Time for a tone change. This is a tough call, since I've been a hard-core deflationist since the mid-1970s after reading a persuasive book by the late C.V. Myers, and later another, The Great Reckoning, by James Dale Davidson and Lord William Rees-Mogg. Myers' thesis was that the endgame for the epic credit blowout of the last 40 years would feature a dollar so strong that all who owed them would be crushed by imploding debt. The implied tsunami of bankruptcies would be even more devastating than the 1930s experience, wiping a dozen zeroes from the global balance sheet. The resulting shortage of dollars would become the catalyst for a Second Great Depression from which it would take a generation or longer to emerge. I still believe this is how things must end. But not now. Trump, who is verging on political omnipotence, clearly favors a weak dollar, and this will hold the coming bust at bay for a while. But the chart suggests the dollar is tough enough to stand up to such moderate debasement as Trump's patriotism and nationalistic pride can abide. I have adjusted my outlook for the dollar accordingly: Look for weakness down to the range 95-100; then, an explosive rally that will end inflation for 60 years.
Ten-Year yields have been pounding on a 'hidden' support at 4.430% for more than two weeks, presumably getting ready for a drop to exactly 4.242%. A tradable rally from that Hidden Pivot support looks like an 80% bet, but if it eventually gives way, look for a further fall to 3.959% or even 3.675%. By all means, jot these numbers down if you care about where long-term interest rates are headed, since charts can predict them far more accurately than the dartboard guesses you'll get from Bloomberg's talking heads, The Economist, The Wall Street Journal, the punditry, Fox Business News, MSNBC et al.
Friday's mildly refreshing death dive failed to develop sufficient momentum to reach the 'd' correction target at 5965.25. All that sellers could muster was a close a few points above the intraday low at 6024.50. Why were bears unable to finish the job? Probably because they're worried about colliding with buy-the-dips maniacs hellbent on running stocks back up the old wazoo, is why. They are all but certain to achieve the target on Monday, however, given the way they sliced through the midpoint Hidden Pivot support at 6065.88 like a torch through styrofoam. You can bottom-fish the target 'counterintuitively' if you know how to fashion a reverse-pattern trigger borrowed from the 5-minute chart. If you don't, just ask. _______ UPDATE (Feb 25, 5:14 p.m. EST): Despite the usual idiots and psychotics buying today's dip, the weakness did heavy technical damage when it crushed my 5965.25 minimum downside target (which I reaffirmed on Friday, even as the little hoax opened with a 35-point overnight gain). The next opportunity ES will have to turn around lies at 5872.25. If this voodoo number, unknown outside of Rick's Picks, provides no bounce, bulls will have one more reason to worry.
MSFT spent yet another week hopscotching lower on voodoo numbers that point toward more tedium. The look of the chart should be no comfort to bulls, since it shows DaBoyz slathering on layers of supply since early 2024. Never underestimate their ability to goose this stock 30 points higher in a relative blink of an eye, however, since they've demonstrated great cunning at instigating short-covering gaps on the opening bar. Their pony may do just one trick, but the trick makes it much harder to get short and stay short as the stock edges toward the ledge of a $100 drop-off. More immediately, I expect the initial plunge to hit 373.39 before the stock can gain traction. A rally touching 435.47 first would offer an excellent opportunity to get short.
We've used 3040.90 as a minimum upside target for the bull cycle that began last summer, but let's be prepared for a possible top somewhat below it, at 2992.50. This Hidden Pivot resistance is derived from a pattern with a somewhat higher point of origin. Conjecture favors reaching the higher target, since the so-far 12-day consolidation off the recent high would seem sufficient to push the futures more than the 20 additional points needed to reach 2992.50. We needn't play defense, however, since it will be possible to attempt shorting there without risking more than relative pocket change. ______ UPDATE (Feb 25, 7:54): As noted above, there are outstanding rally targets for Comex April Gold at, respectively, 2992.50 and 3040.90 (an oldie). Despite gold’s stall, they remain viable, but I'll use February 12's 2886.50 low as a fail-safe point. Any slippage beneath this number would be warning that bullion prices are about to come down with the broad averages. _______ UPDATE (Feb 27, 12:58 p.m.): This morning’s breach of my ‘fail-safe’ number in gold (see my last update) portends more slippage in the April contract, currently quoted at 2894.25, to at least 2853.50. If that Hidden Pivot support fails, bet on 2813.50 as a worst-case target for the near term (i.e., 2-5 days). You can buy there aggressively with a tight stop-loss, but there are no guarantees the bounce will get legs.
