Holiday Greetings!

The reverse head-and-shoulders pattern shown yields a target up near 7,250, implying that 2026 will begin with a bullish bang. I don’t often refer to H&S patterns because they can be found anywhere one looks for them. However, there is no denying that they describe a telling picture of supply and demand, and that bulls have the upper hand in the picture shown. From a Hidden Pivot standpoint, a mere 7026.50 is as high as I can comfortably project. That implies the head-and-shoulders effect will be stillborn, a possibility to which we should remain open-minded but without bias. If buyers blow past that number, it would shorten the odds of a follow-through to 7250 or so.

Although the trend has been bearish since the stock at peaked at 555.45 in July, bears have struggled lately to achieve the implied correction target at 444.95.  Most immediately, I expect the stock to run up to the 496.09 target of a minor pattern. If it takes out the pattern’s ‘C’ low at 482.09 (12/19) first, however, I’d consider the possibility that stocks are in a bear market more seriously. Because of its solid revenue stream and its pre-eminence in the lunatic sector (aka the Magnificent Seven), Microsoft remains my #1 bellwether for the 16-year-old bull market.

Silver has used up all big-picture targets going back to a time when a single ounce sold for less than $4, leaving us with only sketchy ‘extension’ targets along the C-D leg. They project possible ‘D’ resistance at 81.240 or perhaps 82.295, but I see little practical value in these numbers, let alone a reason to short them. It is a severe bear-squeeze that is driving quotes in the first place, and no one can say with confidence how high it will go. As a practical matter, however, you can’t go far wrong taking some profits if you’ve held silver or its equivalent from lower levels. Once you’ve done this, it will become easier to decide how much exposure you want to retain. Keep in mind that when the ballistic ascent finally breaks, the plunge will allow no easy escape, much less a good profit-taking opportunity. Even if it should come from a high of, say, $150/oz, there might be no exit possible for the first $50 of the fall.

I’ve modified my outlook and coordinates following last week’s punk performance and am now projecting more downside to the 72,756 target shown. However, the short-term picture would brighten moderately if the bounce from Friday’s low exceeds 87,903. Thereafter, a pullback to 87,236 would signal a (very) short-term buy with a possible ride to as high as 89,236. Bitcoin’s violent swings may seem fearsome, but they make it paradoxically easier to read. Nearly all of the highs and lows are tradable and turn out to have had a Hidden Pivot reason, including Friday’s bottom, which occurred a micron (i.e., 0.02 percent) from a voodoo number. _______ UPDATE (Dec 28, 9:57 p.m.): Bitcoin took off with no pullback, negating our plan to get long. Does this vehicle not even trade between Saturday at 4:00 p.m. and Sunday at 6:00 p.m.?  Who can keep track of such things? 

With its weak point ‘A’ low and its obviousness, the pattern shown should not be considered reliable for predicting a precise top. However, it can still serve us in several ways. For one, the easy move through p has shortened the odds of a rally to at least D=135.90. Also, a pullback to the green line would trigger a ‘mechanical’ buy sufficiently enticing that we should not want to miss it.  And if p2=123.76 shows stopping power, that would validate the pattern itself and its target. ______ UPDATE (Dec 20): Bulls further distanced this vehicle from the red line last week, increasing the likelihood that the 135.90 target will be achieved.  A pullback to the green line (x=99.49) in the meantime, however unlikely, should be viewed as an opportunity to get long or to augment an existing position ‘mechanically’.