The Dollar Index tripped a theoretical buy signal on Friday when it slightly exceeded the green line (x=103.57) early in the session. A hypothetical trade would have finished in the red, but we'll await more evidence next week to determine whether the rally has the moxie to reach p=104.82, the midpoint Hidden Pivot resistance. Although we don't actually trade this vehicle, its gyrations inform and influence our outlook for other vehicles, particularly bonds and bullion. Assuming the latter remains strong, it will be interesting to see whether the dollar and gold/silver are able to rise simultaneously. That would be an important tone change -- something we haven't seen before for a prolonged period of time. _______ UPDATE (Dec 8): Nothing dramatic, but the dollar made encouraging progress last week toward the 104.68 midpoint pivot of the pattern shown in this chart. If it reaches it this week, that would generate the first bullish impulse leg we've seen on the daily chart since September. _______ UPDATE (Dec 13, 11:20 p.m.): Nothing cheers the chimps who manage your money like a falling dollar, since a strong one will undo every assumption that has powered global markets and economies (and Globalists!) for as long as anyone can recall. A day of reckoning is coming, so don't expect the dollar to keep falling just because Wall Street and the bozos who invent the news are spinning everything Powell says these days as wildly dovish.
They don't ring a bell at the top, as the saying goes, but it's hard to see how Mr. Market can avoid it this time. The stock market's heedless, nutty short squeeze since October will end when Microsoft hits $430, probably early in the new year. It's that simple. How do I know this? Just a gut feeling. I've been paying close attention to charts for more than 40 years, and the one above looks like it can't miss. It tells us two things with clarity and authority: MSFT will continue to rise until it reaches $430, a Hidden Pivot resistance; and, it will not surpass that number, at least not by much, without a major correction. Furthermore, because Microsoft shares, which are trading in record territory, have surpassed a laggard Apple's as the #1 favorite of portfolio managers, the former cannot but serve as a reliable proxy for institutional mindset. My high confidence that MSFT will reach 430 is rooted in the way buyers handled resistance at two crucial 'Hidden Pivot' levels: 1) at the red line, a 'midpoint resistance' at 322.01; and 2) at the pink line, a 'secondary resistance' at 376.29. Not only was the first level easily penetrated on first contact, it also became support thereafter, adding to the likelihood of a further move to 430.58. As for the secondary pivot, although it has yet to be decisively exceeded, the fact that it was exceeded at all strongly suggests the uptrend will continue. Also, the ABCD pattern is sufficiently clear and compelling that we can infer D=430.58 will show precise stopping power. Ankles Grabbed Mr. Market undoubtedly would love to rebuke (i.e., sodomize) me for being so confident. As the headline implies, though, I've willingly grabbed my ankles so that he can try. The pattern is
The December contract is about to get interesting, since its steep climb to a 4612.75 target, the attainment of which was never in doubt, will soon generate a powerful new impulse leg. This will happen when the uptrend exceeds the 4597.50 'external' peak recorded on September 1. Although the relatively small push it would take to achieve new record highs never figured into our trading plans, it was always a possibility. If and when it happens, we'll want to keep this old IBM chart well in mind, since it is as perfect an example as I could offer to show you how devious a major top can be. This one trapped bulls and bears alike with an initial high that fell slightly shy of my D target. When the stock sold off from the initial high, bears evidently were so busy patting themselves on the back that they were unprepared for, and unbelieving of, the short-squeeze sneak attack that produced the final high exactly at D. The devastating collapse that occurred thereafter could only have happened if everyone were unprepared for it. I've left some additional notes on the chart, which was designed to teach a key aspect of the Hidden Pivot Method, to wit: Healthy trends produce 'abcd' corrections that do not reach their 'd' targets. This one did, however, thereby warning that when IBM reached D of the dominant (i.e., bull-market) cycle, that would be the last hurrah of the long-term bull.
Following a relentless short-squeeze rally over the last month, AAPL has receded moderately so far from within 43 cents of the 193.36 Hidden Pivot we were using as a minimum upside projection for the bull market. The pullback did not quite reach the green line (x=188.76) on Friday, so there is as yet no theoretical sell signal. This seems likely to occur as the new week begins, and we can use p=184.60 thereafter as a minimum downside target. It can be bought with a reverse pattern trigger when the time comes, but our trading bias should be bearish in the meantime. Were AAPL to head-fake above last week's 192.93 high, I'd suggest using a voodoo number at 194.11 to get short. Tune to the chat room and keep your email 'Notifications' turned on if you want to stay apprised.
I'm ready to bury that earlier prediction of $117 a barrel, since the daily chart has evolved to provide no hint of it. Not that it couldn't happen. There is an ABCD pattern stretching back to 2021 that would allow for a move to above $115. The original forecast assumed that a growing conflagration in the Middle East would drive the price surge. However, it turns out that speculation, including by the U.S. military brass, that Israel would face a long, drawn-out war, turned out to have been based on Israeli disinformation. In fact, Hamas has trapped itself in a tunnel die-off, every shaft, entrance and exit of their supposed fortress having been mapped by Israel at the time they were created. As for Hezbollah opening up a new front to the north, they haven't, and one can only surmise that neither they nor their paymasters in Iran want to cause the total destruction of Lebanon -- or of Iran's nascent A-bomb capability, since a couple of bunker buster boms such as Israel used on Gaza City could end the weapons program in a trice. Returning to January Crude's chart, it is a mess of dueling impulse legs that are tradeable, but only with diligent attention to the intraday bars. At the moment, the chart is neither bullish nor bearish, nor are there any price targets of interest that I can discern.
