Friday, February 27, 2009

DXY played toes-ies yesterday with a Hidden Pivot resistance at 87.94, hitting an intraday recovery high of 87.87. This is crucial territory for the dollar, and if the rally relapses without going any higher it could signal an impending bout of weakness. The key number on the way down today, assuming the Dollar Index falls, is 87.49, a Hidden Pivot midpoint. If it is breached, weakness could continue all the way down to 87.11 over the near-term.

The pattern shown in the chart speaks with authority, especially since the visual symmetry of the AB and CD legs is somewhat obscured. The downside target is 730.75 -- a bit lower than the one given here yesterday -- and it looks like an opportune spot to try bottom-fishing, provided it is hit before the final hour of the session. Bears should dive for cover, however, if, over the next few days, ES reverses and hits 797.00 before 730.75. That would be extremely bullish, even if unfathomable. _______ UPDATE: The futures got pulped overnight, hitting a low before the opening of 729.50. Traders using a stop-loss as tight as 1.50 would have been on board for the bounce that ensued. If you still hold a position as of the opening, I'd recommend using a trailing stop that would ensure a profit of at least 5.00 points, or $250 per contract. Immediate upside potential was to 741.00, a Hidden Pivot. (Note: The bounce had reached 746.75 an hour into the session, although there was a pullback before then from 743.00 that would likely have stopped out most longs.)

Gold's dip yesterday beneath a 934.90 pivot is not a healthy sign. The actual low was 932.20, and that's enough of a breach to suggest more weakness ahead. The bearish outlook for the near term would be diminished -- though not negated -- by a rally exceeding 950.40 overnight, since that would create a bullish impulse leg on the hourly chart. However, we won't breathe a sigh of relief until the futures exceed Wednesday's 979.70 peak -- and the sooner the better.

Here’s Mike Huckabee, former governor of Arkansas, cutting to the quick yesterday on Fox: “You can’t spend your way to prosperity,” said Huckabee, “with money you don’t have.” Hard to argue with that statement. And if Americans understand this, as they very likely do, we should expect to see Fox’s ratings climb in the weeks and months ahead. Fox has been nearly alone in applying common sense to its analysis of the Democrats’ various stimulus packages, and, more recently, to the prospect of big new taxes that the Obama administration is considering. Mr. Obama is predictably eager to take the scalps of some allegedly fat cats. In his view, apparently, fat cats are those with incomes exceeding $207,000. Under his soak-the-rich proposal, it is at that threshold that the value of deductions for charitable gifts and mortgage interest would start to decline sharply. The genesis of this plan should leave no doubt that the President has stepped onto the slippery slope of the politics of envy, given that he campaigned on a promise not to raise taxes on anyone earning less than $250,000. $207,000 Buys Bupkus So what’s the big deal about sliding the benchmark for fat cats down to $207,000? Well, for many two-income households, $207,000 before taxes is barely making ends meet. In high-tax states like California and New Jersey, that equates to about $100k of disposable income. Subtract $35k for your kid’s college expenses, $30k for mortgage payments, and another $20k for a family health plan, and that leaves a whopping $15k for things like food, clothing and utility bills. If anything remains for that well-earned vacation, you’ll be lucky if it buys three days at a Holiday Inn in Phoenix. Even Americans who are hopeful that Mr. Obama’s fiscal effusions will somehow “work,” implicitly understand that