Continue to use the 435.90 target given here last week as a minimum upside objective and an optimal place to get short. A rally to that 'reverse' Hidden Pivot resistance would not affect the textbook perfection of a head-and-shoulders pattern that has been under construction since January. The pattern seems almost too pretty to work, but even if it doesn't, I still expect 435.90 to provide an excellent opportunity to make money betting the 'don't' line. Use put options at the 432 strike with three to ten days left on them. Be sure to check the chat room and your email 'Notifications' for updated guidance, however, since it might be necessary to modify the trade to obtain the best possible odds. ________ UPDATE (Dec 5, 1:10 p.m. EST): MSFT gapped through the 435.90 pivot on an opening-bar short-squeeze, but I still doubt it's going much higher. There are two places you can look for a downturn, both of them voodoo numbers: 440.18 and 455.10. If the stock reaches the higher, it will trash the still-perfect head-and-shoulders pattern, but without negating the possibility of a major top forming well shy of the all-time high at 468.36 recorded in early July.
The selloff from the 108.07 high recorded on November 22 has exceeded any minimum downside target I could have projected at the outset. Also, the high fell a whopping 91 cents shy of my 108.98 upside objective, and that is another reason I've given this correction wide berth with the big pattern shown and its 'locked' point 'a' high. The chart implies the downtrend is bound for a minimum 104.91, the pattern's midpoint Hidden Pivot support. Expect a tradable reversal from there, but if it is short-lived, or if the support is decisively penetrated on first contact, it could signal an important tone change in the bull cycle begun in early October. Since gold has been moving higher with the dollar, we might expect bullion's uptrend to accelerate if the greenback continues to fall.
The December contract cheated us out of a profitable 'mechanical' buy at the green line when it erupted for a 60-point rally without having quite touched our 'launching pad' at x=2598.80. Price action is bullish but not quite bullish enough to make the bounce a shoo-in to achieve the pattern's 2770.70 target. We'll therefore begin the week without the usual confidence and clarity, so check for updates if there's any movement, since that cannot but shed light on the strength and resilience of the uptrend. My gut feeling is that it will achieve d=2770.70, but without making it look easy. _______ UPDATE (Dec 3, 3:58 p.m.): More sideways tedium this week has added nothing useful to an indecisive picture. I am proffering this chart nonetheless as a companion to the update moments ago of the Silver tout immediately below. Both need an upsurge through their respective midpoint Hidden Pivot resistances to signal the onset of a meaningful rally.
A bearish target at 28.445 target that has been forever in coming now looks highly likely to be reached. The reverse pattern with which it associated is sufficiently gnarly that you can bottom-fish there with a very tight stop-loss, preferably crafted with a 'camouflage' (i.e., small-pattern) trigger. Alternatively, the futures would signal an opportune 'mechanical' short on a rally to 31.880. That is a Hidden Pivot midpoint resistance associated with a=30.440 (10-8, 180-minute) _______ UPDATE (Dec 3, 4:09 p.m.): March Silver has tripped a theoretical buy signal with the potential to reach 34.870. The link is to a reverse pattern that I expect to work well for all purposes: buying, shorting, forecasting, determining trend strength. It is bullish that Silver has gotten traction, sort of, without having come down to the 28.455 target we were using to clock the correction. But the retest of the November 14 low should not have been necessary to jump-start Silver, and that will remain a concern until such time as the futures impale p=32.483, a key number for the near term.
With its 'locked' point 'a' low, the pattern shown looks reliable for our purposes, whether trading or forecasting. It is not a healthy sign that the rally off the 44.76 low recorded on November 14 failed on the first attempt to reach the red line, a midpoint Hidden Pivot at 49.17. Bulls could still pull it off, but if GDXJ dips below C=44.76, negating the pattern, that would be more than a mild discouragement. The weakness so far is especially dispiriting because of the power of the impulse leg that took GDXJ quickly from 46.71 to 55.58, a 20% move, in mid-October. _______ UPDATE (Dec 9, 9:17 a.m. EST): This morning's gap through p=49.17 has guaranteed that the rally will reach D=53.58, at least. Be prepared for a stall there.
The chart shown (inset) substitutes a single target for two at, respectively, 107,670 and 119,253 that were given here last week. They will remain viable in theory, but it will be simpler to use a single target that would become a lock-up if and when the Hidden Pivot midpoint resistance is decisively exceeded. I have blanked out the Hidden Pivot levels for p, p2 and D because they looked too useful to share with outsiders. To reproduce the chart with the coordinates and precise levels, combine the visual information in the thumbnail chart with data I posted in the chat room at 2:00 a.m. Sunday morning. _______ UPDATE (Dec 6): If you're updating the chart, add in a low at 92,091 on Thursday that provided a textbook opportunity to get long 'mechanically' at the green line (x=93,344) for a so-far $8500 ride. Meanwhile, the target (1xx,343.54) I posted last Saturday at 2:20 a.m. remains not just valid, but downright enticing.
The big pattern shown in the inset is too ambitious to frame the so-far timid gyrations that have lifted T-Bonds from their bear-market low. However, I have used it anyway because lesser charts magnify TLT's indecisiveness even more. Regardless, the gyrations have triggered a theoretical 'buy' signal that will require a follow-through to at least p=116.27 for validation, TLT is tradable in the meantime, but only by way of short-term signals on the intraday charts. A breach of c=82.42 would be discouraging news for the few bond bulls who have bucked the tide, although not necessarily for those who have been waiting for a washout to load up the truck.
DXY's sharp poke on Friday through p=107.55, the midpoint Hidden Pivot, implies the rally is very likely to reach the pattern's 108.98 target. This symbol is not optionable, but you can trade the futures contract by interpolating my targets. It is encouraging to see bullion strengthen with the dollar rampaging higher. Its potential on DXY's long-term chart is to 119.37, or 124.82 if any higher (monthly chart, A= 89.54 on 5/31/21). A move of that magnitude would put enormous strain on all who owe dollars, and a ruinous deflation would likely be the result. This would occur irrespective of the level of nominal interest rates, since it is the real (i.e., inflation-adjusted) burden of debt that matters, not the marquee number.
Since it has become difficult even to imagine a prolonged downturn, I'm being extra cautious with this week's projection. It points most immediately to a potentially tradable top at 6007.50. This reverse-pattern Hidden Pivot resistance is well located, and the pattern is not too obvious; that's why odds for shorting there are attractive. However, any progress above the resistance, especially if easily achieved, would imply more upside to 6019.50, the midpoint pivot of a larger, conventional pattern; or even to D=6101.75. There is one more trade possibility to recommend, a 'mechanical' buy if the futures fall straightaway to the red line (p=5931.25). The stop-loss would be at 5905.75, but you'd want to use a 'camo' trigger to reduce entry risk by as much as 95%.
I've always treated MSFT as an infallible bellwether. My narrow, if not to say obsessive, focus has served us well, since MSFT has stayed consistently a step ahead of the broad averages, and even ahead of other stocks in the lunatic sector (i.e., the atrociously misnamed Magnificent Seven). But the long bull market has not conditioned us to think that when MSFT acts like crap for an entire year, as it has, that it is signaling a possible end to the bull market. This I will infer, however, implying that the failure to produce an easy 'mechanical' winner after falling to the green line on November 18 is further evidence of a waning bull. This observation would be strengthened by a dip below C=405.57 without having first achieved D=435.90. The target and pattern will remain viable as long as 405.57 is not breached.
