Tuesday, July 5, 2011

A Hidden Pivot at 1382.25 flagged here earlier is equivalent to the one at 13182 that I've proffered for the Dow.  Like the Dow, the futures have easily surmounted, and now closed above, a key midpoint resistance, 1317.25. However, within the next 2-3 days, buyers will need to handle two 'external' peaks that lie respectively at 1342.50 (May  31) and 1352.75 (May 11) to ensure that the thrust to 1382.25 is swift and easy.

Share valuations ahead of Dot-Com Bust II have been crazy-stupid, demonstrating yet again, to borrow Mencken’s line, that no firm in the IPO business will ever go broke underestimating the intelligence of the American investor.  Witness the huge markups paid last May for IPO shares of the still profit-less LinkedIn, a company that purports to network business contacts between individual users. Instead, and as far as we can surmise, LinkedIn has grown its subscriber base using viral techniques, mailing out link “requests” to people like your editor, who thus far has failed to throttle such e-mails. The result is that, although LinkedIn has collected a zillion names, e-mail addresses and personal data from registrants, the registrants themselves are only tenuously tied, a vast nervous system unconnected to a brain.  Of course, this didn’t stop investors from trampling each other to pay ridiculous prices for LNKD stock when the company went public last May.  Shares expected to fetch around $35 soared to $122.70 on opening day and currently trade for around $94. This is notwithstanding the fact that LinkedIn, like Facebook, has yet to develop a revenue model even remotely capable of vindicating the outlandish multiples speculators seem willing to pay for an equity stake. Meanwhile, even as the thimble-riggers and confidence men at Goldman and other Wall Street firms salivate over the prospect of retailing insider shares of Facebook to the rubes at superheated premiums, Google is threatening to eat Facebook’s lunch and perhaps make Mark Zuckerberg’s Great New Idea the next Internet has-been. How scared is Facebook?  Some bloggers have accused the company of hiring moles to churn out hostile comments on Google+, a new social networking service that has generated such hot demand that Google had to suspend invitations to try the beta version.  And the reviewer at

Not only did Friday's short-squeeze rally close above an important midpoint resistance at 12523 identified here earlier, it also exceeded a prior peak from June 1, refreshing the bullish impulse on the daily chart. Taken together, these accomplishments will shorten the odds of an eventual move to a 13182 target previously noted.  Also, because three more 'external' peaks lie within 200 points of here, any strong rally as the new week gets under way could make the move to 13182 all but unstoppable.

As of around 3:40 p.m EDT Monday, holiday trading has generated a bullish impulse leg on August Gold's hourly chart. However, as I've noted in today's tout, it will take a quite a bit more than that for bulls to gain traction against the corrective downtrend from early May's highs.

Friday's slide to 1478.30 was telegraphed by the failure of a key support I'd noted at 1496.90.  The low I predicted lay at 1479.10, so the forecast missed by just 80 cents. Does the overshoot portend still more weakness over the near term?  Not necessarily, since it was so small. However, neither is it a bullish sign, and the futures would need in any event to thrust above 1526.50 within the next couple of days for bulls to regain the upper hand.  Otherwise, minimum downside to at least 1446.90 looms for the near-term, with a presumably unsuccessful test of May's lows in the 1470s in the interim.