Still Fishin’…

Although buyers did not quite impale the midpoint Hidden Pivot at 79.37 on first contact, they broke free of its gravitational pull with sufficient force on Friday to all but ensure more upside to at least p2=85.53, or more likely to the d target at 91.69. Traders, and even the hacks who invent ‘the news,’ have learned by now to tune out any suggestion emanating from on high that crude oil markets will return to normal any time soon. The August contract will offer an enticing short at the target, but it should be traded from the long side until the target is reached. Does that imply some breakthrough in the war is at hand? We may have an answer before August.

The bull is taking its time consolidating for an upthrust to the 4.82% target shown in the chart. The process could include a dip to x=4.48% that would trigger a theoretical buy signal. Although we do not actually trade this vehicle, such a signal could be easily leveraged using TLT or T-Bond futures. But it is more the implications that interest us, since higher rates will tend to make nearly every economic challenge each of us faces more difficult to cope with. Gold will remain under pressure, and many tens of trillions of dollars of debt reckoned in dollars will grow more costly for borrowers to service. Imports would be cheaper, but the relief that would bring to beleaguered consumers would be negligible compared to so many other factors that have been making life increasingly expensive.  Our new Fed chairman thinks inflation might be moderating, but he knows a good deal less about this than a housewife tending to the needs of a family with children.

The futures ended the week on a tempting buy signal that was best ignored, since it is impossible to predict on a Friday what fresh hell Sunday’s news might bring. The headlines were decidedly bearish in producing Thursday’s overnight cascade: crude prices were up nearly 4%, Xi Jinping was boasting of China’s supposed answer to Anthropic, and a SpaceX rocket ship failed to get airborne. Stocks did not so much shrug off this news as leverage it to spring a weak bear trap.  The short-covering Whoopee Cushion that resulted culminated in the buying temptation noted above.  Now, the futures will either leap to the 7573.50 target, or at least to p=7523.25; or more likely in my view, stop out the trade and continue down to late-June’s lows near 7350. Stay tuned to the chat room for ringside commentary as events reveal the nature and purpose of Mister Market’s deceptions.

Last week began with a doomed two-day rally that left our 82.46 target unchanged. It has now been five months since shorting an upthrust proved to be a bad bet, and that will probably hold true at least until GDXJ finds a bottom at or near our target. It is a Hidden Pivot support too compelling to simply give way. It is also commensurate with a 3630 target I’ve provided for August Gold where a significant bullish reversal seems most likely to occur. Alternatively, we’ll set the bar at 120.06, just above an external peak recorded on May 29, to alert us to the possible ending of the bloodletting. _______ UPDATE (July 25): Unlike gold and silver futures, GDXJ rallied last week to create an impulse leg on the hourly chart. I suspect this is a false alarm, but we’ll give it the benefit of the doubt for now. The rally would gain credibility if and when it vaults the midpoint resistance at 101.55 and then goes on to trash D=107.22. We’ll monitor these obstacles closely, since a move through them has the potential to lead a similarly bullish move in gold.