Rick Ackerman

The paper-trade I'd suggested last week, a 'mechanical' long from 95,354, is still live, but I'm glad we didn't take an authentic piece of it. Bitcoin spent four days threatening to trigger the stop-loss at 91,270, socking the position with a $4000 loss. I am still tracking it diligently because a failure to achieve the 107,604 would imply that Bitcoin, and therefore all cryptocurrencies, have made their bull market top.  It got some lift off Friday's low, but not quite enough to waft it beyond danger. It's hard not to notice the clean look of the head-and-shoulders pattern that has been forming since mid-December.  Symmetry would put the right-shoulder collapse somewhere toward the end of the week or early next.

The year-long struggle the Dollar Index had getting past the midpoint resistance at 106.31 argues against giving it a free pass to the 113.02 'D' target that would complete the pattern shown in the chart. Even so, the way the rally picked up steam to pierce p2=109.66 as the week ended was impressive and suggests more headway toward the target is likely. We have still-higher targets outstanding, including one at 124.82 that I reiterated here last week. A middling resistance at 110.08, an inch above Friday's high, will also be shortable and warrants your attention. It is notable that the dollar's strength has not crushed gold, only hindered it. _______ UPDATE (Jan 18): A short from 110.08 as suggested would have caught the top of a nasty swoon. The low of the move did not quite reach a 108.40 correction target, and that is bullish. Look for a push above the recent high at 110.18 in the week ahead.

Although the major indices were down just 1.6% on Friday, it felt like a big day. Everything that matters to the U.S. economy was moving the wrong way: stocks were falling across the board; interest rates and energy prices were climbing; dollars were growing dearer, especially for debtors; and gold, perhaps imagining a bevy of black swans, was stressed with fear, up as much as $60 intraday. Cumulative losses for the week totaled nearly 3%, adding to the feeling that the granddaddy of all bull markets is over. I am taking this possibility seriously, in part because the S&Ps topped a month ago a hair above a 6136.25 Hidden Pivot target of mine that had been nearly five years in coming. Similarly, Bitcoin, the hophead that has been inspiring speculative excesses in all markets, apexed in mid-December within 0.1% of a $107,343 Hidden Pivot target first identified here when the price was $15,000 lower. If any chart provides a reason for hope, it would be Microsoft's. Shares of the recession-proof software giant ended the week on a thin ledge, $3 above a key Hidden Pivot support at 415.57. A closing bar decisively beneath it would announce the almost certain start of a bear market. MSFT would be on its way down to at least 374.18 at that point, presumably the first wrenching drop into an unimaginable abyss. Why This Time? Why would this market top differ from the mostly minor ones that have occurred routinely over the last 16 years?  Mainly because it is happening with Southern California in flames. Ordinarily, we might expect investors to buy stocks aggressively, as they always do in the wake of natural disasters, since it will require enormous sums of capital investment to rebuild. This time, however, there is a palpable feeling that the

If the so-far moderate short squeeze off Thursday's 5874 low touches the green line (x=6031.56), it would trigger an enticing 'mechanical' short, stop 6107.75. Since this would follow a record high in early December at a major Hidden Pivot resistance, we may soon have more evidence that a long overdue bear market has begun. Paper-trade this one unless you are adept at using 'camouflage' triggers to shrink entry risk. A relapse to the D target at 5803.75 would not be impulsive, although it would follow an A-B leg that was, unmistakably. ______ UPDATE (Jan 6, 9:34 a.m. EST):  The short triggered at 6033.25 and produced a theoretical gain moments later of 8 points ($400) per contract. The trade is still live, with two contracts covered at p=6025.25, and two remaining to be covered at d=6009.50 (15m, a=5965.75 on January 3 at 9:45 a.m.). The stop-loss would be at your discretion now.

MSFT still looks bound for the 393.65 'd' Hidden Pivot target shown. The downside penetration of the pattern's p midpoint was not dramatic enough to guarantee this. Still, the fact that the pivot turned into resistance immediately after it was first penetrated is hardly a bullish sign. Although the point 'a' high of the rABC pattern is too small and nebulous to be regarded as a surefire winner for bottom-fishing, it is nonetheless a 'locked' coordinate that doesn't need additional justification. Odds for bottom-fishing p2=409.05 are not compelling because the pivot coincides with one at 410.29 recorded on November 21.