AI hubris has become America's chief source of good news. Over the past year, artificial intelligence surpassed bitcoin as mankind's most easily imaginable pathway to quick riches, shortened work weeks, ingenious solutions to every problem, and endless satisfactions. An AI-assisted world supposedly will revolutionize the way we do business, enabling high school graduates, even mediocre ones, to do the grunt work of Wharton MBAs. It will make government workers heroically efficient, fine print more readable and Shakespeare more accessible to the masses. AI will allow paralegals to leverage the law library as effectively as Ivy-educated Supreme Court clerks, homemakers to serve four-star dinners and to provision every lunch pail with perfect nutrition. It will end war, thwart alien invasions and allow pet owners to talk intelligently with their dogs, cats and tropical fish. Graduates of AI-specialized trade schools will reduce the heavy workload on diesel mechanics, actuaries, farriers, coders, electricians, pilots and brain surgeons, pitching in wherever they can. Every savings account will achieve the maximum possible return, and fake news, filtered into oblivion, will cease to exist. No umpire will ever again blow a close call, and no murder will go unsolved. Alexa will know what we want before we even finish a command, and your little Billy will be able to replicate 'The Night Watch' on the living room wall with a tricked-out, AI paint-box. His kid brother, a budding AI tunesmith and composer of nearly hum-able show-tunes, will owe his life to AI's success at cracking the mystery of crib deaths. A Flunky's Tale What a fabulous world it will be! For the time being, however, and most unfortunately, we'll have to content ourselves with AI's most visible achievement to date: AutoCorrect. It was developed by the same millennial geniuses who have been toiling day and night
We're using the 4673.50 target of a larger pattern to project a major top, but the 4612.75 Hidden Pivot at the top end of this pattern can serve for now as a minimum upside target for the near term. The point 'A' low is a muddle of bars, but the target should still work for purposes of getting short. The textbook trigger interval of nearly 300 points poses an initial risk that would be unacceptable. To cut it down to size, we can look for a 'camouflage' set-up at the appropriate time. Meanwhile, I'll suggest trading with a bullish bias if stocks open moderately lower-to-unchanged Sunday night.
The dollar has been falling for seven weeks, but a chart stretching back two years shows that the bull market begun at that time still has credibility if no longer youthful vigor. My bull market target remains 124.79, with a lesser objective at 112.14 that can serve as a minimum upside object for 2024. Notice that just a little more downside to the green line (x=102.95) would trigger a routine 'mechanical' buy. Thereafter, the anticipated rally to at least p=106.31 would give us an objective way to determine whether the bull is robust enough to reach the targets given above. If this occurs, it would imply that the global financial system is no longer in Kansas. Indeed, deflationary pressure on all who owe dollars would have turned the commercial banking system and the American heartland into a landscape of bankruptcies.
Gold delivered on a 'mechanical' buy last week without getting anywhere near the 1955 stop-loss that would have applied. I'll therefore stick with the longstanding target at 2070.70, although the impulse leg that produced it leaves something to be desired. Specifically, it peaked without having exceeded the 'external' peak at 2028.60 recorded on July 20. The rally was impulsive nonetheless because it surpassed other 'external' peaks along the way, but the fact that it looked the high at 2028.60 in the eye, so to speak, without being able to hurdle it suggests reticence and uncertainty in buyers. ______ UPDATE (Nov 24): Scant progress last week produced no change in my analysis or outlook. _______ UPDATE (Nov 28, 4:12 p.m.): With the futures head-butting peaks recorded on Halloween near $2,000, gold's handlers had little choice but to let 'er rip toward the $2070 target we've been using to keep from getting fooled or scared into submission. The smaller pattern shown in this chart, with a 2074.30 target, provides a finer shading if you want to trade this vehicle. ________ UPDATE (Nov 29, 10:53 a.m.): The effortless move through p=2033 of this pattern has all but clinched more upside over the next two weeks to at least 2131.00. Once buyers have pulverized that Hidden Pivot resistance, look for a blitzkrieg rally to 2200 and higher. ________ UPDATE (Dec 1, 10:45 a.m.): February Gold has precisely achieved a $2073 target equivalent to the still unachieved one at $2070 in the December contract. This is a contango oddity, but our focus should be on the February contract, since it is the active month. Here's the chart: https://bit.ly/3N7YgD7
More progress to at least 35.68, the Hidden Pivot target of the reverse pattern shown, seems all but certain, but it's what happens after that that can help us gauge the strength of the uptrend begun in early October from around 30. The first peak lies at 36.85, an 'internal' high just 17 cents above the target. The second, an 'external' that should offer more resistance, is at 36.14. It is important because a push past it would generate the most powerful impulse leg we've seen in this vehicle since early spring. That would set up a likely test of the 39.70 peak from mid-July and thence a possible run-up into the low-to-mid-40s. ________ UPDATE (Nov 24): A push past the 36.14 peak note above appears imminent. However, I will be paying close attention to whether the rally stalls at 36.61, a voodoo number that is shortable with a reverse-pattern trigger interval of 50 cents. _______ UPDATE (Nov 28, 4:42 p.m.): GDXJ has blown past the p=36.28 midpoint resistance of this pattern with such force that the 42.09 rally target I first identified here six weeks ago in mid-October should now be viewed as all but certain to be achieved.
