August Gold's attempt to reverse from a morning sell-off prompted a subscriber to ask in the Rick's Picks trading room whether bullion is already getting second wind. I doubt it, since June's sensational run-up was too steep to sustain and will likely require a breather of perhaps 2-3 weeks to recharge. But I do expect the uptrend to resume after a proper pullback because this month's surge decisively exceeded clear Hidden Pivot resistances at 1412 and 1432. This is usually a reliable sign that the dominant trend will continue, and it is quite clear in this instance. Because the pattern took ten months to play out, it would be surprising -- and quite bullish -- if the futures do a '180' and blow past the 1432.70 peak within the next few days. Anything's possible, so we'll simply wait for gold to do its thing and to tell us what's on its mind. _______ UPDATE (Jul 1, 7:16 p.m. ET): Expect more weakness, since the futures failed to get airborne after tripping a 'counterintuitive' buy signal. Most immediately they could fall to around 1340.00 before picking up structural support from some prior lows recorded in mid-June. But if you want a precise Hidden Pivot target where a tradeable low is possible, use 1356.30 (60-minute, a=1427.80 on 6/27; b=1384.70).
(Test) A homebuilder friend of mine who is also a stock-market junkie and savvy trader emailed me a dismal-looking chart of Lennar Tuesday with this bearish note: "The homies have spoken. Get short [the stock market] or miss the down move." This guy can boast of months when he made more money presciently trading the shares of Lennar, Beazer, D.R. Horton, Pulte et al. than he did from his high-powered construction job. He even managed to tune out habitually upbeat talk in the board room and executive washroom for long enough to clean up on last year's collapse in lumber prices. And that is why I do not take his trading tips lightly. However, in this case the evidence he presents is so seductive that I am inclined do the opposite -- i.e., embrace the seemingly absurd possibility of an imminent upsurge in residential construction. The very idea flouts my gut feeling that America will be in recession before the year ends. Matching Epaulets And yet, study Lennar's chart (inset) and you can easily imagine a reverse head-and-shoulders pattern taking shape with the power to launch Lennar, and presumably other 'homies', significantly higher within the next four to six weeks. I have never put much store in H&S patterns because they are virtually everywhere a trader wants to see them. But this one, with drooping epaulets that look like perfectly matched earrings, is so alluring as to confound the skeptic. We'll probably know by mid-July whether the chart was warning of trouble or throbbing with opportunity. In the meantime, if we get another month of declining home sales, don't scoff at the possibility of a trampoline bounce-from-nowhere in this statistic. _______ UPDATE (Jul 1, 7:27 p.m.): If bulls are going to turn the stock around, their best opportunity will come
With the stock market barely registering a pulse these days and the headlines about as dog-bites-man as news gets (i.e., Jussie Smollett Case to Be Reviewed), I am once again offering to discerning Rick's Picks readers the opportunity to acquire the painting pictured at left. When I accepted it in settlement of a debt some years ago, prominent Atlanta art dealer Bill Lowe advised me that it would fetch between $55,000 and $70,000. Lowe, who exclusively represented the artist, Kathleen Morris, for more than two decades, said her earlier paintings had "balls" and that the large size of this one -- 76" x 80" -- would make it particularly appealing to collectors. Those listed at the time on Lowe's web site as owning works by Kathleen Morris included some names you will recognize -- Halle Berry, Danny DeVito, Cushman Realty, John Glover and David Justice among them. 'Feminine Polarity' The painting is called Arena, and it is oil on linen. In an email to me, Lowe summed up its personal appeal as follows: "Like Kathleen’s work, I am irresistibly drawn to the spiritual realms but have an acute understanding that the physical plane is a manifestation of that – and the feminine polarity of it. I am committed to its perpetuation and to our interaction with it." Judge for yourself whether this striking work of art would inspire similar thoughts if it sat on a wall in your home or place of business. I am open to all offers, including cash, Tiffany glass, antique lab instruments, 60s-vintage British motorcycles, works of art, Persian rugs, 1990s Toyota Supras in decent running order, antique billiard tables, Bösendorfer or Steinway pianos, rare autographs and books, etcetera. If you are interested or know someone who might be, contact me at rick@rickackerman.com
Although the rally is growing more convincing by the day, the chart shows some key benchmarks that will need to be exceeded to buttress the case for a sustained move higher. Specifically, there is a Hidden Pivot resistance at 1455.20 that we should expect to show some stopping power. There are also 'external' peaks from 2013 at, respectively, 1432.40 and 1487.90 that must be surpassed in order to refresh the bullish impulsiveness of the weekly chart. (The lower was missed by less than a dollar today.) Because the chart is a composite of many expired contracts, the Hidden Pivot levels and peaks are not exact. But they should be close enough to actual -- i.e., within $3-$5 -- to be useful for gauging the strength of the rally and identifying its obstacles. ______ UPDATE (Jun 25, 8:12 p.m.): One obstacle overcome (1432.20), two more to go. But by exceeding the first, buyers generated a fresh impulse leg on the daily chart that will make any retracement holding above 1273.20 corrective and therefore potentially buy-able.