Bitcoin's low on December 29 got nowhere near the 89,246 Hidden Pivot support where I'd suggested bottom-fishing. The actual low occurred at 91,271, nearly $2000 above our implied bid, setting the stage for a recovery rally that looks likely to continue to at least 100,469. The small pattern associated with that target is shown at the tail end of the larger reverse pattern targeted on 98,599. It got poked and prodded, then slightly exceeded once more on Saturday, suggesting bulls are raring to go.  The 98,993 midpoint Hidden Pivot of the small pattern should produce a fleeting pullback suitable for scalping, but expect it to be shoved aside ahead of a push to 100,469.  (Please note that I've switched to a new symbol that, unlike BRTI, is tradable. It is listed on the Coinbase Exchange, GDAX.) _______ UPDATE (Jan 6, 12:31 p.m. EST): Here's a chart you can use to tame this idiot-driven little sonofabitch. This morning's impalement of the red line (p=99,437) implies bitcoin will reach the 107,604 'd' target. Any one-level pullback can be bought 'mechanically' using a stop-loss equal to a third of what you stand to make if BTCUSD achieves d=107,604.  I suggest paper-trading this one unless you know the rules for 'mechanical' trades and the location of the 'sweet spot'.   

Last week's leap through the 2662 midpoint Hidden Pivot of the pattern shown shortened the odds of a further run-up to d=2728,30, but I doubt the rally will top the record high 2826 achieved on October 30. That's because of the power of the bearish impulse leg in November that took the February contract from 2826 down to 2565 in just two weeks.  This implies that quotes will fall to 2500 before this vehicle can get good traction. More immediately, a drop to the green line (x=2629.60) should be regarded as an opportunity to bottom-fish 'mechanically'. The implied $33 stop-loss means the trade should be executed only with a small-pattern (i.e., 'camouflage') trigger to reduce entry risk by at least 90% theoretical. _______ UPDATE (Jan 6, 9:43 a.m.): Using reverse a=2636.50 (15m, Jan 6 a7 2:45 a.m.) produced a quick, theoretical gain of $700 per contract, with two contracts covered at 2638.20 and two still 'live'.  The 'd' target lies at 2651.80, and a pullback to 2631.40 would trigger another 'mechanical' long, stop 2624.50. _______ UPDATE (11:16 a.m.) Feb Gold has pulled back $9 after coming within a dime of the 2651.80 rally target I furnished a little more than an hour ago (see above). Going by-the-book and using reverse a=2636.6 would have produced a profit of around $4,800 on four contracts. That assumes a 50% partial profit at p=2,638.20, 25% at p2=2645.00, and the last 25% at d=2651.80. _______ UPDATE (Jan 8, 8:26 p.m.): Careful, since the current uptrend may have limited potential. I'm using a 2728.30 rally target, and your trading bias should be bullish until the futures get there. If buyers surprise by blowing past this Hidden Pivot resistance, it would open a path to at least 2765.80 or even 2866.00.

We should give silver's tortuous bottoming action the benefit of the doubt, since gold looks bullish at the moment. The March contract reaffirmed a theoretical 'buy' signal on Friday with a pop through the green line (x=29.954), but it will need to fist-pump its way past the midpoint Hidden Pivot resistance at 30.763 to demonstrate the rally's staying power. Because the reverse-pattern's point 'a' low is a 'locked' coordinate with no alternatives, the levels should work well for shorting or for bottom-fishing 'mechanically. _______ UPDATE (Jan 8, 8:35 p.m.): Buyers pierced the 30.763 midpoint resistance, but not decisively enough to clinch safe passage to d=32.380.  However, a return to the green line (x=29.954) no sooner than next week could be bought 'mechanically' with a 29.140 stop-loss. A 'camouflage' trigger is suggested to cut the $16,000 entry risk. 

The Dollar Index has retraced slightly after pushing past the 109.30 Hidden Pivot resistance we were using as a minimum upside target. This has put into play the 112.20 'secondary Hidden Pivot' shown in the chart. Expect a tradable pullback from that 'invisible' resistance, but if it gives way easily, that would imply that bulls are fixing to take this symbol to D=124.82.  Everyone should have noticed by now that the dollar's strength has not inhibited the long-term bull market in gold. It has been in a holding pattern, presumably developing thrust for the next phase of its ascent.