September 2009

Index futures look like they are starting to roll down on the daily charts, with yesterday's respective highs forming some potential secondary tops.  So far, however, the stochastic indicators accompanying the tops  are regular rather than diverging, hinting that the dominant trend -- i.e., up -- will continue. We'll keep a very close eye on things nonetheless, since the rally from March's lows is brushing up against the top of a channel that goes back to 2007.

The futures appear to be struggling too hard to get past a relatively modest resistance at 16.410 made last Friday on the way down.  Such a thrust would create a bullish impulse leg on the lesser charts, but if it doesn't happen, look for further consolidation over the near term to as a low as 15.680.

We can use a midpoint support at 96.97 this morning to attempt bottom-fishing in this vehicle. Bid 1.55 for two October 97 calls (DAVJS), but stop yourself out if the stock trades under 96.89.  DIA would be signaling more weakness over the near term to as low as 95.58 if the stop is hit. _______ UPDATE (10:20 a.m.):  DIA was trading below the stop when the calls hit 1.55, but if you bought them anyway your loss on exit moments later would have been no worse than $12 per contract.  The 95.58 target is still valid.

At yesterday's peak, the futures were just a few ticks shy of a potentially important Hidden Pivot target at _____.  If it fails to contain the surge, however, look for another topping possibility at _____, a Hidden Pivot that you can short with a tight stop-loss. Switch to a 5-tick trailing stop on a pullback of  10 ticks, and use 121^24 as a minimum downside target.  A top of at least short-term significance is loosely corroborated by a _____ target for TBT that I disseminated in the chat room yesterday afternoon.

Considering that Gold has simply been loitering near $1000, chat-room interest in the stuff seems somewhat fevered.  Relative to my forecast for the dollar and U.S. Treasurys (see today's touts), I see bullion remaining under pressure for perhaps another week or two before it advances on a long-standing Hidden Pivot target at _____.  I'll be ready to reconsider if the December futures start pumping out some bullish impulse legs on the hourly chart (or even a mere 1001.70 on the 5-minute bars) , but until that time, keep the 970.80 downside target in mind as a worst-case number for the near term. _______ UPDATE (1:21 p.m.): We lucked out during this morning's weekly tutorial session, when a "camouflage" entry opportunity at 1004.50 popped up unexpectedly. It allowed us to get long almost risklessly.  The 'D' target of the minor pattern used to make entry was 1005.70, but longs were advised to hold onto at least a small portion of their original positions for potentially bigger thrills ahead. [Note: Recordings of more than 30 Wednesday sessions are available to all seminar grads. The seminar fee includes three months' access to the recordings, but if you've used that up, please contact mikej165@gmail.com to renew.)

The dollar's recent low missed a Hidden Pivot target that I'd drum-rolled in my commentary by just 26 cents. I offered no target for the current DXY rally, but keep in mind that once it ends, I expect DXY to plummet all the way down to _____.  Moreover, DXY's rally may just be getting started because the initial reversal off the 75.83 low (versus a 75.47 target) has had no problem generating bullish impulse legs on the hourly chart.  If true, this would mean gold will remain under pressure for a while -- perhaps another 7-10 days. The good news is that it is already under pressure but still able to home in on $1000 nonetheless. If $1000 is cruising altitude, as would appear to be the case, that's good news for long-term bulls.

When B of A spokesman Lawrence DiRita turned up on the evening news not long ago to assure listeners that his employer was willing to work on a case-by-case basis with troubled customers, we decided to call his bluff.  Would DiRita, formerly a high-ranking official in the Defense Department, go to bat for the borrower whose “teaser” loan from the bank was about to shoot up overnight from 0% to 12.24%?  Everyone with a credit card has been offered such a loan at one time or another, and it was once possible to initiate one at rates varying from 0% to 4%, with no additional fee for the balance transfer. Not any longer, though.  Anyone unfortunate enough to have gotten caught with a large balance when the music stopped is now paying rates of 12 percent or more to service it. And while there are still promotional rates available as low as 5.99%, a balance transfer fee of 3% to 4% effectively kicks that up above 13% annualized, since the loans are typically for 6-8 months. If you’re in this situation and hoping the bank will work with you, don’t hold your breath. We were told that the lowest non-promotional rate available from B of A at the moment is 12.24%. The man we spoke with, who reports directly to B of A’s top brass, implied that only credit card customers with spotless records could borrow at that rate. We shudder to imagine the rate that would apply to those with spotty credit histories.  Funds Cost Nothing Now, we don't doubt B of A’s sincerity when they say that 12.24% is a pretty good rate for unsecured borrowing. The man we spoke with said that’s what the bank must charge in order to make a profit.  We did point out to him that

Frank Shostak  is one of our favorite economists because he talks plain-sense.  In a recent essay he wrote for Mises Institute, he explained why the government's huge stimulus efforts have failed to stimulate much of anything.  To make matters worse, says Shostak, if the feds continue down this path, seeding the banks with yet more money from nowhere, it will effectively destroy the real-savings base that is absolutely crucial to any recovery. Click here  to read his essay.

Neither bulls nor bears seems particularly inspired at the moment, although the edge still goes to the latter and to the downside target given here previously:  _____.   A descent to that Hidden pivot would become an odds-on bet if its midpoint sibling at 985.60 is exceeded on a closing basis.  Alternatively, the futures would need to touch _____ on a rally Monday night or Tuesday to turn the minor trend bullish. A more important midpoint resistance would come into play thereupon, and with its breach a potential run-up to ______.