy-stupid and nasty as this one is with a mechanical bid. I flagged one last week at 1802, but with a warning that the the entry risk on four contracts was nearly $4000. As it happened, the position went $3200 in the hole on Thursday before the futures pulled out of a tailspin and reversed course sharply on Friday. At the close this gambit was showing a paper gain of around $3600 -- proof again that mechanical trades work well if they are predicated on textbook impulse legs. Subscribers unfamiliar with the tactic should paper-trade 'mechanicals' whenever I tout them to build confidence. ______ UPDATE (Jul 20, 9:06 p.m.): The 1838.10 target given above looks like a lock-up at this point, but here's a bigger-picture target at 1994.40 to wrap your head around. This is the first time I've mentioned it, and although I can't offer any guarantees, it would become an odd-on bet to be reached following a decisive push past p=1833.10 or a two-day close above that midpoint Hidden Pivot. _______ UPDATE (Jul 21, 8:36 a.m.): It is most encouraging that buyers have blown past 1833.10 this morning with a spike to 1843.20. Usually Comex futures give up most such gains achieved at this time of day, but perhaps not. In any event, the rally certainly hasn't hurt bulls' chances of seeing 1994.40, perhaps soon. If this is the beginning of a powerful bull phase, it should happen within
The bullish pattern shown in the chart is so clear and compelling that even a relatively small thrust above it such has occurred would imply that new record highs are coming. This would hold true even if the futures take out the 10358 low recorded last Tuesday. In fact, it would require a plunge all the way down to 9728 to generate an impulse leg strong enough to turn the daily chart bearish. We should keep an open mind in any case, but we'll look for ways to go bottom-fishing next week if the futures gift us with weakness. Alternatively, if there is strength we'll look to get short, since I strongly doubt the futures are ready for a sustained rally. _____ UPDATE (Jul 20, 9:19 p.m. EDT): The 11688 target shown in this chart seems very ambitious, but given the rabid obsession with supposedly pandemic-proof tech stocks, we shouldn't be surprised if it's achieved by week's end. The pattern looks like a good bet to work for 'mechanical' setups, but I doubt we'll be gifted with the kind of pullback it would require to trigger us in. Accordingly, we'll look for smaller stuff on the way up, catch-as-catch can. _______ UPDATE (Jul 21, 6:54 pm.) Bulls chickened out three ticks shy of a new record high, then acquiesced in a nearly 300-point pullback. This is odd behavior for this vehicle, which is so hopped up on meth that nothing should stop it. Let's see what TSLA earnings due out Wednesday bring.
Bulls hung tough all week against an onslaught of ugly pandemic headlines, so we'll continue to use the 273.14 midpoint pivot shown in the chart as a minimum upside objective for the near term. DIA will need to achieve more loft, however, before I could recommend placing a 'mechanical' bid at the green line in anticipation of a swoon. It there is no such retracement and this vehicle achieves 273.14 more or less straightaway, you can short there using put options. Specifically, I'll recommend buying the first strike priced under $1.00, with an expiration no farther out than 7-10 days. The trade should be initiated only with DIA within 0.06 points of the target. Stop yourself out if the options subsequently trade for a third less than you paid for them. ______ UPDATE (Jul 30, 2:53 p.m. ET): Zzzzz. I'm as bored with the 273.14 rally target as you are, but with bears unable to do more than minor damage, it's the only logical target we've got.
You've got to wonder how many of the institutional geniuses who are buying TSLA now at $15oo a share shunned it back in March at $350 and had a dozen reasons for doing so. No question, the outlook for sales has improved dramatically. But it could not possibly have improved enough to justify the apparent consolidation that seems to be occurring near $1500. How do we know portfolio managers have decided Tesla shares offer good value at these levels? Simply because after creating a monstrous spike to $1800 a week ago, the stock sold off for all of one day; then, instead of gyrating wildly to get its bearings, it simply leveled off at $1500 as though every fund guy in the world had a bid there for the duration. Earnings will be out this week, but it seems DaBoyz have made their decision no matter what the data say. If the nuttiness produces a new record high, we'll be ready to short it. ______ UPDATE (Jul 20, 9:30): The imminent impalement of shorts on earnings news due out Wednesday seems so likely that perhaps I should be more cautious about pushing out the 1914.64 target shown in this chart. But I won't, since it's probably not worth the bother. The company is certain to report a profit because it will qualify them for inclusion in the S&P 500. Although it's usually disappointing when companies report making money because it tethers their shares to an earnings multiple, Tesla is probably going to soar anyway because it is not bound by the usual rules. _______ UPDATE (Jul 21, 6:59 p.m.): The stock was unusually subdued, perhaps because traders have already anticipated to death a fourth straight profitable quarter and Tesla's induction into the S&P 500.
