Friday, June 18, 2010

The Dollar Index head-faked yesterday morning before plummeting to within 0.11 points of the 85.41 Hidden Pivot we were using as a minimum downside objective.  Any lower would portend 85.01, or perhaps 84.91. The 85.41 pivot itself remains valid as well and could evince a bounce, since it remains unbroken as of this writing. ______ UPDATE:  The Dollar dove anew today but still  couldn't break the 85.41 hidden support.  The low was 85.45 before DXY rallied to a so-far recovery high of 85.77. My hunch is that the support will give way on Monday. When it does, look for a new leg down to exactly 85.01.

Hidden Pivot forces appear to be properly aligned for a promised push to 1272.60.  For starters, a minor ABC rally that took the futures somewhat above the  magically resistant 1250.30 slightly overshot its target, 1258.10. Adding to the bullish picture is the fact that the retracement so far is shallow, having created no bearish impulse legs so far even on the 5-minute chart. _______ UPDATE (2:48 a.m. EDT):  The correction went "impulsive" late Thursday night with an abc pattern that projected as low as 1240.20.  If the still-dominant uptrend is eventually to prevail, however, the pullback should go no further than 1243.50, the c-d midpoint. Worst case low if bears should hijack the London fix would be 1237.10, a Hidden Pivot that could be bottom-fished with a stop-loss as tight as three ticks. _______ FURTHER UPDATE (11:04 a.. EDT):  Sweet! The futures bottomed overnight at 1243.10 as they should have, just a few ticks below the midpoint support.  A stop-loss as tight as 50 cents would have worked, so I hope you were able to climb aboard. The rally that followed just before dawn was swift and powerful.

Yesterday's thrust refreshed the bull trend on the intraday charts, exceeding the external, "look-to-the-left"  peak shown with a robust new impulse leg. The small pattern at the right-hand edge of the chart can be used for targeting and leveraging the next push, but keep in mind that the larger pattern begun from the May 6 low implies critical resistance at 19.200. _______ UPDATE (2:32 p.m. EDT):  The July contrtact has been as high as 19.275 today, having effortlessly impaled the 19.200 resistance in a single bound.  This exuberant price action will shorten the odds of a further push to at least 20.45, the next important hidden resistance, over the next 4-7 days.  

A Hidden Pivot target at 1127.25 is equivalent to the one at 10572 given in today's DJIA tout.  The midpoint resistance at 1113.75 has already been exceeded, although not on a closing basis, so we won't assume yet that the rally is a done deal. Night owls can try getting long in the conventional way, at point 'X', if the pattern shown in the chart plays out in normal fashion, more or less as shown.

I mentioned a 10572 rally target for the Dow in today's commentary; the chart show its provenance.  The midpoint resistance lies at 10445, just a few points above yesterday's high, so we might expect quite a bunny-hop if it is taken out.  Will it be?  The suspense is killing me.

Like frightened little rabbits, shorts panicked once again late in the session, goosing the Dow 100 points in the final 30 minutes (see chart below). In the end, predictably, they wound up doing exactly what they had sought to avoid.  Don’t these guys understand that if they all hung together and chilled for a rare change, the broad averages would come cascading down like a tropical downpour, ending a selling drought that has persisted for more than a year. You’d think that the May 6 “clerical accident” might have emboldened at least some of the “Don’t Pass” bettors. Evidently not. The way things stood Thursday afternoon, the rabbits had only set themselves up for more punishment later in the day, since nothing short of Armageddon could cause DaBoyz to relinquish the choke-hold they had around the rabbits’ necks at the closing bell. A silly image, we know – a mustachioed, Simon Legree character with a bunny locked in his armpit, its little pink eyes bulging from their sockets. But in truth, those who have been betting against the market lately don’t deserve to be called bears. They don’t roar, they don’t rear up ferociously on their hinds when challenged -- they just nibble on lettuce and extrude little pellets when nervous. Fresh Pellets Friday morning could produce a fresh pile of pellets if there’s any good news on the tape to help DaBoyz maintain their short-squeeze choke-hold. The Dow closed at 10434, but according to our proprietary Hidden Pivot forecasting system, there’s 138 points of open space just above if bulls are in command at the bell.  That implies a run-up to at least 10582, which is the next place the rabbits could attempt to impede the rally without getting damaged too badly, at least not right away. But if