Friday, October 24, 2008

Those ugly targets way down below are still valid, but it looks like the Indoos want to vamp for a few more days, bobbing and weaving like a punch-drunk fighter, until shorts have been wrung lifeless. We'd start to take the rally seriously, however, if DJIA closes for two consecutive days above 9105. That's a Hidden Pivot midpoint from the hourly chart, and I have reproduced it alongside for your interest. _______ UPDATE: Stocks have gotten savaged overnight -- a little healthy profit-taking, as Kudlow might say -- and it looks like the Plunge Protection Team, unable to work its magic, has deferred to circuit-breaker limits to do their work. In this vehicle, the midpoint pivot associated with the uglies down at 6195 is 7995, so we'll make that latter number our minimum downside objective for today.

Yesterday's $40 bounce may have felt powerful in real time, but it did not surpass even a single prior peak on the hourly chart, and so it is suspect. It wouldn't take much today to remedy that, since a $7 thrust from current levels, to 735.30, would surpass two "priors," signaling a tone change of at least minor importance. Much more encouraging still would be a surge that gets past a peak-let at 761.50 made on the way down Wednesday. Pivot analysis suggests the futures could get to 741.20, or perhaps 748.50 if any higher.

Bulls may have pumped another 170 points of hot air into the Dow yesterday, but they failed miserably where it counts -- in Citi, a stock that I characterized here the other days as THE bellwether to watch. The stock fell 32 cents while the broad averages climbed and now looks ready to re-test an 11-year low at 12.00. The spinmeisters have managed to keep this bank out of the news for the last couple of weeks, but only someone with the acument of Kudlow could believe Citi's problems are other than fatal, or that they will not eventually precipitate out in disaster.

Silver showed some resilience for a change yesterday, but I'd need to see a 10.325 print today before I could sound the "all-clear" for the near term. The significance of that number is shown on the hourly chart reproduced alongside. A rally exceeding 10.320 would create a promising impulse leg of hourly-chat degree.

Kerkorian holds a 54% stake in MGM Mirage, which as of yesterday had fallen 90% since peaking at $106 almost exactly a year ago. It is not possible to project a low using the long-term charts because the stock has exhausted all possible downside targets. However, a charitable reading of the daily bars suggests Kerkorian, as well as his deep-pocketed backers in Kuwait, may get relief down around 7.20, a midpoint pivot that we ourselves could try to bottom-fish if and when the opportunity arises. _______ UPDATE: The futures have taken an oversold leap from 8.91, so we'll shelve the order for now.