AAPL's initial bounce after getting sold hard last Monday looked distributive, but when the stock leveled off to finish the week just below the midpoint of the selloff, it was warning bears not to get too comfortable. I'll need to see a couple more days of price action to determine who are the patsies-- bulls or bears -- but my bias for the moment is with the former, since the stock's swings from Tuesday on failed to generate any bearish impulse legs even on the lowly 15-minute chart. We'll simply observe for now until we get more clarity or perhaps even a fat pitch. _______ UPDATE (Jul 20, 9:43 p.m. EDT): I usually wait until a stock has demolished a midpoint resistance before I signal the all-clear to its corresponding D target, but why wait. Here's a chart that shows a logical path to 424.05, about 8% above these levels, and there's no good reason to think it won't be reached. When it happens, the geniuses who have been riding the move while touting AAPL to their clients will be about $21 billion richer. The only way we will be able to trade the move is via mechanical entries, so stay tuned to the chat room if you care.
Wacky price action can be leveraged using mechanical entries based on the pattern show in the chart. Wednesday's low missed filling a bid at the green line, but if the futures return there it would still be a decent bet, stop 1791.00. The implied entry risk is more than $4000 on four contracts, so we'll want to cut it down to size using the lesser charts 'camouflage'-style if the opportunity arises. The 1875.20 target of a larger pattern remains viable, but we're taking it one step at a time since gold has shown no signs of becoming a friendly buy-and-hold. More like Chinese water-torture, actually. _______ UPDATE (July 16, 8:50 p.m. EDT): Gold was more than mildly disappointing today, although its mini-plunge failed to stop out the mechanical bid I'd noted above. With no drama indicated on the chart, I'll suggest watching from the sidelines for now. I'll be curious myself to see whether the trade works. The tactic is geared to exploiting violent swings, not the kind of gratuitous, sloppy meandering we've become used to in gold.
GDX looks like a very good bet to achieve the 45.71 target shown in the chart. If it reaches this Hidden Pivot resistance, that would represent a gain of about 19% from current levels. The impulse leg from 23 to 27 in April/May was sufficiently steep to imply that we could use any pullback from a Hidden Pivot level to the one beneath it as a 'mechanical' buying opportunity. This seems unlikely at the moment, however, since bulls appear to be consolidating above the red line, a midpoint support at 38.47. We may be able to use a smaller AB segment, the one that occurred between June 26 and July 9, to fashion a relatively low-risk entry opportunity, and that's where we can focus intraday. ______ UPDATE (July 15, 9:16 p.m.): Several subscribers have jumped in after pondering my bullish target, but don't expect an easy ride. I'd suggest staying closely in touch in the chat room to help manage position risk. ______ UPDATE (Jul 21, 7:10 p.m.): A secondary Hidden Pivot resistance at 42.09 lies just inches way, but GDX will have to push decisively past it to lock up a further move to D=45.71. Here's the chart. ______ UPDATE (Jul 29, 8:15 p.m.): A pullback to p2=42.09 would offer a decent bet, stop 40.88, for 'mechanical' buyers. I mentioned this in the Trading Room today and it will remain viable unless 44.12 is exceeded to the upside. ______ UPDATE (Jul 30, 2:57 p.m.): Only one person reported doing the mechanical traded detailed above, so I have not established a tracking position. I will paper-trade this one nonetheless, lowering the stop-loss to 40.20. just beneath a key low made last week.
The secondary Hidden Pivot at 288.22 shown in the chart will make a serviceable upside target for the next 2-3 weeks, although we should avoid the temptation of drooling over the prospect of getting short there. I'll be more inclined to recommend it if we can get make a few bucks on the way up. The best way to do this will be to catch a swing low intraday, possibly on an opening-bar bull trap. Watch this space and the Trading Room if you're interested. _______ UPDATE (July 14, 7:52 p.m.): So eager were buyers to come charging out of the chute this morning that there was almost no follow-through to Monday's hard sell-off. DIA now looks bound for the 273.14 midpoint pivot of this chart, at least, but the D target at 297.18 would become an odds-on bet following a decisive push past p. Here's the chart. _______ UPDATE (Jul 16, 9:08 p.m.): The rally sevened out nearly three points beneath the 273.14, implying buyers are getting fatigued. Let's see if they get second wind ahead of the weekend.
