I've lowered my target for Treasurys so often that it's time to face the music. The 73.69 'D' Hidden Pivot shown in the chart is where this ETF proxy for the long bond is probably going, and it is not a pretty picture. The punditry, editorialists and Bloomberg bozos can blather all they want about the economy's supposedly soft landing, but this is wishful thinking. Interest rates are headed even higher, and this will crush markets that owe their artificial robustness to easy financing; cars and houses, to name just two. It will also turn the irreparable devastation in commercial real estate into a catalyst for the Second Great Depression. The chart pattern is too clear to deny, especially since it has already worked several times to produce profitable 'short' trades on the way down. A second test of p2=85.44 could conceivably turn this cinder block higher, but we shouldn't look for miracles. ______ UPDATE (January 5): TLT continued to hover near death's door, extending its distributive, sideways scuddle for another week. It would need to pop above 88.91, an external peak shown in this chart, to emerge from purgatory. _______ UPDATE (Jan 10): TLT stopped scuddling, the better to plunge anew. It ended the week with an imminent test in prospect of the 82.42 low recorded in October 2023. A two-day close beneath it would all but ordain more progress down to 73.69, a target that would have seemed unimaginable when this symbol spiked to a covid-era peak at 179.70 in March 2020.
Bitcoin has fallen 16204 points, or 15%, since peaking at a record 108,244 last Tuesday. I still have a final bull market target outstanding at 113,343, but the ferocity of last week's plunge has cast doubt on whether it will be achieved any time soon. Friday's low halted just a split-hair shy of generating an impulse leg on the hourly chart, but we can expect that to occur early next week with the penetration of the 92,091 'external' low recorded on December 11. The short-squeeze bounce that occurred off Friday's engineered, sold-out low at 92,130 was impressive and scary enough to scatter shorts, but it will need to reach 102,760 to become impulsive on the hourly chart. Alternatively, if BRTI continues to fall, we can try to bottom-fish a voodoo number at 91,142. This vehicle is not tradable, but the voodoo number equivalent in BTCUSD is 91,389. The next beneath it is 88,824, and thence 87,846, my worst-case low for the next 4-7 days.
The chart shows interest rates on the Ten-Year Note rising over the next 8-12 months to 5.5% from a current 4.5%. This will devastate the economy and lay bare the delusion that America's economy is booming. The 5.5% figure is deceptive, because, presumably, it will be achieved with asset values falling. If we repeat the experience of the Great Financial Crash of 2007-08, that would imply real rates (i.e., adjusted for deflation) rising to as high as 6%-10%. That would usher in an economic depression at a time when the U.S. economy is in much worse shape to weather adversity than in 1929. Back then, a third of the workforce was tied to the agricultural economy, literally living off the land. This time, perhaps 80% of the workforce is tied to bullshit. That figure is not invented, by the way; it is simply extrapolated from Musk's firing 80% of Twitter's employees without impairing the company's ability to carry on normally.
It has been years since the E-Mini S&Ps created a bearish impulse leg of daily-chart degree. They did so last week, however, with a plunge that breached the required two lows: a small 'internal' from December 10, and the external low at 5921.00 recorded on November 19. The implication is that the urgent short-squeeze rally on Friday will sputter out shortly, allowing the futures to resume their well-deserved slide into hell. It will be interesting to see whether this happens before New Year's, which would be the kind of shocker that takes everyone, bull and short-covering bear alike, down with it. This seems difficult to imagine, given that the rigged support system for the stock market is ubiquitous. It includes Fed funny-money, portfolio managers locked into a handful of high-fliers, and share buybacks by companies with many more tens of billions than they know what to do with. Be patient, permabears. Your day is coming, probably sooner rather than later.
Microsoft would trigger a 'mechanical' buy if it falls to the green line (x=433.65), but I suggest paper-trading this one unless you are an expert because the point 'a' low is so nebulous. I rate the pattern a middling '6.5' (out of 10). Even so, price action at p, even in lousy patterns, is usually useful for analyzing trend strength. In this case, the initial upthrust that impaled p was sufficiently decisive to imply that d=448.70 is entirely likely to be reached. Will the miserable pisher-of-an-'a' change the odds? We're about to find out.
The three-day dance around p=2630.70 left me mildly bearish when the week ended, but not so bearish that I would recommend a 'mechanical' short at the green line. Although the bounce to the line will have occurred off our sweet spot midway between p and p2, the tedious, irregular C-D leg let off enough steam to flatten A-B's bearish energy. That energy is what makes 'mechanical' trades work and the reason why this gambit is unlikely to offer the edge we seek. In any event, the D target at 2500.00 remains my worst-case low between now and December 31. It will also provide good odds for bottom-fishing with a tight stop-loss.
The three-day dance around p=2630.70 left me mildly bearish when the week ended, but not so bearish that I would recommend a 'mechanical' short at the green line. Although the bounce to the line will have occurred off our sweet spot midway between p and p2, the tedious, irregular C-D leg let off enough steam to flatten A-B's bearish energy. That energy is what makes 'mechanical' trades work and the reason why this gambit is unlikely to offer the edge we seek. In any event, the D target at 2500.00 remains my worst-case low between now and December 31. It will also provide good odds for bottom-fishing with a tight stop-loss.
The March contract looked bound for at least p=30.763 when the music stopped on Friday. The pattern is sufficiently clear to keep us confidently on the right side of the trend and allow us to exploit it profitably with relatively little risk. Most immediately, that would imply getting short at p. The trade should be attempted only if you are comfortable using reverse-pattern triggers of small degree (aka 'camouflage'). If the rally hits our sweet spot between p and p2 straightaway and then pulls back to the green line, that would offer a back-up-the-truck opportunity to bottom-fish 'mechanically'.
GDXJ is probably within no more than five points of groping its way to the bottom of the textbook head-and-shoulders pattern shown in the hourly chart (see inset). If it's going to revive sooner rather than later, though, the secondary pivot at 43.44 would be a logical place for this to occur. You can bottom-fish there with a tight stop-loss, using expiring call options if you've got the chops. I've used a dubious one-off 'A' high here, and the pattern could turn out to be governed by the marquee high at 55.58, so plan accordingly.
The Dollar Index pulled back hard on Friday, half-correcting the steep upthrust from two days earlier. Given how the uptrend impaled the midpoint Hidden Pivot (p=107.36), there is little room for doubt about whether D=109.30 will be reached. As noted earlier, that would keep weight on gold. It would also set up a potential 'mechanical' buying opportunity at p=107.36. We don't often do this trade at p, but the trend is so strong that waiting for a relapse to the green line (x=106.39) might leave us empty-handed when the turn comes. _______ UPDATE (Dec 28): The dollar has hovered stubbornly aloft, denying us an opportunity to bottom-fish at the red line (p=107.36). The trade recommendation remains viable nonetheless.