The 3114.50 bull-market target shown is equivalent to one at 3095 for the S&P 500 Index introduced here a while back. The pattern is unusual because it came within less than a point of stopping out a textbook 'mechanical' buy that would have triggered on May 13 at the green line. Ordinarily I would take this as a sign of weakness. However, the subsequent 'counterintuitive' buy signal that triggered on the run-up back to the green line turned into one of the most powerful rallies in history. It now looks like no worse than a 50-50 bet to reach the 3114.50 target, but we should monitor buyers' vital signs each step of the way in any event, since this would be a great place for Mr Market to spring a nasty bull trap. It would begin with a plunge to 2910.38, tripping a 'counterintuitive' short. That wouldn't necessarily mean the end of the world, but it would give us good reason to be especially cautious. If it were to occur by Wednesday, that would make the weakness even more menacing. _______ UPDATE (Jun 25, 8:18 p.m. EDT): The September contract is closing fast on the 2910.38 trigger for a 'CI' short. This is a big-picture trade, and it carries $12,000 of initial risk on four contracts. I am not recommending it for that reason, but we can still use it to get a good 'read' on the downtrend. Specifically, if it triggers, that would imply the weakness is more menacing than most traders are likely to imagine at the time.
The Dollar Index looks primed for a turnaround for technical reasons noted in my latest $DXY tout. To summarize, we will be using two compelling benchmarks to tell us more: a Hidden Pivot support just below current levels and a key bottom made in March. If a reversal is coming it would hold bearish implications for gold and other commodities, including a recently resurgent crude oil. This gives us ample reason to monitor the dollar very closely in the days and weeks ahead.
Here are three numbers to jot down to get an accurate and potentially useful 'read' on the aging bull market: 27,436, 28,738 and 33,161. These are 'Hidden Pivot' resistance targets for the Dow Industrials, and any one of them could stop the bull in its tracks. Each is a good place to attempt getting short with a tight stop-loss, but if the stop gets pulped, assume that the next-higher target is in play. And if the Indoos should hit 29,000 (or so) and then plummet to the green line (24,5740), treat that not as a sign that the long-awaited bear has finally arrived, but as a great buying opportunity. Above 33,161, I have no additional targets to offer. That would be the bull's final charge, as far as I'm concerned, and the best opportunity to get short that we might see in a very long while. Why should you trust these numbers? For one, if you've followed Rick's Picks for any length of time, you'll know that the big-picture forecasts -- for T-Bonds, gold, the U.S. dollar, interest rates, inflation (or lack of, actually) and major stock averages -- have gotten it mostly right. (But not always, as those of you still waiting for crude to hit $28 a barrel would be ready to attest.) Another reason is that these sunny numbers come not from a hopped up permabull who thinks that decade-old rally will go on forever; rather, they are from someone who could give you a dozen good reasons why the Dow should be trading at 10,000 now, not heading toward 30,000 as would appear to be the case. _______ UPDATE (Jul 16, 8:30 p.m.): Tuesday's high came within an inch of our longstanding target at 27,436, the first of three important stair-step Hidden Pivots. Let's see how
The correction begun from 98.37 a month ago is about to run out of room. For one, there's a clear and compelling Hidden Pivot support at 95.94 where we might expect a turnaround. And if it fails, there's a structural support just below it at 95.74 that's tied to an important low recorded in March. It can be used as a point 'A' for purposes of setting up a counterintuitive buy signal. Regardless of whether you trade this vehicle, a 'CI' buy signal would have bearish implications for gold, which for the last three weeks has been in one of the most promising rallies in years. A strong dollar would affect the entire universe of investable assets, so we'll want to monitor DXY's price action diligently. _______ UPDATE (Jun 27, 5:50 p.m.): The low I'd projected is holding so far, with a bottom 10 cents off the 95.74 support noted above. However, DXY has not gotten much loft and will remain in the danger zone until such time as it pops above 96.80. _______ UPDATE (Jul 1, 7:37 p.m.): DXY has put some distance between itself and the recent low I'd predicted, but bulls are still not out of the woods. That would take, for starters, a rally exceeding the 97.76 peak shown in this chart. _______ UPDATE (Jul 30, 10:56 p.m.): The Dollar Index has slightly exceeded the 97.76 peak noted above and now faces key resistance from some peaks recorded in May and June. If and when it exceeds them, look for more progress most immediately to the 99.05 target shown in this chart.
Comex Gold is sharply on the move tonight, approaching a key rally resistance. The August contract has slightly exceeded a longstanding Hidden Pivot target at 1412.20, but corresponding targets in some popular bullion vehicles, including GDX, have yet to be reached. If this occurs on Friday's opening bar, you should be wary of a bull trap.
Bullion’s powerful rally this week has kicked this popular mining-stock vehicle into high gear. I haven’t tracked it in quite a while but aim to do so now, provided it remains feisty and interesting. In that regard, GDX looks like it’s about to ratchet up the interest-level, although not in a way we might have preferred. Notice that Thursday’s energetic short-squeeze brought the ETF within inches of a target at 25.58. This Hidden Pivot resistance can be used as a minimum upside objective for now, but don’t expect GDX to pop through it on the first try. More likely is a pullback of sufficient magnitude that you should consider taking a partial profit or doing covered writes in the range 25.42 – 25.70 if you are long. Please note that if buyers should blow past D=25.58 with ease, that would imply that the target of a bigger pattern is in play. In this case, it would be 36.67 (!), a Hidden Pivot whose provenance goes back to a low at 12.40 recorded early in 2016. The lower target corresponds to one at 1412 for Comex August Gold that I disseminated to subscribers several weeks ago._______ UPDATE (Jun 24, 8:52 p.m.): Buyers shredded the 25.58 pivot, leaving little doubt about the underlying strength and potential of this move. _______ UPDATE (Jun 25, 8:28 p.m.): I neglected to mention an important Hidden Pivot resistance at 26.98 that can serve as a minimum upside target for the near term (i.e., the next 3-5 days). It is the C-D midpoint tied to the 36.67 target noted above. Here's a chart that shows it. _______ UPDATE (Jun 26, 9:42 p.m.): GDX tripped a theoretical sell signal at 25.47 that implies it will fall to at least 25.21, or possibly to 24.67, if it slips today.
