T-Bonds got crushed last week, reversing precipitously from within an inch of what would have been a bullish breakout. The gap down through p=91.82 all but guarantees the downtrend will continue to a minimum D=88.78, a Hidden Pivot support that can be bottom-fished by interpolating the target for March T-Bond futures. The reversal is likely to work precisely if at all, so you can use a stop-loss as tight as 3-4 ticks (or a 'camo' trigger) to get long. If the target is easily penetrated, that would be bad news for bonds and correspondingly bullish for interest rates. Higher rates would of course keep pressure on gold.
I've reproduced the 'mystery levels' that were blacked out earlier because the pattern has been quite useful for trading purposes. The pullback from p=100,011 was easy to short, as was getting long 'mechanically' on the 12/5 pullback to the green line (x=93,344). With any luck, the next burst will hit D=113,343 exactly, providing us with an optimal place to exit long positions and/or reverse them with the tightest stop-loss conceivable. The balky action at p means there can be no guarantee that D will be reached, so don't hesitate to attempt shorting at p2=106,677 with a reverse-pattern trigger that cuts theoretical entry risk down to size. _______ UPDATE (Dec 16, 1:52 a.m. EST): BULLSEYE! The 106,677 Hidden Pivot I’d suggested using to short this rabid badger caught the top of a $3,900 spike within one-tenth of a percentage point. It was a new record high for Bitcoin, and the precipitous reversal that followed could have been worth as much as $2,378 so far to any subscriber who was paying close attention. The ‘camouflage’ trigger I’d advised using to hold entry risk down to a practical minimum is a proprietary trick, but for the record, the short would have triggered at 106,314 less than two minutes after the top was in.
Last week's rally ended with 10-Year rates sitting just above a midpoint Hidden Pivot resistance at 4.38%. If Monday's close is above this number as well, that would portend more upside to D=4.63%. This would be bad news for all who owe dollars, a class of businesses and individuals whose size is almost beyond imagining and which includes commercial real estate developers who have been hanging on for dear life. It will also put further pressure on bullion, which has faltered in recent weeks. If there's a silver lining, higher rates will also constrain our elected representatives in Washington from spending like drunken sailors.
We'll find out soon whether Mr Slammy has bigger ambitions than the so-far two-day thrashing he has administered to gold futures. The small reverse pattern shown yields a target at 2643.00 that is probably the best bulls can hope for. You can bottom-fish there with a 'camouflage' trigger created from five-minute-or-less bars, but if this 'hidden' support is easily exceeded, brace for more downside to at least 2628.10. That's the midpoint Hidden Pivot support of a big pattern (A=2826.30 on 10/3) associated with a D target at 2497.40, a worst-case target for 2024. ______ UPDATE (Dec 17, 12:52 p.m.): The futures have turned higher from within an inch of the 2643.00 minimum downside target given above. A relapse would encounter 'voodoo' support near 2632.70 that can be bottom-fished with a small-pattern (aka 'camouflage') trigger. Otherwise, the so-far modest bounce will need to touch 2683.50 to suggest a recovery and become interesting.
The futures bottomed Friday at a key support, the 30.728 midpoint Hidden Pivot of a pattern that projects to as low as D=28.18. The pattern is gnarly enough to offer some potential trading opportunities, including bottom-fishing at p, p= p2=29.456 or even D. Also, a rally from the sweet spot between p and p2 would set up an enticing 'mechanical' short from x=31.999, stop 33.275. As always, a decisive penetration of the midpoint support (p=30.728) would portend more slippage to at least p2, or possibly D.
Expect this dive to reach a minimum 45.95, the midpoint Hidden Pivot support of a pattern projecting to as low as 40.93. If there is no respite from sellers at 45.95, the next stop would be 45.16, the 'd' target of a reverse pattern similar to the one proffered in March Gold. The decisive breach of any clear Hidden Pivot will always imply the next is likely to be achieved, but more bearish still is a two-day close beneath a Hidden Pivot.
The Dollar Index is stealing up on a key Hidden Pivot resistance at 107.36 that is associated with a D target at 109.30. The pattern is clear and compelling, so we could be confident its target will be reached if buyers push past p with ease. That is what I expect, and it would have negative implications for gold, as mentioned in my update for the February Comex contract. Shorts at p and D can be attempted nonetheless, using any vehicle of your choosing that corresponds directly or inversely with the dollar.
I'll trash bitcoin in a moment -- my new hobby -- but first a yellow alert for everyone who thinks the stock market's inevitable collapse is most likely to happen shortly after the first of the year. Although that seems quite plausible, fulfilling popular expectations is not how Mr Market usually works. Think how many lives he could wreck if the collapse were to begin any day now, at the height of Santa season. We should be especially cautious because premium levels for put options on the S&Ps have fallen to near-record lows. Although that does not tell us exactly when the crash is likely to begin, it does make one thing all but certain: The stock market's initial plunge will be so breathtakingly swift and steep that put prices will soar in mere hours to stratospheric levels where no one will want to buy them. Count on it. Concerning Bitcoin, I couldn't resist the temptation to weigh in at WSJ.com after they ran an article last week that attributed Bitcoin's extremely high price to 'scarcity'. The headline drew the usual crowd of youths who seemed to agree. Reaching deep into market history, one of them helpfully pointed out that Bitcoin has outperformed all other investible assets over the last decade. Who knew? Whatever he believes, it is indisputable that Bitcoin -- unlike tulip bulbs, which can produce beautiful flowers -- has an intrinsic value of zero. Granted, there's nominal value of perhaps $2-$3 per token because the blockchain within which cryptos are created can be used to effect and record financial transactions securely. But $100,000? That's absurd, considering Bitcoin cannot accomplish those tasks nearly as efficiently as credit cards or cash. Violent Money? And what kind of crazy 'money' explodes in value from five cents to a hundred thousand
With TLT poised for a breakout, I've lowered my target for rates on the 10-Year Note to 4.094%. The pattern is pretty nutty but still good enough for government work. That means D can be bought with a tight stop, using whatever vehicle you favor for trading the swings in long-term rates. Also, a decisive penetration of the Hidden Pivot support would imply rates are likely to fall even further. Could this indicate a recession is imminent? We'll worry about that after we've seen interest rate bears -- i.e., those who expect yields to fall -- interact with the support.
Any short attempted from the 6109.00 rally target we were using would have made money, even if tightly stopped, since the futures fell 20 points after topping on Friday at 6111.00. I did not establish a tracking position, however, because no one mentioned having done the trade. Now, if buyers close this gas-bag above 6111.00 for two consecutive days, expect more upside to the 6219.00 target shown in the thumbnail chart. Trade with a bullish bias until such time as the target is reached, then use a 49.50-point trigger interval to tell you when to get short. A 'camouflage' trigger will be necessary, since conventional-entry risk would be $10,000 on four contracts.
