Wednesday, October 21, 2009

Stocks looked pretty punk yesterday, even Goldman.  Google looks unstoppable, though, and so we should look for a possible change in leadership until investors' awareness of the banks' fatal problems fades once again beneath the din of bullish hubris.

Those of you who were nimble and daring enough to have gotten off a short just above my 553.87 target last Friday should set a hair-trigger stop-loss, since GOOG looks like it's a-comin' to git ya. The stock could hit 568.18 on the next maniacal leap.  The sibling midpoint of that Hidden Pivot is 554.44, just beneath the 554.75 high. My hunch is that if the stock can better the pivot, the peak itself won't put up much of a fight. ______ UPDATE: GOOG exploded for a quick $8 points, topping at 559.35 before detumescing on the stock market's final-hour selloff.  If you were short coming in and dodged the bullet, treat yourself to a good cigar.

The futures have gone limp enroute to a presumptive target at 1105.50.  The sibling midpoint of this Hidden Pivot resistance lies at 1091.00, which is the a approximate midpoint of the last two days' action. Let's stipulate that a close above that number be recorded before we infer that the rally is back in gear.

DXY has reversed sharply after having failed to achieve the top of the 74.97-75.04 pullback range I'd flagged. This suggests that the rally will have legs -- most immedfiately to get it to a 76.16 target that is the  closest important Hidden Pivot on the hourly chart. The midpoint lies at 75.81, so anything above it will foretell more upside. (Note: This corrects my earlier analysis, which was derived from a TradeStation chart that had failed to refresh.  I have found this to be a problem with the TradeStation platform, especially when I was trading off a chart, unaware that the last price displayed was an hour old.)

The consolidation begun from last Wednesday's 18.175 high feels like it has a bit farther to go, but if and when it gives way to a  thrust exceeding  the 18.504 peak shown in the chart, that would be the most encouraging event, technically speaking, since late June. The nearest Hidden Pivot target of consequence on the daily chart is 19.920. Its sibling midpoint is 17.840, and we can infer the target is a good bet to be reached if the futures can close for two consecutive days above the midpoint.

Take a look at the hourly chart if you're worried that yesterday's selloff was anything special. In fact, the uptrend from Monday's 1048.60 low is intact and projects to 1073.00, provided the midpoint sibling of that Hidden Pivot, 1062.80, can be surmounted. Alternatively, it would take a decline to at least 1038.90 today to turn the intraday charts mildly menacing.

Our NYC-based correspondent Chuck Cohen, a consultant who specializes in gold investments, is so bullish on mining shares right now that he can barely contain himself. We’re hard-pressed to hold back ourselves, having recently disseminated a 492 target, 12% above current levels, for the Gold Bugs Index (HUI). We also expect the next surge in Comex Gold to push the December contract up to at least $1134, implying a rally of about seven percent from current levels.  Chuck’s latest dispatch is mainly a pep talk, but he concludes with a strong recommendation for a Canadian mining stock with an OTC listing in the U.S. The name of this stock, and its profile, can also be accessed at Rick’s Picks by clicking here. Here’s Chuck: Ecclesiastes records,” There is a time for everything, and a season for everything for every activity under heaven."  Today, King Solomon's wisdom can even be stretched to the buying of  gold stocks, for there is a time for patience and waiting, and there is a time for action. This doesn't mean I am at all putting down patience, for it is critical for success in this or any bull market. If you lack it, you will tend to buy impulsively, sell out  prematurely and be out when you should be in, especially in this historic market. I was taught this lesson back in 2004 when I grew impatient and bored with the lack of action in Virginia Gold, selling it for $.50, only to see it get bought out by Goldcorp shortly after. Within two years, Virginia was at the equivalent of $16. But there is a subtle, yet major difference between patience, and, as the song goes, "Wishin' and hopin' and thinkin' and prayin, " as you wait for that theoretically perfect moment to buy. In