The two-month-long ascent of rates on the Ten-Year Note did an apparent death rattle last week with a run-up to 4.46%. That fell slightly shy of the 4.48% peak recorded at the end of March. I still think the peak will endure, at least for the foreseeable future. This outlook remains to be confirmed, however, by a downtrend that generates an impulse leg on the daily chart. At the moment, that would imply a decline touching 4.22%. I should note that someone who thinks rates will fall is considered bearish on rates. Because this can be confusing, we tend to say that the person is bullish on bonds, since bond prices rise as rates fall. _____ UPDATE (May 13, 6:20 p.m.): So much for my death-rattle theory. TNX broke slightly above two previous peaks, but there is Hidden Pivot resistance an inch away, at 4.52%. Let's see how bulls fare before we draw any conclusions. If the resistance gives way easily, that will imply more upside to the next at 4.61%. _____ UPDATE (May 15, 10:36 a.m.) Today's breakout has all but clinched a finishing stroke to the 4.61% target flagged above. Let me therefore introduce a new one at 4.75%, my worst case for the near term. I'll also remind you that this is one important economic variable over which Trump has no control, although his eagerness to put a dove in charge of the Fed could be seen as driving rates higher. And mortgages thrusting once again toward 7% will surely not help to Make America Great Again.
The 'mechanical' buy at the red line (p=4636.30) went in the black last week with a pop to 4775 on Thursday. That would equate to a theoretical gain of around $14,000 per contract, but there is an additional $36,000 of profit potential if the futures reach the 5144.00 target. Price action at p has been wishy-washy, but that is no reason to presume that the uptrend will not reach p2=4890 at least. When it does, you should take off half of the position you hold, either in this vehicle or in an equivalent such as GLD. Be alert to the possibility of a stall or reversal at 4847.40, a truly 'hidden' resistance.
With strong back-to-back rallies on Wednesday and Thursday, the futures made significant progress last week toward the 93.995 target shown. Although we were able to get long in Gold using a similar pattern, July Silver's recent dip did not quite reach the green line (x=69.744) to signal a 'mechanical' buy. It left the station without us, but that only shortened the odds of a move-to-target. A relapse to the green line (x=69.74), however unlikely, can be used to get long using a 61.65 stop-loss.
Last week's impalement of the red line, a midpoint Hidden Pivot resistance at 103.58, is bad news for the geopolitical and economic world, since it implies June Crude will reach a minimum 128.19. Although the feeble point 'A' leaves a lot to be desired as a starting point for the pattern, it will do in a pinch. A pullback to the green line (91.28) would undoubtedly be read as relief, but this chart says it would be an opportunity to buy aggressively for a blast to new highs. A 'camo' trigger should be used to cut the approximately $12k entry risk by at least 95%. The tactic is detailed in a course I've made available free to subscribers.
Rates on the Ten-Year Note climbed to within inches of the 4.48% high recorded on March 27, but there is reason to doubt they are about to break out. Specifically, the pullback from the high breached a Hidden Pivot midpoint support at 4.35%, implying more slippage to at least 4.28% is no worse than an even bet. Using the futures contract, traders can get short at 4.39% (interpolated) with a stop-loss at 4.44%.
A measly 3% rally would reach the 7499.75 target shown. This is a composite chart, so we shouldn't expect to see precise stopping power, but it should be close enough for government work. There are two other Hidden Pivot resistances to hold in mind if the futures keep going: 7644 and 10,336. That last number is the highest I can project on the monthly chart, and it is intended to stretch your imagination, especially if you are a permabear. Because penetration of p=6166.00 was effortless and decisive, it's all but certain the lower target will be achieved. Since this is the bull market that won't die, don't assume the target will mark an important top unless it coincides with Iran's complete surrender.
Microsoft has had a strong move off March's 356 low, but the monthly chart makes it look feeble. True, the stock's steep descent tripped a 'mechanical' buy at the green line (x=408.52). However, I don't expect the bounce to get much further than the midpoint Hidden Pivot resistance (p=472.25), if that far. I am no fan of head-and-shoulders patterns because they are everywhere one cares to find them, but it is not difficult to imagine a picture-perfect right shoulder forming. Regardless, the pattern as is should serve our need to keep close track of this crucial stock-market bellwether.
The bullish pattern shown projects to 93.99 and corresponds to the one accompanying the current Gold tout. A key difference is that Silver did not signal a 'mechanical' buy, or at least not one that would still be "live". That could actually be construed as a sign of strength, since the futures did not pull back far enough to touch the green line (x=69.744) where we initiate most of our 'mechanical' trades. If it does so this week, however, don't hesitate to buy there, albeit with a 'camo' trigger that would spare us the approximately $40,000 of entry risk associated with a textbook stop below 'c'.
These weekly commentaries have struggled to make sense of a world in geopolitical chaos but which is nonetheless transfixed by a financial melt-up that cannot end other than disastrously. Still more challenging is predicting the day-to-day effects on a stock market whose behavior is a perfect analog for acute, mass mental illness. By ascending without pause into celestial heights, the market is saying it doesn't give a fuck about the Strait of Hormuz, war with Iran, the AI bubble, Trump's falling poll numbers, Europe's decline into economic darkness, rising oil prices that threaten to implode the global economy, bloated earnings multiples, stubbornly firm interest rates, a big victory for Democrats in November, or a next round of inflation that will make what has occurred so far seem like just a warm-up. Bloomberg's Dart Board Concerning the price of crude oil, let me cut to the chase so that you don't have to waste precious time listening to some amateur on Bloomberg choke out dart-board guesses: NYMEX June Crude, which settled on Friday at 102.50, down 2.57 a barrel, is about to rise to 128.19. Furthermore, if it relapses to 91.28 in the interim, don't mistake this for a sign of respite; for in fact, crude would become a fetching "buy" there, predicated on an implied 40% run-up to 128.19. While that might be enough to wipe the idiotic grin from Wall Street's face, don't be surprised if the broad averages seem to hold their own. Whatever it takes to end the 17-year-old bull market is probably too terrifying to imagine. But the catalyst will necessarily be deflationary, since the bull market has been built on an expansionary mindset that has multiplied and rotated OPM into stocks that have faced little resistance. Insiders have finally begun to sell, and so should
The potentially important low I signaled a week ago caught the exact bottom of a powerful, $20 rally. It came within 11 cents of the 98.50 target for the June contract, then receded by nearly $6 to finish the week. Are bulls depleted? We may know soon, since, with moderate selling to start the new week, the retracement will test the 89.41 midpoint Hidden Pivot support of a reverse pattern on the daily chart (a= 96.93 on 4/13). It should hold if Crude is going to challenge the spike high at 104.34 recorded on March 9. Otherwise, a decisive breach of p would open a path down to at least 80.43. This analysis should prove as accurate as the one proffered last week, since the patterns on the chart are equally compelling.
