We ended the week with a nice score in crude futures that is detailed in the chat room. Check out Friday's discussion thread to determine whether you could have followed my simple, explicit instructions to reap a gain of at least $1070. It came by way of a day trade initiated in the early afternoon. This gambit went against the trend, leveraging a presumably minor breakout that died almost precisely at the p2 secondary target of our bullish pattern. So what's next? The selloff from just beneath June's $94 top comes as a surprise, since my recent forecasts have called for a run-up to at least $117. That's still possible, and the target will remain theoretically viable in any case unless the December contract plummets below $63. But the inability of DaBoyz to manipulate the price above the June high diminishes the likelihood of a blowoff. It's possible the 92.48 peak in late September was a terminal move, but the rally could still re-ignite if the Israel/Iran war escalates sufficiently to curtail global energy supplies. _______ UPDATE (Nov 10): Crude got savaged last week as sellers pushed the December contract beneath two important lows -- one internal the other external -- without an upward correction. This generated a strong impulse leg that will require an even more powerful upthrust exceeding 83.60 to undo the damage.
[A change of tone and tempo this week from our good friend Richard Charles, owner of Lake Tahoe-based Alpine Capital. His observations concerning gold's historical role during periods of intense global strife should remind us that bullion's sometimes crazy price swings should not be investors' focus right now. RA ] With plans to attend memorial service for a dear teacher friend of 92, as Rick asked for a modest commentary, thoughts turned to finite things. JFK’s poet laureate Robert Frost wrote: Nature's first green is gold, Her hardest hue to hold. Her early leaf's a flower; But only so an hour. Then leaf subsides to leaf. So Eden sank to grief, So dawn goes down to day. Nothing gold can stay. In 92 years, Vera survived the Great Depression, The Great Inflations and World Wars. She saw a few years of peace dividend in a country with more riots than years of her lifetime. At this time we face a market test in our lives and history. Wednesday, waiting for the latest Fed decision on interest rates, we saw a record low Put to Call Volume Ratio of 3%. We consulted several sources to make sure it was not an artifact. Our experience is when people give up buying or selling puts for income, protection or speculation, TTOBGH, -- that’s the old ball game, honey. What to do ? Always, the question of survival and thrival -- or at least less loss. When I was a young Merrill Lyncher, we had a customer gallery on our trading floor. I was always interested in what the well-dressed old guys had to say. In 1980 gold briefly breached $1000 as Hong Kong produced $1000 gold coins to commemorate the Year of Elizabeth II and Lunar Monkey Year. I asked the eldest market
Since triggering a theoretical buy signal at the green line (x=105.89) a month ago, the dollar index has corrected only slightly and not closed below it. This implies that the next significant move will up and that it will take DXY to 112.20, the Hidden Pivot midpoint of a long-term pattern that projects to as high as 124.82. This is bad news for all who owe dollars, although it may eventually force the big spenders on Capitol Hill to rein in deficit spending. I used to think a strong dollar would force an end to Powell's tightening regime, but perhaps the deflationary implosion it could cause is what he intended all along.
Gold completed a shallow consolidation last week before launching toward the 2068.00 target we've been using as a minimum upside objective. If buyers plow through this Hidden Pivot, our next price objective would be 2133.10, calculated by sliding the point 'A' low of the reverse pattern down to an 1820.00 low recorded last November. That would produce a conventional ABCD pattern, but it would be sufficiently gnarly to make the resulting Hidden Pivot levels useful for trading.
The spike that capped the recent rally narrowly failed to surpass an 'external' peak at 24.05 recorded a month earlier. It was not all we might have hoped for. But there was more resistance than appeared, including a second, very sharp peak that caught bulls off guard before crushing them in a two-day cascade. Now, looking on the bright side, with gold promising to drag silver higher, we should expect this pullback to give way to an exuberant thrust that clears not just the prior peaks, but also a midpoint Hidden Pivot resistance at 24.02. Once the December contract is above them, we'll be able to trade 'em up as bulls cruise to at least p2=25.60.
The October 20 rally top at 35.36 failed to impulse above some peaks from mid-September, casting a shadow on the chart shown. This dour price action will likely have consigned GDXJ to a test of the midline of a channel that has contained this vehicle's ups and downs for the last six months. However, since my outlook for gold and silver is bullish, I expect the midline to hold and to support a bounce that breaks out of the channel. My minimum upside objective thereafter would be 42.09, the 'D' Hidden Pivot target of a reverse pattern flagged here earlier.
With the geopolitical cauldron boiling, crude's docility is hard to fathom. One theory has it that the heavy manipulation that has always characterized energy markets has conspired to suppress the price of crude so that war fears don't stampede the herd. All it would require to trigger a global war is for some Russia-armed enemy of America to take a potshot at one of the U.S. aircraft carriers stationed in the Middle East right now. My 117 rally target for December crude will remain viable in any case, but the futures will first need to overcome the drag created when they fell last week after failing to take out an 'external' peak at 89.60 from October 2. Most immediately, that would require a decisive move past the 86.33 midpoint Hidden Pivot of the pattern shown. ______ UPDATE (Oct 31, 9:16 p.m. EDT): All things considered, oil's price decline is quite impressive. However, it looks like those who have been manipulating it lower will run out of room at 79.94. the Hidden Pivot support shown in this chart.
With the Middle East war threatening to escalate on Friday, it's odd that sellers couldn't deliver a knockout punch. They spent the entire session running the futures up and down within a 20-point range, turning what should have been a rout into a merely moderate decline. Not only did they fail to bury the broad averages, bears couldn't even reach the first of two downside targets in the E-Mini S&P futures at 4100.00. The second lies at 4o68.50, and it seems likely to be reached by Tuesday if not sooner. We won't necessarily attempt bottom-fishing because corrective rallies have been pretty anemic lately. ______ UPDATE (Nov 1, 4:08 p.m.): Anemic price action has mutated into a full-blown short squeeze, investors either havinginginging grown bored with the pace of Israel's invasion of Gaza or completely forgotten about it. For now, use the 4310.50 target of this pattern as a minimum upside objective.
A 146.13 target is the most pessimistic I've identified to date, but in the interim we should use the 159.98 Hidden Pivot support shown in the chart as a minimum projection. An $8 rally to the green line (x=176.75) would likely be construed by many if not most investors as a bullish resurgence, but we should see it first as an opportunity to get short there 'mechanically'. Alternatively, we'll try bottom-fishing with call options if AAPL continues along its tortuous path lower.
The monthly chart shown offers an unorthodox view that should be held in mind as the dollar makes its way higher. Much higher. Last week I presented a weekly chart that went back to 2019 with a 124.72 target. This one stretches back to 2004 and has a somewhat less ambitious 'D' target at 119.37. I'll suggest sticking with the earlier version to get a precise handle on trend strength in the weeks ahead. Specifically, you should use its 112.16 midpoint resistance as a minimum upside projection for the next six to eight weeks. However, in the highly unlikely event of a vicious swoon to the green line of this monthly chart (x= 96.03) , you'll be able to recognize it for what it is: just a correction.
