Yields on the Ten-Year Note ended the week just beneath a Hidden Pivot resistance at 4.49%, but the damage had already been done with the slight penetration of the resistance earlier in the session. If the rate had settled above it for a second consecutive day, I'd have shortened the odds of a further run-up to the 4.75% target to even money. As things stand, I'll use a voodoo # at 4.62% as a minimum upside target for the near term. We'll be better able to assess the odds of new highs at that time.
On the weekly chart, the futures have been on a 'mechanical' sell signal since mid-June. They seem in no hurry to do what they ought -- i.e., fall to the modest, 6959.00 target of the pattern shown. That would equate to a 7.5% correction from these levels and 9.5% from the record-high 7694 notched in the first week of June. That's the worst I could see at the moment, and it would be the kind of garden-variety correction that would draw in buyers who have been waiting for a token discount. But fear? Not hardly. The low would likely come in the middle of August, however, leaving enough time for plenty of fear to develop ahead of the November elections. Fear of what, you ask? The possibilities are too numerous to predict, so let's focus instead on ways to chase boredom during what promises to be a dull, glum summer on Wall Street.
The two-day rally that ended the holiday-shortened week was a stage-managed fake and destined to fail, based on how easily sellers crushed the midpoint Hidden Pivot support (p) at 402.80 on the way down. That clearly implied that D=339.27 eventually will be achieved and that the rally can be shorted. But where? My hunch is that a 'mechanical' entry using p will work. It would take a stop-loss at 423.98 to keep risk and reward in balance with 339.27 as the objective. Since that would risk $1050 per contract initially, the trade is recommended only to those who know how to cut that down by as much as 95% with a 'camouflage' entry set-up.
Last week's dip below the red line (p=68.75) amounted to just 2.4%, but that's enough to somewhat darken the picture. For starters, it implies that a rally to the green line (x=73.44) should be shorted with a 78.15 stop-loss just above the pattern's point 'C' high. (I am recommending this trade only to subscribers who are adept at fashioning risk-averse, 'camo' entry triggers.) It also opens a path to the 59.35 'D' target. However, given bears' struggle to push quotes below p=68.75, a slide to 59.35 is still no better than an even bet. But p2=64.05 is likely to be reached, and we should plan accordingly.
Gold's modest rally last week looks like it could go a tad higher before sputtering out at 4312.80. the d target of a minor, bullish pattern. The downtrend that follows should take the futures to 3795.20, a Hidden Pivot 'D' support associated with a pattern begun from 5323.00 in early March. Bulls could expect a pretty good ride thereupon, since it will have taken more than four months to trace out the pattern, part of a larger correction begun from the record 5700 on January 29. Alternatively, we should allow for the small possibility that a major correction ended with last week's 3955 low, and that a lasting rally is under way. If this is so, buyers will demonstrate it with a fist-pump through 4312.80, and thence a follow-through exceeding the 4527 'external' peak recorded on May 29.
If there is reason to think gold prices are finally recovering, it is Silver's bounce from near a D correction target at 55.56 that took four months to reach. Neither got as close as we should have preferred, but silver's 60-cent miss, amounting to 1.1%, is probably close enough to offer a hopeful sign, even if the jury is still out on gold. Its corresponding low fell fully 4.2% shy of the target, a shortfall that allows less room for encouragement. The next impediment on Silver's chart is a middling 'external' peak at 67.72 recorded on June 21, and an easy pop through it would be reason to take notice -- and heart.
GDXJ ended the week with a tentative double bottom at the 96.05 secondary pivot of a large corrective pattern. The rally was not impulsive, however, since it exceeded no 'eternal' peaks. That would require a leap to 120.06, a penny above a high recorded on May 29. This is somewhat more ambitious than what I am requiring of silver and gold futures, but the picture is sufficiently ambiguous to require it. The good news is that if this vehicle relapses to D=82.46, you can confidently load up the truck there.
August Crude ended the week tap dancing on a crucial support at 68.75. That's the midpoint Hidden Pivot of a pattern projecting to as low as 59.35. The pattern looked like a bearish head-and-shoulders formation a week ago, but last week's 19% slide turned the immediate picture even more bearish. Now, if the futures close below the red line for two consecutive days, it will significantly shorten the odds of a further slide to at least p2=64.05, or even to 59.35.
Stocks fell hard on Tuesday when crazed traders pretended briefly to care about oil prices and the Middle East, but otherwise the broad averages gave ground only grudgingly as the week wore on. This was hardly a picture of strength, however, and so we should wait to see how sellers interact with the 7247.26 'D' correction target shown in the graph before inferring that a significant trend change has occurred. A rally to the green line (x=7548.38) in the meantime would trigger a 'mechanical' short, but I recommend the trade only if initiated with a 'camouflage' setup. The tactic is explained in detail in the Hidden Pivot course that I've made available free to subscribers.
Friday's vague crosscurrents allowed MSFT's handlers to seize the advantage with a short-squeeze reversal that caught bears unawares. The bullish pattern shown gives this con-job wide berth, since DaBoyz can be expected to pull out all the stops to recoup the hundreds of billions of dollars' worth of gaseous 'wealth effect' the stock shed as it slid 25% from a record 466 peak in early June. A key test awaits when the push hits p=383.36, the midpoint Hidden Pivot resistance. An easy and decisive move past it would imply more upside to the pattern's D target at 417.51.
