Grand Supercycle Will End with Trump

February Gold has a clear path to at least 4532.70 over the near term, a midpoint Hidden Pivot resistance. Price action there cannot but provide an accurate ‘read’ on trend strength, as well as a reliable idea of the speed and likelihood of a further rally to the conventional pattern’s ‘D’ target at 5132.20. That is likely to be an important number for gold, and we shouldn’t assume the futures will surpass it. That would leave gold well shy of the fantastic heights long predicted for this bull market by some seers. _______ UPDATE (Dec 23, 9:15 p.m.):  Tonight’s easy move through the 4532.70 target advertised above has shortened the odds that the rally will continue to at least 5132.20, a potentially important Hidden Pivot target. 

Silver’s ballistic ascent has left it out-of-synch with gold, which looks months away from a potential bull-market top. At the rate Silver is climbing, it could hit a correspondingly important target at 70.810 by Christmas. Since we should always have an alternative target lined up, I would need to create an extension with the C-D leg, shifting ‘A’ to the November 21 bar whose bottom is 48.710. We’ll wait until 70.81 is hit before doing so, but be prepared for a significant (and tradable!) pullback when the target is hit. _____ UPDATE (Dec 23, 3:47 p.m.): The $2.07 pullback this morning from within 1.5 cents of the target billboarded above was brief and nasty, but it could have been worth as much as $10,000 per contract to anyone who traded against the trend. Silver’s subsequent swift reversal to the upside suggests there is no stopping it. It has since traded within four cents of the 71.83 target of a much larger pattern aired here earlier, but only time will tell how much stopping power this major Hidden Pivot shows. _______ UPDATE (Dec 23, 9:34 p.m.): Silver futures have traded 47 cents above a 71.73 target that comes from the weekly composite chart. Visually, the overshoot is inconsequential, and the target itself, although imprecise because it comes from a blended chart, is too compelling to write off as yet. I’m, done projecting higher targets for the time being, however, since there are no bullish patterns remaining in any time frame that I like.

The chart shows the entire, insufferable month that Bitcoin speculators have spent jerking off, all of it in the context of a bear market that has lopped 36% from the value of the cryptocurrency so far. The closest downside target lies at p=81,163, a midpoint Hidden Pivot support associated with a ‘D’ target at 67,685.  That last number is my worst case for the next 2-3 weeks. There is another Hidden Pivot at 73,076 mentioned here earlier that could provide support, possibly just temporary.

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’. 

T-Bonds have been treading water since Trump took office. His eagerness to stimulate growth with a gusher of fiscal spending and consumer credit has increasingly weighed on fixed-income markets. However, this has been more or less offset by the President’s ability to attract buyers of Treasury debt from outside the U.S.  The chart says this precarious balance is about to end with a fall in bond prices and a corresponding rise in long-term yields. At a minimum, TLT is headed down to the red line, a midpoint Hidden Pivot support at 78.05. If yields on the long bond were to rise commensurately, they would hit 5.33%, up from a current 4.79%.

That might not seem like much, but it would squeeze the last breath from a consumer economy already suffocating from debt fatigue and persistent inflation. The already shaky housing and auto sectors would collapse, presumably led by a stock market that is filled mostly with hot air. Nor are there any guarantees that the red line on the chart will hold. If it doesn’t, and TLT falls to the next logical plateau at 62.23, the damage this would do to the U.S. economy and to our way of life is distressing to imagine.

Any spike in rates would be short-lived, since it would quickly deflate the economy into deep recession. Since this would be fundamentally a deleveraging event, investors should not be looking for opportunities at this moment; rather, they should secure their capital in safe-haven assets such as Treasury paper, bullion and utility companies with strong dividend histories. The burgeoning healthcare sector’s ability to withstand hard times is not a given, since it thrives now only on the illusion of prosperity. _______ UPDATE (Dec 14): Friday’s vicious reversal, which featured the gap-down penetration of a ‘hidden’ midpoint support, implies that TLT’s steady progress toward the 78.05 target identified above remains on-track. More immediately, look for this phase of the bear market to achieve the 85.75 target shown. A corresponding move in long-term rates would push them to 4.95% from a current 4.86%.

Microsoft spent the last two days of the week churning a weak ‘mechanical’ buy signal. It is considered weak because the pullback to the green line where we typically do our buying followed a high along c-d that barely reached the midpoint Hidden Pivot, let alone the ‘sweet spot’ midway between p and p2.  How the stock treats the signal has consequences for the broad averages, since the company trades with a value of around $3.6 trillion. If MSFT dips below c=464.89 without punching through p, that would add to the evidence that stocks are in a bear market. _______ UPDATE (December 14): Traders and the, um, ‘investment community’ spent the week screwing the pooch, so nothing has changed in the analysis above. _______ UPDATE (Dec 20): Another week of merciless pooch-screwing left MSFT undeserving of our attention.  There is little to see or predict here, folks, so let’s move along to the next exhibit