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.
There was hubris in my assertion last week that the perfectly formed head-and-shoulders pattern that has been taking shape since April would mutate into a 'surprise' breakout to the upside. However, the chart shows what to expect if this forecast proves to be flat-out wrong. There is that possibility. The August futures would fall to 2204.20, completing the H&S pattern, before they could find traction. Moreover, the Auggies would become a juicy 'mechanical' short if they rally over the next week or two to the green line (x=2408.80). The pattern is quite gnarly because of the double top, but I've seen this set-up work perfectly in the metals before (do NOT tell your friends if you plan to bottom-fish there, as you should). Rest assured, however, that even a $200+ dive as described would not mar the otherwise bullish look of the long-term charts. If you're still worried, here's a continuous monthly chart that shows the ostensibly distributive head of the H&S to be occurring above the 'D' target of a completed pattern stretching back 15 years. That is inarguably bullish no matter how nasty this correction gets.
Silver's correction since topping at 32.75 on May 20 has created a distinctive channel that grows more ponderous and tedious by the day (see inset). If the July contract falls yet again to the lower line and this happens within the next 4-6 days, that would imply a low near 27.50. However, here's a weekly chart that puts that in a long-term context that is clearly bullish. It shows a stall to have occurred in a logical place, a secondary pivot at 32.41. But even a nasty pullback now to as low as x=23.32 would still be technically constructive and generate a juicy 'mechanical' buying opportunity. I strongly doubt silver bulls will need such a rebuke after a nearly two-year consolidation begun two summers ago, however, and that implies the July contract can be bought 'mechanically' at p=27.873 with a stop-loss at 24.84. This is a theoretical 'do', but I'd suggest seeking guidance in the chat room if the opportunity takes shape.
If you're wondering when the miners are going to take off, this week's chart offers a sodden dose of reality. Notice first that GDXJ is currently trading about where it was in 2013. Lows a few years later near $15 followed the cliff dive from 2011's exhilarating precipice at 180. Who could have imagined that, 10 years later, mining shares would still be scuddling lazily along, tormenting investors more or less in proportion to the limit of their patience? Yes, this ETF could take flight at any time, like a bat from hell. And it will -- just not on our time. If there is anything to console us in the meantime, it is the ease with which this vehicle's gratuitous swings can be traded. Now, for instance, you can stay short down to 38.32, or do covered writes until then, and then reverse your position when the target is reached. That would be 2.60 below the so-far retracement low off May's 47.25 peak. Don't sweat the details.
Hey, all you twenty-something, failure-adjusted, peach flavored hard seltzer-drinking, avocado toast-munching, downwardly mobile, squishy-gendered, Robin Hoodie, World-of-Warcraft miscreants: Listen up!! If you're as desperate as I think you are to fatten your crypto wallets, you'll need to pay up to find out exactly where bitcoin is headed next. Hint: The last three digits of my current price target are xx191. This will be a last-chance, bargain-basement retracement low before bitcoin blasts off for hyperspace. I've published the super-secret correction target in my chat room, and you need only click here for a free, two-week trial subscription that will give you instant access to the chat room and all the other nuggets of tradeable information that lie behind the Rick's Picks paywall. No credit card is necessary, since that would only add to the unpaid balance, metastasizing at 21.99%, that has been devouring you limb-by-limb like a flesh-eating bacterium. _______ UPDATE (June 29): I've lowered my precise correction target (hint: it is below 56,000), a modification that has changed its last three digits to xxx709. UPDATE (July 5): Whether you subscribed or not, I hope my warning prepared you for the disaster that has unfolded in bitcoin. It has actually exceeded the original downside target, and so I've posted an 'extension target' in the chat room. It is my worst case at the moment and is below 51,000. Click here to sign up for a free two-week trial, no credit card required.
