Musk Will Be the Last AI Entrepreneur Standing

Last week’s decline in 10-Year rates was the biggest since September, catalyzed by Fed easing of 25 basis points.  The chart implies there could be a further fall to as low as 3.706%, but I have my doubts. In fact, the ste3p slide triggered a ‘mechanical ‘buy’ at 4.073% that suggests rates are more likely to rise from here or perhaps a little lower, to at least 4.452%, than they are to fall below 3.937%.  If they crack that last number hard, however, odds of more slippage to 3.706% would be no worse than 50-50.  FYI, I’ve substituted the 10-Year for the 30 because the shorter duration is a more sensitive indicator of interest rate risk.

From a Hidden Pivot standpoint, the only thing of interest that occurred in this vehicle last week is that it failed by 11.50 points to hit a juicy target at 7023.00 that I’d advertised.  We were therefore unable to get off an opportune short, not because the target was front-run, but because the daily blips that passed for rallies were too weaak to reach it.  A logical conclusion is that the clueless meandering within the channel shown is starting to break down, and that the two recent breaches of the lower line are  significant.  I promised to be sparing in my use of the words ‘topping process’, but that ‘s what we are lookng at, and it has become almost too tedious to watch.  However, since I always try to leave you with a price target no matter how muddled the action, I’ll proffer 6748.00. which comes from conventional A=7027.25 on Feb 3. It can be traded despite the pattern’s obviousness,  but I’ll recommend it only to those of you who know how to execute a CI (counterintuitive) entry.

Subscribers who used the 128.13 bottoming target I posted in the chat room at 12:35 could have gotten an $8 ride from just above Friday’s low.  The rally left GDXJ hovering within a bearish pattern that projects to as low as 110.79. There is no way to judge the likeliood of this, nor will there be until we’ve seen how sellers interact with the midpoint hidden Pivot support at 126.20. The trend could also go the other way, blowing out the 141.60 high that forms the pattern’s point ‘C’.  For now, though, GDXJ remais on a theoretical sell signal from x=133.90 that was showing a small loss when the week ended.

The ‘mechanical’ short recommended from the green line (x= 5.9093) last week narrowly survived getting stopped out when a midweek upthrust failed to surpass the conventional pattern’s point ‘C’ high.  On Friday, the futures fell far enough to touch the midpoint Hidden Pivot support (p=5.7035), where we customarily take profits on half a position. If you are still in the trade, plan on taking an additional 25% off at p2=5.4978, the seondary Hidden Pivot, saving the remaining 25% for a possible ride down to D=5.2920. Since there has been little discussion of the trade in the chat room, I will likely replace ‘Doc’ Copper soon with another symbol as part of a continuous rotation.

A further fall to the 404.67 target would represent at 27% decline since the stock sputtered out in October at 553.72, just an inch shy of new record highs. The pattern doesn’t quite qualify as an ominous, island-reversal top, but it doesn’t take a chartist to feel the weight of the dome the stock has traced out over the last nine months.  The pattern is simple and obvious, but sufficiently compelling for us to infer that MSFT is far more likely to hit D before C=493.50, if it ever does.  This is the fourth most valuable company in the world, behind Nvidia, Google, and Apple, implying that the stock’s decline has deflated the global ‘wealth effect’ by a large amount.  See this week’s commentary (above) for a further discussion of this. _______ UPDATE (Feb 8): The stock has looked so awful that I am substituting AAPL on the ‘touts’ list.  The chart shows a logical path down to D=376.88. The stock can be ‘mechanically’ shorted at the red line (p=408.24), stop 418.70.  ________ UPDATE (Feb 14):  We usually do ‘mechanical’ shorts at the green line, but I made a rare exception this time, recommending that you get short at the red line (p=480.24) with a 418.70 stop-loss. The trade would have produced a loss of $1024 per round lot. Had we shorted at the green line (x=423.92)  as is customary, the trade would have worked out nicely, since the stock made a top at  423.68 just ahead of a so-far plunge of $22.67.  The 376.99 downside target remains valid in any case and should be used as a minimum objective for now.

The chart is featured in the current commentary, but let me add a cautionary note for subscribers only. The 50K milestone that lies just a hair above Friday’s record settlement closely coincides with the 49,355 ‘D’ target of the pattern shown in the inset. My gut feeling is that the so-far slight overshoot of the target happened because traders were intent on hitting 50K regardless of any Hidden Pivots that may have stood in the way. We should infer in any case that there is double stopping power here, and that a significant pullback is distinctly possible, even if it turns out not to have been the start of a bear market. Since we should always have a higher target ready just in case, the 53,022 Hidden Pivot noted in the upper-right corner of the chart can serve that purpose. Assume it will be achieved if the Indoos close for two consecutive weekly bars above 50,600. _______ UPDATE (Jan 30):  The Dow has been jerking bears’ chains with a Wile E. Coyote dance inches from the potential top I’d warned about at 50,000. Sellers will need to penetrate the red line (p=48,270), however, before I can diss this gas-bag with enthusiasm and still sound credible.  Even then, it would be a good bet to fall no further than D=46,918, hinting that the broad averages, unlike bullion, are in shallow correction that will cause little pain or even anxiety. _______ UPDATE (Feb 8): The Dow broke out last week, but the follow-through could be less than spectacular. This chart shows a compelling Hidden Pivot resistance at 50,819, just 704 points, or 1.4%, above Friday’s closing price.