The hourly chart is mildly bearish, albeit with no hint of a major top. That's why I've reproduced the weekly chart, with its compelling target at 430.58, as a reminder of how close the stock is to hitting a resistance that it is unlikely to penetrate, much less brush aside. It will have help putting in a top from a few other lunatic-sector faves, including CMG and NFLX, which have maxed out their respective weekly charts. If MSFT struggles to push above Friday's 412.06 high for a day or two, that would leave it vulnerable to a 50-point fall over the near term. We won't attempt to short it, though, unless it pops to 430, so stay tuned.
So much for the wall of worry! Optimists and visionaries supposedly climb it while ignoring troublesome signs that leave most investors on the sidelines, paralyzed with fear. Last week, as soaring shares of Nvidia tugged stocks higher around the world, speculators swarmed the wall like cockroaches gorging themselves on dried beer, glue and animal feces. Do insects ever pause to worry? More likely is that even the dark shadow of a size 14 shoe descending on their wretched banquet would not quiet the feverish din of a hundred thousand mandibles crunching away. And so it is these days on Wall Street, scene of an epic wallow that is far removed not just from worry, but from reality. The so-called Magnificent Seven -- we have always referred to these stocks, more appropriately, as the Lunatic Sector -- all by themselves created more than a trillion dollars of 'wealth' in just the last week or so. This occurred when stocks took volumeless leaps on earnings announcements whose details, whether bullish or bearish, were of scant concern. No one maintains any longer that this is rational behavior. But leave it to Wall Street's hype machine to tell us that earnings eventually will catch up to the craziness. Really? Celebrate This! The megastocks have gone vertical at a particularly unsettling time. Commercial real estate is collapsing, government is doing most of the hiring, brutal price increases for nearly everything have crushed middle-class purchasing power; and borrowers, led by the U.S. Treasury, will need to refinance more than eight trillion of debt this year at significantly higher rates. To make matters worse, inflation is poised to take off again, in part because of higher costs incurred by shippers avoiding Houthi missiles in the Suez. Under the circumstances, it is far more likely that the next
Crude is the most agitated trading vehicle I track, but paradoxically the easiest to trade. We can practically count on every tradable price reversal to come from within a tick or two of an in-your-face-obvious prior high or low -- i.e., from smack-dab-in-the-middle of a 'discomfort zone'. The pattern shown has a rally target at 80.30, and we know from experience that the political powers that be and their lackeys will be there to impede the uptrend, lest gasoline prices become problematical for voters nine months ahead of the election. The pattern is also an inch from triggering a textbook 'mechanical' buy at the green line. Watch it develop if you are bored. _______ UPDATE (Feb 23): The green line (x=76.71) could have been used to make as much as $2,200 per contract with little difficulty, since the futures made a nearly two-level move after dipping slightly below the line on Wednesday morning. A subscriber reported having used UCO to do the trade. Here's the chart. The 80.30 target given above remains valid.
Bulls were in charge when the week ended, having clawed their way back to within an inch of new record highs. Option expirations slowed the ascent, since many traders held calls at the higher strikes that had prevailed before stocks plunged on Tuesday because of unsettling inflation news. Although the futures finished the day down 32 points, it took gumption for bulls to pull the lunatic stocks out of a nosedive that began to gain momentum just minutes into the session. Look for the rally to continue to the 5128.50 target of the pattern shown, and don't pass up the opportunity to bottom-fish 'mechanically' if a correction should bring the March contract down to the green line (x=4984.50).
By now, we've come to expect little of rallies in this vehicle, and so last week's so-far modest bounce off a secondary Hidden Pivot at 30.68 is unlikely to arouse much interest. It could run all the way up to the green line (x=36.77) and still be nothing more than a promising short. Thereafter, or perhaps before then, look for GDXJ to turn south, bound for the 27.63 target. The good news is that the pattern is a pretty one likely to produce a targeted low we can trust.
MSFT has replaced AAPL on the list for the time being, since its chart is more fun to look at. This is notwithstanding the tonnage that has been distributed between 403 and 410 over the last three weeks. It is real and it is heavy, but we know that DaBoyz are capable of rendering it insubstantial with a short-squeeze when conditions are right. My hunch is that they will still have to take the stock down by at least $3-$4 before they can set up the volumeless leap into a sunny-and-mild wafting zone above $410. We are still focused on a target at 430.58 (or possibly 437, which comes from the weekly chart) as the place where this aging bull market will seven out.
The pattern shown, with a 2056.30 rally target, is not particularly bullish, but it looks serviceable for trading. A presumably corrective rally stalled Friday at 2026.40, the midpoint resistance, but any headway above it when the new week begins would imply the target is likely to be reached. A 'mechanical' buy at the green line looks promising, but I'd suggest that you act only if the pullback has come from above p=2026.40, especially if it is exceeded decisively. _______ UPDATE (Feb 23): Last week's modest rally fell a few dollars shy of the 2056.30 target flagged above, but you can expect it to be reached within the next couple of days. It is shortable via a tight 'reverse pattern' for subscribers who are familiar with this tactic. The pattern can also be used for 'mechanical' buying at either p or x if the futures favor us with a swoon,
Friday's blast through p=23.03 clinched more upside to at least 24.08, the unexciting target of the pattern shown. That would amount to a rally of just 60 cents, but if the futures thrust past this 'hidden resistance', we could look for a test of the peak at 24.895 recorded on December 22. It's too early to start counting our chickens, especially given the way the futures have underperformed since early December. But our bias will be bullish for now. Since the last correction would have trashed a 'mechanical' bid at the green line, I won't suggest attempting to buy there if the opportunity presents itself.
It took TLT more than a year to achieve the 100.25 target of the reverse pattern shown, and so the three-week-long correction that has occurred so far should be viewed as an early phase of whatever retracement is coming. That doesn't preclude the possibility of a reversal at any time, even in the next week or two, that would take this T-Bond ETF to new recovery highs. Most immediately, though, technical signs suggest the correction will come down to 91.20, and that is where we should look for signs that the worst is over. Probably not, but as always, we'll let the price action speak for itself. _______ UPDATE (Feb 23): Friday's strong rally derailed what had looked like an unavoidable descent to the 91.20 target noted above. The bounce, if that's what it is, should carry to at least p=94.94. Even at 96.80, however, the thrust would still offer a promising opportunity to get short 'mechanically' for a one-level ride south, at least.
The chart offers a moderately bullish picture of the dollar, but with one caveat: the impulsive rally last summer to 107.35 just missed exceeding a small but important peak at 107.99 recorded along the dollar's horrific plunge in late 2022/early 2023. This subtle but significant failure does not preclude the possibility of a further rally to D=108.38. Actually, it seems entirely likely based on the teasing interaction between buyers and the pattern's 104.50 midpoint resistance. But don't expect the C-D phase of the bull cycle begun in July to play out symmetrically relative to the A-B leg. This means it could take a while longer for the second leg to reach its destination than the 11 weeks required by the first.
