Monday, February 7, 2011

The 29.645 Hidden Pivot we've been using remains viable as a minimum upside target, and it is sufficiently clear that any breach will be telegraphing more upside over the near term. At that point, a bigger-picture target at 29.845 (given here earlier) would be in play.

After screwing the pooch all day Friday, the futures were bouncing off a marginal, and presumably gratuitous, new low at 1344.10 Sunday night. If it holds, the rally projects to as high as 1379.80 over the near term, subject to midpoint interference at 1362.00.  As of around 9:40 p.m., there appeared to be few camouflage opportunities to get long, even on the lowly three-minute chart.

The futures look bound most immediately for 12142, a Hidden Pivot shown in the chart.  The target looks not only like a high-odds bet as a minimum upside price objective, but also a good place to attempt shorting with a stop-loss as tight as 12151. If you're not reversing a long position there, a camouflage entry is recommended for the short.

A by-now familiar target at 1356.00 beckons, but more immediately we should concern ourselves with a lesser one at 1312.75, a Hidden Pivot whose ABC origins are shown in the chart. A 3-tick breach would indicate 1315.00.  However, best odds for shorting lie at 1312.75, stop 1313.50, since the 'D' target of a larger pattern (A=1249.50 on December 31) is 1312.25.

It seems we were premature when we wrote here a week ago that the Mother of All Bear Rallies had perhaps breathed its last.  Just that, with stocks and gold diverging sharply at the time, it seemed for one brief moment that something like fear, or a vestigial remnant of it, had re-emerged on Wall Street. How silly of us to think anything less than the sight of a mushroom cloud billowing over Saudi Arabia’s oilfields would rattle NYSE speculators.  And yet, here was the caliphate, ablaze with protests, the prospect of radical political change in the air. A week later, that prospect remains not only possible but likely.  Alas, how were we to know that, within the week, America’s stance toward Egypt would be, “Like, hey, we’re cool with whatever you guys want to do.”   And thus, there was this remarkable headline in the Jerusalem Post yesterday:  “[Hillary]  Clinton Tentatively Welcomes Muslim Brotherhood Involvement”.  Although we can understand why Mrs. Clinton would want to try and put a big, smiley face on the mounting geopolitical disaster that is Egypt, we would have preferred she’d said nothing at all. Instead, she continued in the Obama-esque tradition of speaking softly while carrying no stick at all: “We’re going to wait and see how this develops, but we’ve been very clear about what we expect,” the Secretary of State said while attending the Munich Security Conference. In Their Own Words You have to seriously wonder what “we” actually do “expect”. After all, the very name “Muslim Brotherhood” does not exactly conjure up images of benign leadership, religious tolerance, a free press and neighborliness.  Not that Wall Street could care about such things, nor about the implications they may hold for the uneasy truce between Arabs and Israel that arguably has been postponing Armageddon.

Aussie Bill Buckler's 'Privateer' is one of my favorite reads. The twice-monthly newsletter offers a superb global economic picture refracted through the lens of a staunch libertarian.  For a one-time free sample, the late-January edition can be accessed by clicking here. You'll be surprised to learn how the intrusions of government were directly to blame for the devastation wrought by flooding recently in Eastern Australia.