Because powerful rallies often look like fakes initially, we shouldn’t be too quick to diss last week’s vaporous surge, which sent the Dow wafting 700 points higher in the space of just four days. Another 100 or so points of such hot-air magic on Monday and bears could find themselves seriously on the ropes. The chart below shows why. Notice how Friday’s 258-point thrust goosed the Industrial Average past two prior peaks. That’s not very impressive by itself, because these were weak “internal” peaks created by the uptrend begun on November 21. But if you look to the left of them you’ll see a third peak that was made when the Dow was falling hard. This is a more daunting “external” peak, and if the blue chip average were to push above it Monday or Tuesday without taking a breather, it would generate a powerfully bullish impulse leg on the daily chart. The peak lies just 95 points above Friday’s high, so it wouldn’t take much more silliness to get past it. Skeptical as we might be about the staying power of such a rally, we’d resist the urge to short it until we see how it fares at 9256, a “Hidden Pivot” resistance. If that number gives way easily, though, and the Dow closes above it for two consecutive days, bears had better run for cover.
Monday, January 5, 2009
February Gold (851.90)
– Posted in: Current Touts Free Rick's PicksThe 901.00 pivot flagged here earlier can continue to serve as a bullish tripwire, and once the futures move decisively above it they should be considered bound for at least 972.20. Meanwhile, February Gold appeared on Friday to be setting up for a nice thrust, having touched bullish trigger points for two patterns, one of them minor, the other a few weeks old. _______ UPDATE: The New Year has begun -- Friday didn't count -- with a so-far gratuitous downdraft that bottomed at 843.50. However, it would take a print at 820.30 today to do any real damage to the hourly chart.
E-Mini S&P (924.25)
– Posted in: Current Touts Free Rick's PicksAssuming we're about to experience a big, silly rally to kick off the New Year, there are just two Hidden Pivots with which we need concern ourselves: 969.25,and 1008.50. The first, our minimum upside projection for the near term, is a number I first flagged here an eon ago; the second is of more recent vintage. If the lower pivot is breached decisively intraday, or on a closing basis, assume the second is likely to be reached. Traders can short either with a stop-loss as tight as 1.00 point.
March 30-Year T-Bond (135^19)
– Posted in: Current Touts Free Rick's PicksThe downtrend from mid-December's highs found no respite whatsoever at 135^25, a Hidden Pivot support that comes from the 180-minute chart. It would take quite a bit more than that to wreck the bullish look of the daily chart, but we don't need to wait for more evidence to infer that a major top is in. If you're looking for a way to get short, stick with abc retracements on the 5-minute chart, since the rallies have been pretty feeble.
DIA Diamonds Trust (89.79)
– Posted in: Current Touts Free Rick's PicksA Hidden Pivot resistance at 90.85 is the next bullish benchmark worth monitoring. The futures have been as high as 90.62, so it remains untested. However, if the pivot is breached decisively on a closing basis or intraday, we should infer that the mania could continue to as high as 98.80.
