November 2008

I'm raising the 89.22 rally target to 90.38, since DXY is head-butting an 88.25 midpoint associated with the higher number. There is just one Hidden Pivot obstacle between here and there -- 89.22 -- and if it is easily breached, that would hint that the finish stroke to 90.38 is coming without delay.

If the Dow Industrials fail to hold above 7995, we’re projecting a whopping 1800 points more downside over the near term, to at least 6195. The target comes from a forecast that went out to subscribers on October 22, when the blue chip average was trading above 8500. At the time, we projected downside to at least 7995, a Hidden Pivot “midpoint” associated with the lower target at 6195. According to the Hidden Pivot Method, a decisive breach of the midpoint implies that the target itself will be reached, as it was yesterday. Moreover, if support comes precisely at the midpoint, its subsequent breach would imply that the lower target is likely to be reached with equal precision. (Click on chart to enlarge) Under the circumstances, and using a very tight stop-loss, we would be aggressive buyers of shares if the Dow were to fall to 6195. That may seem like a promising opportunity for someone currently holding no position, but it would be scant consolation to those who plan on sticking with their existing portfolios come hell or high water. (Of course, the forecast could go awry, and the Dow could rally strongly without getting anywhere near the target. But even if that were to occur we would not necessarily be caught unawares, since subtle signs of a turn would be evident on the intraday charts before a significant rally could develop.) *** Free Hidden Pivot Demo If you’d like to see Hidden Pivot analysis in real time, during market hours, there will be a free 45-minute demonstration online today at 1 p.m. MST. Seats are limited, so if you want to attend this demonstration you will need to register soon. You can do so by clicking here and following the instructions.

The two Hidden Pivot targets given here yesterday -- 772.25 and 766.50 -- still look like done deals, even if consummated sooner than I had expected. As noted here earlier, either number can be bottom-fished with a stop-loss as tight as 1.00-point. If you attempt it at the higher pivot, I'd suggest taking a partial profit on a bounce of as little as 6-8 points, since the lower target will still be in play and could coax the futures into a relapse.

Our 7649 target corresponds to the 772.25 target given for the E-Mini S&P. However, there is none equivalent to ES 766.50, since no true A-B impulse leg was created.(See chart: the would-be 'B' did not exceed the 10/10 low). If the futures were to close for two consecutive days below 7649, though, they'd become an odds-on bet to continue down to at least 7224.

I've set some daunting benchmarks so that we don't get fooled by pernicious noise like yesterday's. For starters, a print at 782.30 is still needed to signal a resurgent bull. There are no compelling targets immediately below, although the decisive breach of a midpoint support at 729.40 could spell more weakness over the near term to as low as 694.10.

Silver's intraday charts are as uninteresting as gold's right now, although a midpoint support at 8.970 needs to be mentioned, since its breach could portend further weakness over the near term to as low as 8.085. Alternatively, a print today at 9.545 would be encouraging news on the 5-minute chart, but the leap it would take to create some positive energy on the hourly is beyond imagining, at least for the moment.

We hold four Jan 7.50 calls purchased yesterday for 1.75, but I'll raise the cost basis if I hear from any subscribers who paid more. The stock's collapse yesterday was stunning, since it steam-rollered two Hidden Pivot supports and just kept on going. Both of the pivots worked, although not for long. The first engendered the biggest bounce of the day -- a 58 cent-er precisely from the 7.75 pivot -- but it gave way about 75 minutes later. The second, at 7.09, was breached by 7 cents initially, creating a low at 7.02 that held for about 80 minutes. Now, there is immediate jeopardy to 6.10; or to 5.86 if any lower; or to 3.58 if trumpets sound from on high. Accordingly, I'll recommend stopping yourself out of the calls if Citi exceeds 5.92 to the downside. I am suggesting this mainly because the firm's share price feels like it is skirting the vortex of bankruptcy. Incidentally, if it goes, as I mentioned here earlier, so, probably, will UBS. _______ UPDATE: With Citi looking bound for oblivion, we exited the calls for 1.22. The trading loss per contract was $53.

What’s the one factor most likely to boost the performance of students at grade schools and highs schools around the world? Is it small class size? Lavish spending per student? A supportive home environment? All of those things undoubtedly help raise students’ scores on standardized tests, but the correct answer may surprise you: The students who perform best are those who were taught by teachers who themselves were top students. And this could prove to be one of the great benefits that comes with economic hard times, since the pool of potential teachers even now is beginning to swell with overachievers whose intended job path will have been blocked at least temporarily by the severe downturn in the economy. Not that every prospective MBA is likely to head into teaching. Some who were expecting to become investment bankers may stray no further from the MBA track than a job in corporate finance. But given the fact that college business schools are still churning out many thousands of graduates for whom there will be precious few business jobs on Main Street, let alone on Wall Street, it would seem all but certain that at least some of them will wind up in teaching. The same is likely to hold true for government employees, who are about to experience a wave of layoffs more severe than any since the Great Depression. Schools are likely to feel the cutbacks as well, but most districts can be expected to do their utmost to preserve the status quo, such as it is. Teachers’ salaries are unlikely to rise, but even so, the traditional perks and benefits that come with the job �' including excellent health benefits, extravagant stretches of time off, and work weeks much shorter than in the business world �' are bound to

The question of up or down over the near term looks like a coin-toss, although a Hidden Pivot support at 718.60 still appears promising for bottom-fishing if sellers get the upper hand. Please note, however, that a close beneath that number would hint of more downside to as low as 683.30. Alternatively, the futures would need to hit 782.30 to turn the hourly chart decisively bullish.