June 2009

A few more days like yesterday, and bears could be pardoned for feeling a little cocky.  By simply keeping their cool Sunday night, they left DaBoyz with precious little buying power when stocks began to trade Monday morning. The result was a 200-point decline to start the week. That's even worse than last Monday's step-step-stumble out of the gate, which primed the Dow Industrials for a 187-point decline that day. The mood on Wall Street has definitely changed, and nowhere is this more evident than in the failure of the world-class predators who work the Sunday-night shift to spook those who went home short on Friday into covering. Actually, Friday itself had been a bust, since even at the apogee of the head-fake that played out in the opening hour, buyers couldn't push the broad averages above even a single prior peak on the hourly charts.   As we like to point out, merely bullish buying can almost never create headline rallies; rather, it takes the kind of urgent buying that only shorts who have gotten caught in the ringer can provide. While it is true that legit, die-hard bulls lend moderate buoyancy to the markets at all times, it is only desperate bears on margin calls who can  punch through supply zones and create opening-hour gaps in places where sellers might otherwise have been more aggressive about profit-taking. Bottom line: Bull markets (and bear rallies such as the one we've been in since early March) owe far more to skeptics, doubters and permabears than to business-show shills who are constantly talking up the market. A Tough Week Ahead... So where do we see stocks headed this week? For starters, the E-Mini S&P looks likely to fall an additional 20 points, at least, when stocks start to trade again Tuesday morning.

A post-midnight update for the E-Mini S&P seems to have caught a telling turn -- one that hints of more weakness on Monday.  If DaBoyz can't even get a short-squeeze going on a Sunday night, stocks may be weaker than they appeared at last week's end.

RIMM's sharp decline from just above 86 looks like it could go all the way to 69.13 before the stock finds traction.

Save some ammo, since Microcrap looks like it will be a good short if it makes it up to 25.34 a Hidden Pivot.  We have a small, losing put position from way back when, but re-shorting the stock at the target looks like a promising way to recoup the loss.

A move above Friday's 420.46 high would be bullish for the near term, since that number fell within 0.15 of a Hidden Pivot rally target visible on the intraday charts.

Friday's failure to push above a small peak at 115^03 recorded on the  way down a day earlier suggests weakness over the near term, although a pop today exceeding 115^20 would turn the minor trend back to bullish.  Short 114^14.5 with a very tight stop-loss if the opportunity arises.  Correction:  Sorry for the untradable misprint, for it was a short at 115^14.5 that I'd intended.

A dip to 68.65 today, or tomorrow at the latest, should be viewed as a bottom-fishing opportunity.

Silver looks quite vulnerable, having recently created a bearish impulse leg of daily-chart degree. A fall into the high $12s is indicated for the near term, although a bounce from conventional support near 13.630 could slow or even reverse the decline.

All signs point moderately lower over the near-term, but there are too many Hidden Pivot supports to choose from to make for compelling bottom-fishing opportunities. If forced to choose the most attractive of the lot, I'd say _____. We'll make that our minimum downside objective for now, subject to negation by a rally today exceeding _____. That would be the most promising sign we've seen on the hourly chart in more than two weeks.