Rates on the Ten-Year Note retreated last week precisely to a key Hidden Pivot support at 4.39%. We are likely to know soon whether the downtrend will continue, since the reverse pattern here is so clear and compelling. A two-day close beneath the support would portend more slippage to as low as 4.16% over the next 4-7 days. The bet would become even juicier on an intraday print decisively below the red line -- say, 4.34% or lower. If the downtrend reverses from 4.28%, however, that could indicate an important tone change and the possible resumption of the uptrend that has dominated since early April, when rates bottomed around 3.88%.
Although I no longer expect the June contract to achieve a new record high, it can still be bought 'mechanically' on a pullback to p=5483.88, the midpoint Hidden Pivot of the pattern shown. The textbook stop would be 5266.75, implying a theoretical entry risk of nearly $11,000 per contract. It should be possible to cut that down to around $250, however, by using a 'camo' trigger fashioned from an intraday chart, so that's how we'll plan on getting aboard if the opportunity arises. Nudge me if I'm in the chat room then and we can plot this one together. _______ UPDATE (May 27, 5:08 p.m.): DaBoyz left shorts badly bleeding and hanging on the ropes with today's short squeeze. They were warned when last week's low on Friday narrowly missed touching a theoretical, major sell signal at 5742.00 (see inset chart).
Thursday's stab higher failed by $2 to reach a 462.26 voodoo number I'd advertised here, so we ended the week without taking home a short position. The stock barely held above an 'external' low at 448.73 on Friday, but the obviousness of this structural all but guarantees that sellers will crush it when the new week begins. That would create a bearish impulse leg on the daily chart, the first since late March. If bears are agitated enough to push the futures below a second 'external' low at 431.11 notched on May 7 without any upward corrections, that would double the putative power of the impulse leg. _______ UPDATE (May 27, 6:18 pm}: MSFT's rally from a too obvious low on Friday would ordinarily have brought a punitive reversal. But I didn't foresee that DaBoyz would throw the switch to activate short-squeeze conditions. They are already prepping for an ambitious run-up to challenge the old record highs. I have expressed serious doubts they will get there, but I am not about to lay odds. See my chat room comments today regarding Peter Eliades.
Rates on the 10-Year Note gave up little ground last week, suggesting they want to move higher. If so, they'll have a chance to make an important top at 4.92%, the Hidden Pivot 'd' target of the reverse pattern shown. A precise reversal is likely there, given the obscurity of the pattern that produced resistance. We can use it as a minimum upside objective as well. That's bad news, considering the amount of refinancing ($9Tr.) the U.S. Treasury must do this year. There are no guarantees that the 4.92% target will cap the uptrend, but if it gives way, it will put a lot of weight on stocks.
A 3360.50 rally target kept us confidently on board last week, even though DaBoyz tried their hardest to shake bulls loose on Thursday. Notice that the futures slightly exceeded the target by $6. The 0.17% overshoot may not seem significant, but it has bullish implications in this case because the target, a Hidden Pivot resistance, should have worked precisely. The next rally target lies at 3393.10, the midpoint resistance of a bigger, conventional pattern going back to April 7's 2970.40 low. It is tied to a 'D' target at 3662.80 that lies $153 above the previous record.
Reaching d=35.982 shouldn't pose a problem, although we may be able to squeeze off a short from there, since it coincides with a voodoo resistance number. A two-day close above it would activate the 39.272 target of a larger pattern (continuous weekly, A= 16.314 on 3/20/20). That chart has produced just one 'mechanical' buy signal, a profitable one from p=30.93, but a second dip to that price would be an appealing place to try again, stop 27.170. _______ UPDATE (Jun 3, 12:50 a.m. EDT): Silver’s big move today nearly maxed out the gnarly reverse pattern shown with a blast to 34.935 that came within six cents of d=34.995. Yes, I am just skeptical enough that we'll keep the burden of proof on bulls for now, meaning they've got to close this brick above 34.995 for two consecutive days, or trade above 35.800 intraday, to earn our confidence.
Last week's sharp reversal laid waste to a bearish target I'd proffered at 53.51. The switch to a conventional pattern shows there is now upside potential to as high as 74.11 over the next 2-3 weeks. More immediately, buyers will need to get past the 65.78 midpoint resistance shown in the chart to become an odds-on bet for a run-up to the target. Once achieved on a closing basis for two consecutive bars, you can use p2=69.95 as a minimum objective. A one-level pullback should be regarded as an opportunity to get long. _______ UPDATE (Jun 2, 11:58 p.m. EDT): The week has opened with a powerful short squeeze that sent this vehicle soaring to a so-far top just 19 cents shy of my minimum upside objective at 69.95. Now, a two-day close above it will all but clinch a finishing stoke to the 74.11 target.
Last week's $7000 rally sputtered out $1000 shy of my 113,127 target, denying us an opportunity to reverse the position for the return trip south. The downtrend looks likely to achieve a minimum 106,020, a Hidden Pivot support you can bottom-fish with the tightest possible stop-loss. Confirmation of a likely reversal from very close to that number came with the precise bounce from the pattern's 108,045 midpoint Hidden Pivot support (p=108,045). Use a tight stop-loss to get aboard, but be prepared for a tricky bottom, since the target coincides with a bunch of lows recorded one day last week.
Crude looks primed to screw the pooch, but the daily chart suggests two trade possibilities nonetheless. One would call for getting short on a pop to d=65.38. A stop-loss as tight as 15 cents can be used, although it would be preferable to set up a 'camo' trigger pattern on a chart of a lesser degree. The second trade calls for bidding 'mechanically at the green line (x=57.0). The textbook stop-loss would be just below c=54.33, so tighter risk management is called for by entering the trade with a trigger pattern of small degree. _______ UPDATE (Jun 11): Today's unusually powerful spasm suggests war may be coming, perhaps in the form of the long-anticipated strike on Iran's nuclear bomb facilities by Israel. There are many other imaginable catalysts, however, and they should all be taken seriously if this spike gets past two tough obstacles: 1) a Hidden Pivot at 68.98; and 2) the distinctive peak at 71.10 recorded on April 2.
If DXY is going to resume the uptrend begun in April from 98.01, the 98.66 Hidden Pivot support shown would be a logical place for this to occur. The pattern is a conventional one, but because the 'B' low is not obvious, its gnarliness should work for us, delivering a tradable bottom precisely where expected. We don't typically trade this vehicle, but a reversal from the target could yield opportunity in currency pairs or futures. ______ UPDATE (May 30): Easy come, easy go. What started out as a promising week ended with a steep, one-day reversal that left the dollar little changed from the previous week's lows. Still worse is that the apex of the rally failed to generate an impulse leg on the hourly chart by surpassing an external' peak at 110.58 recorded May 19 on the way down.
