I still consider a pullback to x=5105 more likely than a move straightaway to D=5542. A subsequent rally to the target would not be a done deal, either, given the mild struggle bulls have had surmounting the midpoint Hidden Pivot's gravitational pull. Impale it they did not, and that leaves the pattern's completion to D at least mildly in doubt. We can still use p=5397 as a minimum upside objective, since that is the most logical place for this rally to stall.
Those who think the wizards at the Fed have engineered a soft landing for the grotesquely pumped U.S. economy are in for a rude awakening. Strip out the "wealth effect" from mega-cap stocks driven mostly by hot air and short covering, and the economy is already in recessionary muck. Although yacht sales reportedly are still brisk and nearly every American has booked an exotic cruise, retail sales to the broad middle class have slipped so badly that even lowly Dollar Tree is struggling for air. Consumer confidence has begun to fall because wages are again losing ground to inflation. A look ahead is even more dispiriting with AI breathing down everyone's neck, since it is potentially the biggest job-killer the global economy has ever faced. While work-saving innovations may have created more jobs than they've destroyed, it's difficult to imagine how that will happen in an era where the machines themselves are capable of rooting out inefficiency more ruthlessly than any human could. Tesla as Savior So what would a soft landing imagined by Wall Street look like? It would probably start with a 10%-15% selloff in stocks-- not quite a statistical bear market, just enough to allow investors to do some bargain-hunting ahead of the next big run-up. Car manufacturers would sink into genuine recession, but it would be cushioned by Tesla's unique ability to ride out the storm with fabulous high-tech innovations yet to be imagined. Tesla shares have already fallen nearly 60% from their 2021 highs just above $400, so the worst, we'll be told, may be past. The Street's spinmeisters would also be fixated on the prospect of lower fuel prices, lower inflation and lower interest rates. The mainstream media, too stupid and lazy to deviate from the popular narrative, would give these fantasies a boost
Friday's nutty finale should remind us that the agent responsible for such behavior is none other than...ourselves. Lest you take the vicious, end-of-day short-squeeze too seriously, the thumbnail chart puts it in perspective. The futures have in fact rolled down without even reaching 5398, the p2 'secondary pivot of the still-bullish pattern shown. They are a better bet to fall to 5108.25 first than to reach D=5542.50 straightaway. We'll be ready in any case, especially for a feint marginally above last week's record high at 5368.25. That was itself a slightly new all-time high, creating ideal conditions for a top of potentially diabolical cleverness.
The bullish pattern shown, with a 457.12 target, is unlikely to steer us wrong, given the precise, confirming pullback from p=383.41. It is ambivalent on the question whether D will be reached, however, so we'll accommodate simply by being prepared for that -- or anything else. My gut feeling is that the stock will need to correct further before that could happen, so we'll look initially for a 'mechanical' buying signal on a pullback to p=383.41. The by-the-book stop-loss would be at 358.84. By implication, any rally of 10-25 points should be regarded as an opportunity to get short.
Gold has repeatedly resolved double tops in favor of bulls for many years, but always differently. The current pair of peaks is tightly spaced, giving the impression of weighty distribution. The 2530.40 rally target on this continuous weekly chart is viable nonetheless, and there is no reason to presume it won't be reached. But that does not preclude a sharp pullback first to the red line (p2=2071.70). It makes a logical target if bulls are to be rebuked yet again for their steadfast belief in the quaint idea of gold's historical primacy as money. For now, let's draw our inferences from the lesser charts of August Gold, which currently provide an easy path down to 2300-2320. ______ UPDATE (June 7, 12:15 p.m.): Gold has in fact followed an all-too-'easy path' south, to a so-far low today of 2320.20. That is the upper threshold of the corrective range I'd forecast. However, I'd be surprised if the futures did not take out May 3's 2308.70 low and then diddle 2300 just for good measure.
Silver's continuous weekly chart is more encouraging as to whether an ambitious longtime rally target will be reached. The target, a Hidden Pivot, is 36.03, about 18% above, and the strong move in April past p=26.67 on first contact attests to the strong likelihood that more upside to D is coming. The ascent looks too steep, however, to continue without a punitive correction. Regardless of whether the expected pullback comes down to 'mechanical' buying territory near p=26.67, we'll stay focused on the lesser charts to be ready for the turn.
The easy, decisive pop through p on the first attempt implies not only that D=49.15 will be reached, but that last week's pullback to the red line offered an attractive opportunity to get long mechanically. Even so, further accumulation and a running start may be needed to supply the requisite thrust, so we should be prepared for more backing and filling between 43 and and 45 before GDXJ leaves the launching pad. There has been almost no mention of this vehicle in the chat room lately, but I will provide tradable guidance if it is requested. _______ UPDATE (June 7, 12:27 p.m.): Today's vicious plunge triggered a 'mechanical' buy signal when it touched the green line (x=42.20). This Hidden Pivot level is tied to the 49.15 target given above. However, there are no guarantees that the implied bounce from between here and C=39.88 will get any farther than p=44.52.
On the evidence shown, I'm unwilling to call this one, at least not yet. TLT tripped a theoretical 'buy' signal when it touched the green line (x= 91.88) two weeks ago, but the odds are not yet good that it can complete the implied trek to D=105.49. Long-term interest rates would be well below 4% if that were to happen, implying the U.S. would be in the throes of a recession deep enough to kill consumer inflation. That seems likely to occur at some point, but it would probably be sooner rather than later, since another powerful wave of inflation is already in the pipeline due to soaring shipping costs that are hitting now. Regardless, if TLT can push without a breather above the April 4 'external' peak at 92.76, that would shorten the odds that a big move is under way.
July Crude ended the week just above a low at the D=76.66 correction target shown in the chart. The pattern that produced the target is sufficiently delicate and precise to suggest that even a slight breach of D would be telegraphing further weakness. This would be a break for motorists and also help mitigate inflation, albeit probably not enough to quell some other powerful inflation inputs, including a dramatic rise in shipping costs. Slippage beneath D would likely send the July contract into the range 74-75 for yet more distribution.
Speaking of my fellow gurus, our switchboards have lit up to warn that something big is looming. Even the oddballs who think stocks are headed much higher seem to agree that a punitive correction is long overdue. And although each of us would like to believe that the arrival time of whatever dreadnought is coming will precisely match our individual forecasts, Friday's Kabuki drama on Wall Street drove home the reality that none of us stands a chance of being exactly right. What an extraordinary day it was -- far freakier, even, than we have come to expect on a Friday. As the Dow Industrials steamed higher, Nasdaq stocks were getting savaged. The high-fliers in particular suffered a memorable drubbing, unable to lure buyers for most of the day. These behemoths have been egregiously misnamed The Magnificent Seven, but there is nothing magnificent about them at all; they are just flying pigs, bloated with enough hydrogen to levitate a million Hindenburgs. A cynic would say the zeppelin fleet's smoking room is located in the Eccles Building. Jackpotters Numbed Call options went begging for bids on Friday as well, discouraging Rick's Picks subscribers from even thinking about the 'jackpot bets' we sometimes make when stocks look ripe for a suddden mood change. And then came the blitzkrieg! As the Dow rally went vertical, a thousand bogged-down stocks got caught in the vortex, rising like a spout to finish the day with miraculous, modest gains or little net change. The craziness was most intense in the final 30 minutes, demonstrating the remarkable agility of trade-desk lackeys who have mastered the tactic of rotating your hard-earned dollars from one flavor-of-the-day to the next. Repo Man Thwarted It was Microsoft, the world's most valuable company, that had led the way down. The software giant
