We settled on MSFT, the second most valuable company in the world, as the mine canary that would signal the end of the bull market. So far, it is saying we should stick with the uptrend, albeit with one foot on the fire escape. The chart shows a logical path to the 547.12 rally target identified here earlier. It is not a done deal, since buyers did not exactly trash the midpoint resistance (p=519.75) on first contact, nor have they broken free of its gravitational pull. Even so, there is almost no chance that p2=533.43 will not be achieved. Any pullback to the green line (x=506.06) in the meantime should be regarded as an excellent 'mechanical' buying opportunity. ______ UPDATE (Oct 28, 2:59 p.m. EDT): Microsoft's decision to dive into fee-based AI has tacked on yet more hundreds of billions of gaseous 'wealth-effect' value to its shares. Today's volumeless stab through the green line (x=543.00) has shortened the odds of a further run-up to p=592.94. I have my doubts the stock will achieve D=692.83, so we should be ready to short the bejeezus out of it at p, provided we've made plenty of dough on the way up. Here's the chart.
The 'reverse' pattern shown has worked perfectly so far, triggering no fewer than three consecutive trades that produced a profit. The first was a conventional long at the green line, followed by a short at the secondary Hidden Pivot (p2) at 4172.70. The last, an easy winner initiated as a 'mechanical' buy at the green line (x=4071,70), remained 'live' as the week ended. This series of winners strongly implies that December Gold will achieve the 4223.20 target shown. The futures would become a compelling short at that price, assuming you've made some money on the way up and that you know how to limit entry risk to small change. I have one outstanding target at 5020 that was identified here earlier. Its provenance is not nearly as clear as the targets we've been using, however, and that's why I am going to stick with the lesser charts for the foreseeable future. If the current move should impale d=4223.20, that would open up a clear path to at least 4351.30, a tad beneath the old high at 4398; or to 4461.30 if any higher. (For a detailed discussion of a somewhat bigger picture, see my 13:51 post in the chat room on Saturday.) _____ UPDATE (Oct 29, 11:28 a.m. EDT): While we were waiting, a $10,000 trade dropped neatly into our lap. See the chat room thread from yesterday and this morning for precise details. _______ UPDATE (Oct 30, 6:50 p.m.): I used a big-picture chart in the chat room last Saturday to lend perspective to a discussion about gold's so-far mild correction. EWT forecasters appear to disagree about where and when the retracement will end. Since then, a lesser chart using Hidden Pivot levels has evolved to suggest the correction could already be over. This interpretation would be strengthened by a pop
The chart replicates the bullish pattern shown this week for gold (see above), although silver has yet to deliver any winning trades. Near-misses were another story, however, since the pattern would have yielded a theoretical $12,540 gain on a single contract if Thursday's 49.225 high had been just a slightly higher 49.328. The second of the two trades that would have resulted would have been a 'long' at the green line (x-48.074) that would have shown a small profit at the bell on Friday. (For details, check out my 21:21 post in the chat room Thursday night.) Looking just ahead, I expect gold to pull silver higher when the week begins. That implies a push past p=49.328, followed by a run-up to at least p2=50.581, or to d=51.835 if any higher._______ UPDATE (Oct 27, 1:24 p.m.): This morning's plunge through the red line (p=46.650) means the downtrend is likely to continue to at least D=44.145. This is even though the pattern is a conventional one that every trader on Earth is aware of. A bounce up to the green line (x=47.903) should be shorted 'mechanically' with a small-pattern 'camo' trigger.
GDXJ ended the week just shy of triggering a theoretical sell signal that could extend the so-far 18% drop from last week's record 112.45. If it slips beneath the green line to start the week, look for more weakness down to at least p=90.18, the midpoint Hidden Pivot support. The ETF will be ripe for bottom-fishing down there, presumably with a reverse-pattern trigger to reduce risk. A decisive breach of p, especially on first contact, would imply that more slippage to p2=86.38, at least, is likely. Worst case over the next 2-3 days would be 82.59, the pattern's D target.
Bitcoin is on a buy signal that triggered last Wednesday at 108,278 following the sharp reversal of a fleeting spike. A balky recovery has turned the position moderately profitable, with a paper gain of $2642 so far. However, the rally will need to tack on another $2,000 to reach the red line (p=113,039), where partial profit-taking on half the position (four round lots initially, as is customary) would become obligatory. Risk management thereafter would be predicated on a 122,562 target, but a 103,515 stop-loss will remain in force until then. _______ UPDATE (Oct 26, 5:41 p.m. EDT): Ka-ching! Anyone who followed my simple instructions from last Wednesday could have exited on today's leap to 113,473 for a profit of $4076. The secondary Hidden Pivot at 117,801 is the next logical objective, but I am not recommending a new position until I've heard from subscribers who caught the current move.
