Friday, April 8, 2011

The 1466.30 pivot flagged here yesterday nailed the intraday high within two ticks.  Now, although we remain focused on a 1473.10 Hidden Pivot that has served as a minimum upside objective for a while, we are by no means obsessed with it.  Since a thrust to that number is not likely to be the last to achieve a new record high, let's move to the front burner a 1502.70 target from a pattern of larger degree. Expect it to be reached relatively quickly -- i.e., within 4-6 days -- if bulls make short work of 1473.10.  Two other, very obscure Hidden Pivots that could cause a stall lie respectively at 1469.70 and 1485.60.  It would be a bullish sign if these resistance points don't put up a discernible fight.

We bought four May 54 puts a while back @ 0.46. They are obviously a longshot bet -- nearly all owned (as opposed to shorted) puts have been losers since they were first listed in 1973 -- but from this point forward in our trading lives, we should always own a few puts just in case. We will also want to take partial profits whenever a put moves our way.  Accordingly, I'll recommend selling two May 54 puts to close if the Cubes closely approach (i.e., within 10-12 cents) the 55.65 midpoint pivot of the pattern shown.

Camouflage-equipped scalpers can have this vehicle all to themselves today, since I'm not going to take the bait and try to predict that "something" is likely to happen.  Better you should flip a coin.  After nearly two weeks of aimless shuffling beneath February's "neckline," the futures have made a hash of the inverted head-and-shoulders that some of you may have been looking at. For what it's worth, it doesn't look like distribution to me.

If anyone needed convincing that the stock market has become invincible, yesterday was the day.  Japan was shaken badly by another big earthquake, crude oil quotes were bounding above $110, Portugal was threatening to topple Europe's financial house of cards, and the U.S. government was hours from shutting down. How did Wall Street take the news?  Like a pro, actually. The stage-managed panic was over almost before it began. Stocks dove on word from Japan -- but not in a way that showed even the slightest sign of fear.  Rather, the market swooned in the fashion to which we've grown accustomed, violently shaking down widows, pensioners and a few other nervous nellies, but few "players."  A precipitous, 100-point loss in the Dow was recouped in minutes, and when the dust had settled it were as though the day's headlines were no more alarming than the kind of routine stuff that fills the "Daily Roundup" box on an inside page.  Now, I'm no Irving Fisher, and I don't mean to suggest that stocks have reached a permanently high plateau.  Far more likely is that they will give back in a week everything gained since 2009.  In the meantime, however, it is clear that it will take far more to bring this market down than the latest evidence that the world is indeed going to hell in a handbasket.

[Discussion prompted by the commentary below continues to evolve and may yet enlighten us sufficiently to produce some useful conclusions about the banking system's looming endgame.  Hyperinflation, or deflation?  At this point, I'll concede that it could be either that brings us to economic ruin.  But I will nonetheless argue in a forthcoming essay that the dollar could collapse without triggering a hyperinflation.  Under this scenario, it would not be a question of paying $1,000 for a barrel of oil, or $100 for a carton of eggs; rather, those in a position to supply such basic necessities would simply stop taking dollars.  This clearly implies that we would move rapidly to barter, abandoning a currency system that might conceivably have become useless overnight. (The spectacularly bullish implications this holds for gold are impossible to miss).  To drive the discussion toward a conclusion, I would urge readers to immerse themselves in this idea. You can skip the commentary itself if you'd like, since whatever insights it might provide at this point pale in comparison to the gems that have turned up in the forum. Simply click on the "Comments" link above to enter the forum. When you jump into the fray, argue not from theory but from the logic of how you imagine your life would proceed in the wake of a collapse of the banking system and the dollar.  You might pretend that the catalyst for the collapse was a Treasury auction at which the Fed was the only buyer amidst wholesale dumping of U.S. paper by...everyone.  To heighten your acuity and stimulate the imagination, make this catastrophe a personal one. Pretend, for example, that it is the first of the month, that your employer and your $100,000 job are unexpectedly in dire jeopardy, and that you are about to send your mortgage lender a check for $2000 drawn on an account with $10,000 in it. The evening news is filled with reports that the Federal Reserve will do everything