Friday, October 5, 2012

The futures made mincing, tortuous progress yesterday toward 1477.50, a Hidden Pivot target that has grown stale but remains viable nonetheless. Notice in the chart (inset) that Thursday's peekaboo high narrowly cleared September 25's 'external' peak at 1457.00, creating an impulse leg that portends more strength as the week draws to a close.  Crucial to next week's price action, however, is whether this vehicle can do a little better than reaching the  'D target of the small, left-most abcd pattern shown in the chart.  If it can, surpassing the 1462.25 high recorded on September 21 in the process, it would leave bulls in good position to run stocks higher come Sunday evening/Monday.

The news media lost almost as big as Barack Obama in the opening debate.  The nation saw an energized and aggressive Mitt Romney trounce a President who clearly has little to say and no record to run on.  Was this a new-and-improved Romney, a guy we had somehow never seen before? Of course not.  It was the same old Mitt, but this time, for 90 shining minutes, unfiltered by a left-tilting press that has maliciously and systematically attempted to snuff the life from his campaign since the GOP convention.  Although the news media would have us believe that Romney is weak, clueless and bereft of ideas, it turns out that the Massachusetts governor looks very presidential when his words, deeds and ideas are not being under-reported by the conspiratorial likes of the New York Times, Washington Post, L.A. Times, MSNBC et al. The fact that liberals have seized on the lack of specific details in Romney's arguments is as pathetic as it is laughable. This election is not about details, it is about whether Government should be allowed to mismanage every aspect of our lives even more egregiously than it already does.  If Obama has any more Big Ideas to present in the next debate, then bring 'em on!  In the meantime, with their candidate bruised and bloodied, expect the news media, abetted by Obama's handlers, to do the only thing they can do now that he's flunked the debate: play dirty.  Very dirty.  Once again, we say "Bring it!" since any attempt to tar a fundamentally decent man like Romney is bound to backfire.

I've devoted much of today's commentary to Apple's awful performance of late.  If the stock has in fact made an important top, the broad averages will not get very far, even if they have rallied in recent days without AAPL's leadership.  Still, when we look at the monthly chart (see inset), it leaves plenty of room to infer that the stock's weakness is merely corrective. Most recently, AAPL failed yesterday to refresh the bullish impulsiveness of the lesser charts. But the end-of-day downswing would need to breach 664.75 this morning -- or still worse, 663.22 -- to hint of more trouble next week.  UPDATE (8:30 p.m. EDT): Apple swooned to 623.55 before recovering with a $17 bounce. It is prospectively bullish for the near term that the low of the move did not quite reach our target, but buyers will need to muster a further, unpaused push to at least 660.41 to generate the bullish impulse leg on the hourly chart that we require to reverse an intermediate-term trend. This is of crucial concern, since, as AAPL goes, so goes he stock market.

Apple shares have looked like hell lately. Given the stock’s uber-bellwether status, can the broad averages be far behind? Probably not -- and that’s notwithstanding the very bullish projection we put out a while ago for the Dow Industrials.  It called for a 1400-point rally to exactly 14969, and although we no longer believe the Dow can get there by election day, the target remains theoretically viable nonetheless. As a practical matter, though, we have set all of our chart-based tripwires on “hair-trigger” lest we miss the onslaught of a 2500-point plunge.  That’s how much we think the market will fall, at a minimum, when the cliff dive so many of us have been expecting for so long finally comes. The technical logic behind our bullish Dow forecast is that the blue chip average exceeded a “midpoint Hidden Pivot resistance” at 13502 on September 13.  Moreover, it did so with considerable force and then appeared to consolidate above the pivot for nearly a week. Taken together, these signs were unmistakably bullish, and, going by-the-book, the 14969 rally target will stand until such time as the Dow breaches a key low at 12035 from a year ago. Even so, we always keep an open mind and an alert eye, since bullish technical indicators, even long-term ones, can sometimes change overnight. For the moment, however, you can infer that we are reluctant bulls: extremely bearish in our outlook for the U.S. and global economies, but compelled by our mechanical indicators to call things exactly as we see them. One Other Factor Besides the stratospheric Dow target, there is another factor that could conceivably buttress the bullish argument for a last-gasp rally. To wit, the Dow is within 600 points of record highs (see chart above). If you accept the premise that Mr