Monday, November 2, 2009

Looks like the alleged "recovery" may bypass the clothing business, since their biggest lender is going down in flames. CIT has provided funding to 2,000 firms that supply merchandise to more than 300,000 stores. About 60% of America's apparel industry depends on CIT for financing.  Click here  for the full story.

The E-mini futures were making headway into zero resistance Sunday night, there being insufficient bad news to embolden bears after their magnificent performance on Friday. If the dearth of headlines still obtains Monday morning, DaBoyz are going to have a rough time squeezing more blood from shorts.

The corrective pattern sketched out here on Friday is not playing out as we'd wanted, since the c-d midpoint where one might have attempted bottom-fishing is too close to last week's lows to be of much value.  The short-term bias remains bullish nonetheless, since the futures' spirited recovery into day's end created an impulse leg on the hourly chart.  If they can push above a midpoint resistance today at 1048.00 without dipping below  1035.40 first, look for follow-through to at least 1053.80, and thence to 1057.70, my best-case target for today. _______ UPDATE(8:35 a.m. EST):  The futures have exceeded the highest target I was able to project for this morning using the lesser charts, implying there are larger forces at work. If so, a Hidden Pivot target at 1111.90 is logical, and the accompanying chart shows its provenance. Two benchmarks can tell us whether the rally is on track to deliver 1111.90:  the October 26 peak at 1060.80 whose breach is needed to refresh the bullish impulse on the hourly chart; and, a close above the 1069.40 midpoint associated with the 1111.90 target. Latecomers may have trouble getting aboard this morning, however, since the correction from overnight highs is not generating any down abc pattern even on the 3-minute chart.

DXY would need to surpass the tiny peak at 76.71 shown in the chart to negate the impression that last week's rally, in failing to push above an October  12 high at 76.67, was suspiciously timid.  Failing that, a close above 76.52, regardless of whether 76.71 has been exceeded intraday, would also be quite bullish and would set up a push to at least 77.21, a Hidden Pivot. ______ UPDATE (2:40 p.m.): A nothing day for the dollar, characterized by randomly boring movement that tripped none of my alarms.

Friday's surge, powerful as it was, failed by three ticks to reach the 120^17 target shown in the chart. The  move was bullishly impulsive nonetheless, suggesting that buyers are capable of  pushing the futures toward a test of some key highs near 121 that were recorded earlier this month. If the rally spears both of those highs in an unpaused push, it would likely end October's correction from near 124 and tilt the intermediate-term bias back to bullish.

Peggy Noonan hits the bullseye once again with "We're Governed by Callous Children". Click here   to access the Wall Street Journal article from which the following excerpt was  taken: "The new economic statistics put growth at a healthy 3.5% for the third quarter. We should be dancing in the streets. No one is, because no one has any faith in these numbers. Waves of money are sloshing through the system, creating a false rising tide that lifts all boats for the moment. The tide will recede. The boats aren't rising, they're bobbing, and will settle. No one believes the bad time is over. No one thinks we're entering a new age of abundance. No one thinks it will ever be the same as before 2008. Economists, statisticians, forecasters and market specialists will argue about what the new numbers mean, but no one believes them, either. Among the things swept away in 2008 was public confidence in the experts. The experts missed the crash. They'll miss the meaning of this moment, too."

Now that’s more like it. After a night’s sleep, Wall Street traders and speculators evidently decided the 3.5 percent GDP growth figure released by The Guvvamint on Thursday wasn’t such great news after all. On Friday the Dow gave back all 200 points of the previous day’s gains, plus 50 more. We’d have to concede that the news media played a positive role in making this a “teaching moment” for the poor saps who actually believe the economy is recovering. Instead of the usual cheerleading, network news anchors emphasized that virtually all of the dubious growth had come from Cash for Clunkers and a massive infusion of fiscal spending. This most surely played a role in Friday’s selloff.    Actually, the networks have been doing a better job lately at describing economic reality than the Wall Street Journal, whose coverage has grown increasingly schizophrenic. While generally downplaying negative news, the Journal has headlined any ostensibly upbeat story that contained even the faintest glimmer of light at the end of the tunnel. Thus, when Caterpillar reported a 53% fall in profits for the third quarter, the prominently displayed story emphasized not only that that number beat estimates, which obviously had been low-balled, but that the company “believes” sales have bottomed.       Such stories have received undue emphasis in the Journal, especially on the front page, even as far more important economic news has gotten tucked away on inside pages. You’d have to get your information from the newsletter world, from blogs, and from local newspapers, to understand, for one, how dire the situation is for state and local governments. Their budgets are imploding, creating a severe drag on the economy that will be felt for years. Is consumer spending supposed to overcome this?   Consumption Above All  The very question raises another issue

The futures looked to be struggling in vain to avoid a descent to 1012.75, the nearest obvious Hidden Pivot south of these levels.  The midpoint associated with that number is 1038.75, so any rally that gets near that number should be viewed as an opportunity to get short.  That would presumably be  accomplished at a retracement-rally midpoint or 'd' target, but you needn't be stingy with the stop-loss, since there'd be 26 points of potential profits in the offing.  The downside target would be invalidated by a big rally above 1064.00 (aka point 'C"), but bears should turn cautious on anything above 1048.00, since that would generate a robustly bullish impulse leg on the 10-minute chart. ______ UPDATE (9:56 a.m. EST): No spurprise so far this morning. The futures died after a feeble short squeeze to 1041.50.  If you shorted the opening, I'd suggest playing for a minimum 1024.75, the midpoint support of a pattern on the hourly chat begun from Friday's  day-session high, 1061.75.  A judicious stop-loss is needed, since DaSleazeballs are not going to let the futures sink easily, having been denied proper time on the opening to cheat, rob and plunder widows and pensioners.