Tuesday, August 17, 2010

Well, at least you don't hear much talk about how this silly rally is a sign of confidence in America's economic future. More like the only game in town now that the U.S. is perceived as being the last too-big-to-fail debtor on the planet.  We shall see.  In any case, a Hidden Pivot at 134^09 looks like a potential rally-stopper, implying there's only a little more upside above yesterday's 134^01 high.  This should correspond to a bottom in yields of 3.64%, my target for TYX, a CBOE proxy for 30-Year  T-Bond rates.

The rally stalled a single tick above the 18.485 midpoint resistance we used as a bullish benchmark yesterday, leaving the immediate outlook unchanged. The futures must still close above it before we infer that they're bound for its 'D' Hidden Pivot sibling at 19.170.

The chart shown in the inset contains the price coordinates and Hidden Pivot target that worked so nicely for us yesterday, accurately predicting not only the strength that ensued, but nailing the intraday high of a $13 thrust within 40 cents.  If the pattern continues to work, look for a push toward the two targets shown, the higher of which lies at 1244.20.

Downside targets equivalent to the ones given today for the Dow Industrials lie, respectively, at 1062.00 and 1035.00. Alternatively, it would take a print today or tomorrow at 1092.00 to put the squeeze on bears, since that would create a robustly bullish impulse leg on the hourly chart.

Yesterday's gratuitous ups and downs seemed to suggest that although buying enthusiasm is non-existent at the moment, selling completely dries up when the Dow is down a hundred points.  The blue chip average had been maneuvered there Sunday night -- a change from a summer-long pattern that has given us mostly Monday-morning short-squeezes and opening gaps. We can use a Hidden Pivot target at 10088 if stocks hit an air pocket, or even 9843 if it's breached on a closing basis, but there is no compelling evidence to suggest that such a selloff is imminent. Alternatively, buyers would need to print 10426 today to create a bullish impulse leg on the hourly chart.

Gold forced a few green shoots through concrete yesterday, setting the stage for a shot this month at June’s all-time highs near $1270. That would require a further rally of just 3.5 percent from current levels, based on yesterday’s $1226.90 settlement price for the Comex December contract. We’d anticipated Monday’s $13 push through resistance with the following forecast, disseminated to Rick’s Picks subscribers Sunday night: “Last week’s bullish finishing stroke brought into focus a minor Hidden Pivot target at $1229.10 that we should use as a minimum upside objective for the near term.  That may seem like a conservative goal because it lies just $12 above Friday’s settlement price, but it would have decisively bullish implications, since the target is above heavy supply created over a two-week period in early July. The futures are almost certain to push above the supply zone this week, but the earlier in the week they do so, the more bullish the implications will be going forward.” As it happened, the bulls’ successful use of the battering ram came earlier in the week than we might have expected -- on a Monday – and this is indeed a sign that buyers are probably eager for more.  By day’s end, they had pushed the December contract past our target by 40 cents, as well as through a supply zone near $1222 that had resisted their best efforts for nearly a month. Moreover, a subsequent pullback from the 1229.50 high amounted to just $6, more than half of which had been recouped by day’s end. All of this augurs more upside over the near term to at least 1244.20, a Hidden Pivot target that appears in the same sequence as yesterday’s. Seasonal Factors In the Rick’s Picks chat room -- which has been quiet lately, as is often the case at this time