My Brash Call for a Top

The S&Ps will be trading above 5000 if MSFT rallies the 15% needed to achieve the 430 target I’ve ballyhooed in this week’s commentary. Even so, I doubt the E-Minis are about to blow through the ‘discomfort zone’ just above, since it is fraught with prior peaks and voodoo numbers. Accordingly, I’ve sketched a bearish reverse pattern that would trigger a short if the futures were to fall 75 points from any high. That’s an unacceptably large trigger interval, but you can cut it down to size by setting up a ‘camouflage’ trade on a chart of lesser degree, such as the 15-minute.

With each new upthrust, TLT continues to pass our tests — most recently by creating of a fresh impulse leg on the daily chart. This occurred when the rally exceeded  a look-to-the-left ‘external’ peak at 91.61 recorded on September 22.  The move topped 11 cents shy of the 93.17 ‘D’ target shown in the chart, so that obstacle remains to be tested this week. Assuming it is exceeded, the next daunting impediment would be the 96.54 peak recorded on August 31. It is important enough that any move above it should be regarded as a sign that a potential bull market is emerging from its infancy.

The 42.09 target shown has been with us for a while but only came into focus on Friday with the clean move through, and close above, p2=39.18, the ‘secondary pivot’. Since GDXJ shredded p=36.28 as well barely a week ago, the implied finishing stroke to D would seem almost as certain as that the sun will rise in the East tomorrow. The rally has been unkind to doubters and will not become any less so as it traverses the white void just above.  Prompt me in the chat room if you’ve got an idea of your own that you’d like vetted, but it will take diligent attention to the lesser charts in any case to get aboard belatedly.

Crude teases prior highs and lows so relentlessly as to seem hellbent on tormenting everyone who trades it. I doubt the bear cycle begun from around 88 on October 20 will reach the 66.30 ‘D’ target shown, but p2=69.56 certainly seems possible, given the small breach of p=72.93 two weeks ago. In any case, the next buying opportunity would likely come on a marginal breach of lows just to the left of Friday’s close. The trigger interval would be $1.39, so check with me in the chat room for risk-limiting ideas before you take the plunge.

The Dollar Index tripped a theoretical buy signal on Friday when it slightly exceeded the green line (x=103.57) early in the session. A hypothetical trade would have finished in the red, but we’ll await more evidence next week to determine whether the rally has the moxie to reach p=104.82, the midpoint Hidden Pivot resistance. Although we don’t actually trade this vehicle, its gyrations inform and influence our outlook for other vehicles, particularly bonds and bullion. Assuming the latter remains strong, it will be interesting to see whether the dollar and gold/silver are able to rise simultaneously. That would be an important tone change — something we haven’t seen before for a prolonged period of time.

Silver’s chart, although clearly bullish, has all the problems of gold’s and then some. The pattern that produced the 24.955 target has a dubious impulse leg that failed to surpass any ‘external’ peaks. Also, there is an authoritative trendline just above last week’s highs that is not likely to be a pushover. And finally, the futures spent the last two days of the week head-butting a secondary pivot at 24.20 that refused to give way. My gut feeling is that the target will be achieved anyway, but I’ll wait for the futures to push above some daunting ‘external’ peaks recorded in July and August before we break out the bubbly. _______ UPDATE (Nov 24): Silver’s chart handily outperformed gold’s last week, shortening the odds of a further push to the 24.955 target given above. What happens after that will be crucial to the intermediate-term picture, since an ‘external’ peak at 25.425 recorded on August 30 will beckon a test of buyers’ enthusiasm.  ______ UPDATE (Nov 28, 4:30 p.m.): Helped by last week’s wicked upthrust, the December contract today hit and then exceeded the 222222224.93 target shown. It is slightly lower than the one given here previously, but the pattern to which it is tied is sufficiently compelling for us to infer the small overshoot of the target on the close portends even higher prices this week. Look for a push above August 25.035 peak, but with some potential rally-stopping ‘voodoo’ resistance prices between here and 25.68.