Friday, February 6, 2009

Most of yesterday's short squeeze occurred over about 30 minutes of the six-hour day. However, what we should notice is that at the end of the day, all of the buying had failed to exceed Wednesday's high. That doesn't mean it couldn't happen today -- only that there was no real guts behind the push. If the squeeze is to turn more menacing, though, we should see the futures push above 844.50 early today and then find support there. That would allow a consolidation for a thrust, presumably, to the 882.75 target associated with the 844.50 Hidden Pivot midpoint. Night owls can try bottom-fishing at 833.50, although the rally could conceivably come from the 839.50 midpoint associated with that number, a minor-trend 'D' target. _______ UPDATE: A little more than halfway into Friday's Follies, we have have seen one of the stronger short-squeezes in recent weeks. However, since the overnight low occurred three points above our bid, we were spectators when the futures took flight.

The futures exceeded the 12.890 Hidden Pivot resistance shown in the chart by three cents, hinting of more upside to come. If so, the 13.160 target broached here earlier should be hit today, and perhaps exceeded. There is no technical logic to indicate a precise impediment above 13.160, but a test of the $14 barrier would seems likely thereupon.

Gold closed off its highs, but only after having exceeded a 922.50 peak recorded on Monday. That created a bullish impulse leg on the hourly chart, implying that yesterday's retracement was prelude to yet another leg up. If so, a Hidden Pivot at 945.90 will make a logical target (and the 952.30 target of an even larger pattern would be a foregone conclusion by then). The midpoint sibling of 945.90 lies at 918.10, and that is why the April contract spent most of yesterday's session oscillating around that number. Night-owls can try bottom-fishing at 912.10, stop 911.80. The 912.00 midpoint pivot is shown in the accompanying chart, and it is one of four possibiltities, so I am just making an educated guess. _______ UPDATE: Night owls would have been stopped out on more weakness than I'd anticipated, since the futures came down to 907.50 overnight, then later to 905.40 after a bounce. This doesn't look like weakness, but rather inertia. Regardless, the bullish targets given above remain undisturbed.

If the Dow is about to blast off, as some in the chat room evidently fear, the evidence is nowhere to be found on this chart. I'm not saying it couldn't happen, but from a Hidden Pivot perspective, any rally over the near-term that falls shy of the 8217 peak should be regarded as mere noise. That's just 2% above curent levels, so the outlook could change in a hurry, but we should ask no less of the Indoos before we infer that yet another bizarre buying binge is erupting. _______UPDATE: And blast-off the Dow did, blowing to smithereens the minor resistance at 8217. As of 1:20 p.m., the Indoos were trading around 8282, looking as though they could go as high today or Monday as 8395, a Hidden Pivot target with no special pedigree.