Last week's thumb-wrestling match ended in a draw as bears failed to push the Auggies down to the 2281.00 target shown. The best they could muster was to diddle the secondary Hidden Pivot support at 2306.40 for nearly two days. The week ended with the futures mildly on the upswing, although a further push to the green line (x=2357.20) would trigger a 'mechanical' short. The opportunity looks second-rate, so I'll recommend watching from the sidelines. A bigger picture shows a nearly three-month consolidation with potential to 2520 or higher. Somewhat lower prices remain likely for now, though.
Sep Silver's slight dip last week beneath the 29.05 'd' target of the reverse pattern shown is sufficient for us to infer that the futures are likely to grind lower before they are fully corrected for another big leg up. It should launch within the next 2-3 weeks and reach 36. Please note, however, that an intervening pullback to p=26.67 (monthly continuous chart, A=11.64 on 3/31/20) would set up the juiciest 'mechanical' buying opportunity we've seen in a while.
The easy move through p=79.55 in mid-June strongly suggests the August contract is bound for at least D=86.66. We can hope nonetheless that p2=83.11, the secondary Hidden Pivot, slows crude's ascent; otherwise, pump prices, along with the price of nearly everything else, will receive a turboboost before summer is over. If there's a silver lining, the pattern is compelling enough to imply there's no great likelihood of a further push into the 90s.
Friday's power dive was more than a minor setback, especially since it occurred before TLT was able to test March 28's key 'external' peak at 95.02. The kamikaze dive was the equivalent of Punxsutawney Phil seeing his shadow, meaning it portends yet more weeks of winter before bulls could conceivably recover the gumption to try again. That's assuming they do, but the outlook would worsen if last week's two-gap downtrend continues more or less unabated until it exceeds 90.65, an 'external' low recorded on June 10 that begs to be tested.
Although this week's commentary discusses why the dollar's weekly chart looks interesting, the daily chart shown is equally interesting in another way. DXY spent most of the week stalled precisely at the 106.07 midpoint Hidden Pivot resistance of a bullish pattern that projects to as high as 108.15. The way in which buyers handle this obstacle cannot but accurately predict the dollar's course over the next several weeks. In any event, and however unlikely, a swoon to the green line (x=105.03) would trigger an enticing 'mechanical' buy.
Of all the markets tracked by Rick's Picks, the dollar arguably has been the most interesting. This might seem paradoxical, given the relatively placid look of the Dollar Index chart above. Although there has been moderate turbulence since early last year, the overall impression is of a transoceanic flight cruising within a vertical range of several thousand feet. Most striking has been the dollar's ability to hold aloft a mere 4% below 2022's peak of around 115. This is tough to square with apparent reality, since the greenback's global hegemony for the last 90 years has come under increasing challenge -- from the BRICs, for one: Brazil, Russia, India, China, South Africa, Iran, Egypt, Ethiopia, and the United Arab Emirates. It were as though they had ganged up on the schoolyard bully, changing the way international trade in goods and commodities is settled so that dollars are disfavored in every meaningful way possible. Most recently, the Saudis announced with some fanfare that they would sell as much oil as demanded of them for payment other than in dollars. As the chart makes clear, however, if this had any discernible impact on greenbacks, it was to have caused their slight rise. Why the seemingly anomalous behavior? A logical explanation is that global trade flows are but a relatively small portion of the uses to which dollars are put. The entire market for crude oil, for example, is estimated at around $2 trillion per annum. This may seem like a big number, but it is a pittance in comparison to the dollar sums that change hands in financial markets. There the tallies reach into the quadrillions of dollars -- thousands of trillions, that is, if such numbers are even imaginable when tied to the flow of actual business. Compare that to global
Crude oil's exuberant spree over the last three weeks recalls Bruce Willis' memorable line from Die Hard: "Yippy-ki-yay, motherfucker!" Weren't 'They' supposed to keep energy prices subdued until the November election? If 'They' means Joe Biden's keepers, one wonders whether the sinister Obummer has that kind of pull any longer with OPEC. Whatever the case, July Crude looks all but certain to hit the 87.31 target shown in the chart -- a 20% gain over prices that obtained at the beginning of June. Too bad for all of us, since pump prices looked ready to dip below $3 before greedy Big Oil recovered its grip. So here is the world's largest commodity market, allocating the world's most important resource, trading like a Vancouver penny stock. The good/bad news is that the wild swings will continue until the energy markets lie broken and smoldering in the Second Great Depression.
TLT has a long way to go to recoup losses since 2020. The chart shows three daunting resistance numbers at relatively lowly levels that eventually will give way. However, we should be grateful that this ETF proxy for Treasury Bonds is unlikely to approach covid-era highs near 180, since that could only imply a world in deep economic depression. The recovery of U.S. Bonds has unfolded slowly since TLT bottomed at 82.42 eight months ago. The gain off the lows is about 14%, and while that might not seem like much, it is impressive considering the staggering amount of U.S. paper dumped on the market in the past year by sovereign holders, particularly China and Russia. Although the dollar and its unbreakable lock on seignorage may stir up the envy of other nations, they cannot remain players in a financialized world if they stray too far from the greenback. That's why last October's lows for T-Bonds may yet endure, even as forecasts of their demise and the bankruptcy of the U.S. persist. Even in bankruptcy, the U.S. will still look like a safe haven to the rest of this blighted, godforsaken world.
I've used a continuous monthly chart to project a 6136.25 target for the E-Mini futures. A corresponding target in the cash S&P Index (SPX) lies at 6118.34. These Hidden Pivots look likely to be reached, although not necessarily precisely, since the patterns from which they are derived will be all-too-obvious to every trader and technician in the game. They are nonetheless sufficiently compelling to not work in some fashion, presumably tradeably. In each instance, buyers had little trouble pushing past the respective HP midpoints, and that's why I'm so confident the corresponding targets will be achieved. If the trend maintains its current slope, that should happen by no later than mid-October if not significantly earlier.
The 456.88 target shown presents itself so clearly on the monthly chart that I am de-emphasizing the 452.35 target of a lesser pattern given here earlier. The latter could still show some stopping power, and we should therefore remain alert to the possibility that it will generate a major top. We can attempt shorting there, too, but the higher target is where we'll train our firepower. It caps a pattern that is more obvious than we should prefer, but my use of a quintessentially 'textbook' one-off 'A' might give us an edge over traders who will be using the somewhat higher 462.80 target associated with the marquee low at 213.43.
