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The Morning Line

Has the Fat Lady Sung?

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If I had to pick one chart that shows why the bull market is probably not over, it would be the one above. To be sure, the 157.26 peak recorded by Apple shares a month ago was a great place for an important top to have occurred; this chart shows why. But THE top? I have my doubts. For if this were so, it would rank as one of the most visually boring summits ever achieved. For permabears who have waited patiently for a fitting climax to the most most insane bull market of them all, it would be like finding a WaWa Market at the top of a Himalayan peak they’d almost died scaling.

Setting the Hook

A few forecasters had precisely predicted a potentially important top at or very near $157, including your editor. Some of us even profited from put butterfly spreads purchased a month earlier that more than quintupled in value with AAPL’s 12% drop so far. But it could be pressing one’s luck to hold out for more, since the downtrend seems to be struggling increasingly and made no progress at all last week. Perhaps the selloff will turn nasty in the week ahead. But if so, keep in mind that a plunge to the green line would actually be bullish, tripping a ‘mechanical’ buy signal based on Rick’s Picks’ proprietary Hidden Pivot Method.  It would also imply an eventual rally to as high as 187.93.

This scenario is congruent with one I raised here last week — i.e., that the stock market will rally to yet one more record high, setting the hook in bulls and short-covering bears alike. A steep plunge in the weeks ahead would make a reversal to new highs even more persuasive, and therefore more deadly. Whatever happens, AAPL is still the 300-pound diva whose final aria will signal the end of the bull market begun nearly 13 years ago.

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CZ21 – December Corn (Last:524.12)

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BRTI – CME Bitcoin Index (Last:54,138)

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Bertie’s brutish poke through the 54,914 Hidden Pivot resistance shown here left little doubt about where its fat-cat sponsors are taking it next.  Shifting to a bullish ABCD pattern of higher degree yields a 64,871 target that should be used as a minimum upside projection for the near term. The nasty C-D leg has yet to gift bulls with a ‘mechanical’ buying opportunity, so we won’t count on one. Trading interest has all but vanished from the chat room lately, but I’ll be around as always if you want to bounce a timely idea off me.

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$IWM – Russell 2000 ETF (Last:225.78)

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Our attention is wasted looking for this dog to break out, since it has been going tediously sideways since January. Hope springs eternal, of course, but we needn’t take unnecessary risks to indulge it. It’s simply a matter of when the chimpanzees agree that ‘value’ stocks should be in vogue once again. They’ll let us know after they’ve goosed it beyond easy reach, implying that the only way to get aboard is when it is going tediously sideways. However, the very rightmost edge of the chart — the last four bars, actually — contains the impulsive rudiments we would need to attempt this.  Query me in the chat room and I’ll explain with a more detailed chart. _______ UPDATE (Oct 12, 9:58 p.m.): The 30-minute chart has stopped out bulls no fewer than three times since last Thursday, implying that IWM is trying hard to break out with no fans aboard. We probably won’t be either, since catching a ride with risk under tight control is too labor-intensive for a vehicle that few subscribers seem to care about. ______ UPDATE (Oct 14, 11:24 p.m.): How very shocking. IWM opened on a gap this morning that would have left any hesitant bulls choking on dust. Let’s see how far DaBoyz can take this short squeeze on a Friday. Wherever it stops, it is guaranteed to be too dangerous a place for taking a position over the weekend.

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$+GCZ21 – December Gold (Last:1779.00)

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Gold’s pointless histrionics have been surprisingly tradeable, albeit only by Pivoteers who know what they’re doing. Notice how Friday’s stupid spike early in the session reversed from the secondary Hidden Pivot at 1782.70. Any rABC pattern one might have used to set up a short would have worked, although the pullback was so precipitous that executing a stop entry would have been challenging.  Some subscribers may also recognize that ‘Matt’s Curse’  took effect when the reversal occurred precisely at p2. This usually means the retracement will take out the point ‘C’ low of the pattern. We shall see, but if it happens we shouldn’t take it too seriously, since gold has been visiting pain equally on bulls and bears alike for the last several weeks. _______ UPDATE (Oct 13, 4:20 p.m.): And speaking of pointless histrionics, you had to love gold’s $40 lunatic leap today after spasming $20 both ways in the early going. A short a millimeter off the intraday high produced a profit for the subscriber who reported the trade in the chat room, but the pullback made little progress as the hours went on, suggestion that bullion’s ‘DaBoyz’ aim to take this gas-case higher. Here’s a pattern so gnarly that I can all but guarantee that it will work in every possible way, including shorting at 1810.50 via a ‘camouflage’ set-up. That means you could buy a pullback to p=1780.20 ‘mechanically’ with a stop-loss at 1770.10. That’s $4000 of entry risk on four full-size contracts, so minis are recommended unless you are trading with winnings racked up earlier. ______ UPDATE (Oct 15, 7:29 a.m.): When the little p.o.s. plunged overnight to within 70 cents of my 1780.20 bottom-fishing number, I used this rABC pattern to drastically cut the entry risk to $480 on four contracts. The trade just triggered at 1782.10, and I will cover half if it reaches p=1783.3, setting a break-even stop for the rest. _______ UPDATE (Oct 15, 7:58 a.m.): The trade triggered, produced a $480 profit at p, then took it back when gold plunged anew beneath the ‘c’ low of rABC. I was so preoccupied with a few of my WordPress publishing tool’s many egregious dysfunctions at the time that I did not try to re-enter with a second-time’s-the-charm trigger. The futures are in gold-is-garbage mode at the moment, an asset class inferior, even, to bitcoin, but I have little appetite for more bottom-fishing. However, I still expect it to produce a profitable trade from a low somewhere between ‘C’ and the green line, as noted above. I am not recommending the trade unless you know how to ‘camouflage’ your way aboard as I did. The technique usually makes money even if we are wrong, but in this case it produced a scratched trade. 

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$DXY – NYBOT Dollar Index (Last:94.05)

With trillions in reckless stimulus as a backdrop, it seems counterintuitive to speak of the dollar as being in a boring consolidation. But that’s what the long-term charts are saying. I’m a dollar permabull myself, since I see a deflationary endgame for the global financial bubble. But I must concede that if the Dollar Index is eventually headed to 120 or higher as I’ve been predicting, it is in no hurry to get there.  The chart doesn’t give much support to dollar bears, though. The most bearish thing that could be said about it is that even though the greenback has risen only very modestly this year from the lows of a five-year range, it is already getting pretty overbought.  This sluggishness is worth watching, but it is not at all menacing at present.  Keep in mind as well that merely being overbought does not preclude the possibility of an enormous rally while this condition exists; it happens all the time. For the time being, however, you can tune out all the noise and ‘expert’ opinion concerning the dollar, especially the bearish kind.

This is a free forecast (Tout) by Rick. Get a free trial of Rick’s Picks to see full member content.

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