We'll stay on high alert as March Silver ascends into thin air. Like gold's chart, the overall impression this one creates is of heavy distribution since last spring. A telling feature is the failure of the rally in early February to exceed mid-December's 'external' peak. That would have created a robust impulse leg, but it ultimately took another pullback and a running start to get it done. The short-term picture turned somewhat bearish with Friday's close beneath a midpoint Hidden Pivot support at 32.895 that had previously contained the downtrend from the Feb 14 high. Accordingly, you should look for more slippage to at least 32.450, or to 32.005 if any lower.
GDXJ's easy thrust through 48.39, a midpoint Hidden Pivot resistance, implies a strong likelihood that the rally will reach 54.92, a bull-market target of middling importance. The pattern also suggests that a pullback to 48.39 should be bought with a stop-loss at 46.21. If you know how, you should use a 'camouflage' trigger to cut the initial risk by as much as 95%. That would entail creating an entry trigger with an ABCD pattern extrapolated from the 15-minute chart or less.
I'm tracking Nvidia shares closely because they can tell us whether China's DeepSeek threatens America's lead in AI development. The Nasdaq-listed stock got pummeled a month ago when the Chinese revealed they were developing an open-source chatbot that can easily compete on performance and price with the most advanced models offered by OpenAI and other U.S. developers, including Elon Musk. Investors who have bet trillions of dollars on relatively costly solutions were so spooked by the news that they batted NVDA down to $113 not long after it had traded as high as $153. At the time, I said the stock would be an opportune short sale if it bounced from $113 to $140. It did so last week, hitting a recovery high of $143, but I'm no longer so enthusiastic about betting against the stock. It is the chart that has changed my mind, not the aggressive attack on DeepSeek by investors, analysts, pundits and scientists. They said China had spent considerably more developing the technology than they were acknowledging and that its smarts were extracted from Nivida chips the Chinese had purchased despite a U.S. embargo prohibiting them from getting their thieving hands on certain high-tech hardware. Eating America's Lunch So, who's lying? I doubt we'll get a straight answer from the news media since they are rarely up to the challenge of reporting on developments that seem to upset the status quo. The question remains crucially important nonetheless, since there are literally trillions of dollars of bets and side-bets on the relatively capital-intensive, proprietary approach that American-based companies have taken toward AI development. NVDA's stock chart is probably as good an answer as we'll get, since a graph cannot lie. In that regard, a move to new all-time highs above $153 would imply that America's edge
Ten-Year yields have been pounding on a 'hidden' support at 4.430% for more than two weeks, presumably getting ready for a drop to exactly 4.242%. A tradable rally from that Hidden Pivot support looks like an 80% bet, but if it eventually gives way, look for a further fall to 3.959% or even 3.675%. By all means, jot these numbers down if you care about where long-term interest rates are headed, since charts can predict them far more accurately than the dartboard guesses you'll get from Bloomberg's talking heads, The Economist, The Wall Street Journal, the punditry, Fox Business News, MSNBC et al. ______ UPDATE (Mar 1): Rates have slipped beneath my initial target at 4.242%, closing last week at 4.231% off a 4.214% low. This implies that the downtrend is taking hold and could accelerate to fulfill the second target at 3.959%. It has also made achieving that target more likely.
The chart shown provides little basis for determining with confidence whether long-term rates have peaked. We'll know better once we've seen the downtrend that began a week ago from 4.81% interact with midpoint Hidden Pivot support at 4.24% (p, shown as a red line). It would take a decisive penetration of the line on first contact to imply not only that Ten-Year rates have put in an important high near 5%, but that they are headed under 4%, possibly to as low as 3.67%, in 2025. If so, it is likely the U.S. economy will be deep in recession by that time.