Friday's short-squeeze bounce came from within a hair of the 'secondary' (p2) Hidden Pivot of the pattern shown. The rally subsequently signaled a short sale when it hit the green line (x=6700.19). The trade was do-able only if you used a reverse-pattern trigger to limit risk. I'm not going to recommend it because the futures are already starting to feel the magnetic pull of last week's high, 6766.75. However, we can still record a paper-trade and monitor it closely to determine whether bulls or bears are in charge at the moment. If the latter, the short should work, eventually falling to D=6500.00 despite the fright-mask intensity of Friday's rebound.
I featured Microsoft at the top of last week's list because it looked primed to test my theory that the bull market is over. The stock did in fact go against the bearish grain by triggering a 'mechanical' buy at the green line (x=506.00). The subsequent rally has yet to develop legs, however, and would need to pop decisively above p=519.75 to offer a profit-taking opportunity as well as evidence MSFT is capable of reaching the 547.12 target. If that is what the world's second-most-valuable company's shares are about to do, it means the broad averages are going to rally strongly as well. My gut feeling is that this bounce will not be memorable, let alone record-breaking, but I'm keeping an open mind.
The bull market begun in May continues to make slow progress as it head-butts resistance at the 91.24 midpoint Hidden Pivot shown. Because bulls have pushed past it slightly, any swoon to the green line would be a 'mechanical' buy. Such weakness would equate to a perhaps fleeting spike in long-term interest rates, which, although unlikely, is not inconceivable. The rally in Treasurys is ironic because Trump's obsession with stimulus has put a great deal of pressure on U.S. debt. However, it is the President's bold leadership that has attracted bond buyers from around the world, reducing pressure on the Fed to mop up paper for which there might otherwise be weak demand. It is a big change from Biden, a walking corpse whose style of governing was enough to give investors in the U.S. and abroad the dry heaves. For your information, a rally to the 94.02 target would equate to a fall in long-term rates from a current 4.60 % to 4.39%. Although that's not enough to shift re-fis into second gear, it certainly would be a positive for the U.S. economy.
Silver signaled a potentially significant reversal Thursday night at the same time as gold, although I did not put out an additional trade recommendation in the wee hours as I did with Gold futures and GDXJ. Both overshot Hidden Pivot correction targets on Friday, Silver by enough to make it a short-term prospect for shorting. Do so gingerly, using the 50.945 midpoint Hidden Pivot resistance of the pattern shown. You can pare the theoretical entry risk by at least 90% by using a reverse-trigger pattern fashioned from a chart of minute degree. I have explained this tactic many times, but if you are unfamiliar with my instructions, don't do the trade. You could attempt the short at d=52.230 as well. Whatever happens, buyers' progress through the Hidden Pivot levels shown on the chart can tell us much about whether the short-to-intermediate trend may have shifted to bearish. Please note that the Big Picture remains insanely bullish, and I mean that literally, since London deliveries reportedly are caught in a potentially fatal squeeze. A chronic shortage of 'physical' has persisted for years, and I am not sure why it took so long to blow up in the greedy faces of the white-collar carnies who run the game. Until now, it has been easy for them to borrow bullion for next to nothing, and to substitute 'paper' silver (and gold) whenever it suits them. Now they are on the ropes, realizing that Trump's free-market team is not about to rescue them. Perhaps their lucrative scheme is about to be undone by a bull market, much as a bear market undid Bernie Madoff's fraud. ______ UPDATE (Oct 22, 12:50 a.m.): The futures have bounced tentatively after plummeting 13% to support on the right side of a garden-variety head-and-shoulders pattern begun in early October.
If you followed the simple instruction I put out Thursday night, which flouted a ballistic rally, you got short using a 94.50-point trigger interval when the futures fell to x=4297.60. Thereafter, you would have covered half the position at 4203.10 on the subsequent decline to just beneath that Hidden Pivot midpoint support. The theoretical gain would have been $9450, enough to provide a substantial cushion to help you manage the remaining risk. The fully-corrected target is D=4014.30, which, if achieved, would yield an additional profit of $18,890, for a total gain of $28,340. However, if the bull market in gold is still intact, the futures should bounce to new highs from p=4203.10 rather than continue lower. Alternatively, they could fall to p2=4108.70 before reversing, so you should be alert to this possibility if you are still short. Most immediately, I'll suggest an 'impulsive' stop-loss at 4332.30, just above a minor peak created Friday on the way down. _______ UPDATE (Oct 21, 10:07 p.m.): Gold was overdue for a brutal correction, so no one should have been surprised by this one. My hunch is that it is already over. I posted a 4020.20 retracement target in the chat room this morning when the futures were up around 4200.00. They subsequently dove to a 4021.20 bottom that came within $1.00 (!) of my target. Anyone who used my Hidden Pivot support to get long could have racked up a same-day profit of as much as $11,300 per contract, since the bounce has reached 4133.80 so far. Gold is currently trading for 4130.80, having given up little of the rebound. Let's see if it has bottomed.
