Thursday, March 5, 2009

A print at 930.10 today would begin to turn things around, but if the futures remain weak instead, the target at ###.## given here earlier will remain a lodestone. You can bottom-fish there, but not aggressively, since, as mentioned ...

If the futures take a decisive turn higher now without having achieved the ###.## downside target I've drum-rolled, it could imply the onset of a bull cycle lasting for 3-4 weeks or even longer. The word "decisive" in this context can be empirically determined, and we shall attempt to do so by stipulating the following: an unbroken thrust surpassing two prior peaks on the 180-minute chart will fill the bill. For perspective, and most immediately, that would take a pop to

Has the stock market put in an important low? We doubt it, and we’ll tell you why in a minute. But we should acknowledge that some technicians we know are apparently impressed by the saucer bottom traced out by the Dow Industrials and other key indexes over the last three days. The pattern is shown in the chart below, and if one were a reader of tea leaves looking desperately for positive signs, this classic formation might do in a pinch. Even considered from a Hidden Pivot perspective – that’s the technical method we use – prospects don’t look all bad. Notice how yesterday’s high exceeded the tiny peak made on the way down Tuesday before buyers got cold feet. Subtle as the overshoot was, it’s an encouraging sign. This is notwithstanding the fact that the selloff that followed was nasty, wiping out 40% of yesterday’s 250-point gain in the final 25 minutes of the session. To understand why stocks behave the way they do, we prefer to ascribe human traits to their price movement. And why not, since the ups and downs of stocks and commodities are driven by alternating waves of very human fear and greed? In fact, no more perfect analog could be found for mob behavior than a stock chart. In this instance we see a rally that looked back on its own progress, saw the little peak from Tuesday sticking up, and conquered it before taking a rest. In our anthropomorphic way of looking at things, we would characterize yesterday’s rally as a real scrapper, ready to take on any challenge it encounters, big or small. The 6883 Factor So why are we still bearish? The answer comes down to a number: 6883, a Hidden Pivot support. Some of you may recall that we billboarded

We should like to see each new rally leg exceed at least two prior peaks, since, from a Hidden Pivot perspective, that is what refreshes and revitalizes the bullish trend. However, the Gold Bugs Index failed to do this in mid-February and is paying the price. Notice how the...