Still Fishin’…

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.

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.

The textbook-perfect pattern shown promises to deliver at least a temporary low at 4.35%, the D target shown. That would represent a 7% decrease in yields on the Ten-Year Note since they peaked at 4.69% on June 19. A weak bounce would open the door to even lower rates, with mid-April’s 4.22% serving as a benchmark and potential support.

Yields on the Ten-Year Note have fallen sharply since getting within pitching wedge distance of the 4.75% target shown. It’s too early to say with confidence whether this is the beginning of a significant downtrend or just a correction that will eventually give way to a new upward surge. My strong gut feeling is the latter, but we may soon get to test that prediction if TNX continues down to the green line (x=4.58%). That would trigger a ‘mechanical’ buy signal with subsequent potential to reach p=44.90 or higher, an event that cannot but give us a definitive picture of trend strength.