Friday, July 22, 2011

A potentially important rally target at 13143 is equivalent to the one at 13182 given here previously for the cash Dow. This is a Hidden Pivot we should look forward to shorting, since the pattern that produced it has the kind of sinuousness and symmetry that produce targets we can count on. The midpoint pivot associated with it lies at 12691, so a pullback to that number should be scrutinized closely for camouflage potential by those who want to try bottom-fishing. _______ UPDATE (July 27, 5:45 p.m. EDT): We'll put this one aside, since the rally target has faded from the horizon with the steep fall begun last Friday.

It could go either way today, although probably not very far.  The most bullish outcome would be a close above 39.710, since that is the midpoint pivot associated with a 'D' rally target at 41.205.  Alternatively, a close below 39.040 would indicate 37.710.

Hidden Pivots aside, Gold looks like it's building a ponderous top that can only be corrected in either of two ways: a dramatic swoon, or a lengthy dirge sideways. Regardless, we'll be watching for signs of impending drama on charts of lesser degree, since that's where any important mood change would first be signaled. Most immediately, a gnarly pattern on the five-minute chart (see inset) suggests that moderate weakness impends today, predicated on a Hidden Pivot support at 1580.20 if its midpoint sibling at 1586.30 gives way. Neither place looks especially appealing for bottom-fishing. Alternatively, bulls would be back in charge of the short-term picture if the futures top 1601.70 today.

It is at times like this, when I am unable, even, to imagine stocks going anywhere but (much) higher, that they usually turn.  If they do so today, although I doubt the selloff will go far enough to alter the 1388.75 target given here earlier, it may suffice nonetheless to send traders home over the weekend with just a mote of doubt.  In any case, the futures need only rally 10 points, surpassing the 1354.50 peak recorded on July 7, to set up a short-squeeze on Sunday. If they fail to do so, presumably only briefly, it will be because the bullish scenario has become too pat to work.

Where would you invest $76 billion if you had it?  That’s the size of Apple’s cash hoard at the moment, and it would appear that they have no better idea of what to do with all that money than you or I.  Apple isn’t the only company with this “problem,” if you could call having a mountain of spare cash in the bank a problem. According to Standard & Poor’s data reported by the Wall Street Journal the other day, the 500 largest U.S. companies alone currently hold cash or cash equivalents that totaled $963 billion at the end of the first quarter, up from $837 billion a year ago.  Tech companies in particular are glutted with cash they apparently cannot use. Microsoft’s got $60.9 billion sitting around; Google, $39.1 billion; and Cisco, $43.4 billion. What’s a company to do? Traditionally, high-tech companies have shunned paying dividends because shareholders expect the companies to use the cash more aggressively for growth. But the likes of Apple and Google have been growing plenty fast without dipping into their so-called war chests. Come to think of it, maybe they should start a war with China, Europe or Brazil.  Hasn’t war always been good for business? As for the excuse that they need to hold cash in case a great acquisition opportunity comes along, Apple, Google and numerous other NASDAQ world-beaters could borrow all they want for next to nothing, at any time.  And so they have been. We reported on the surge in corporate borrowing a while back, mystified as to why a corporate sector with nearly $2 trillion to spare was nevertheless borrowing hand-over-fist. The ostensible reason is that the money can be borrowed for nearly nothing – and so, why not?  Indeed.  Even so, we can’t help thinking that a wave