Friday, May 24, 2013

If IBM heads south over the next week, the 196.54 midpoint pivot shown could prove to be not only a good place for us to bottom-fish aggressively, but to gauge whether the bull-market high at 215.90 record in mid-March is likely to be an important one.  There is much to like about the corrective pattern, and that is why we should trust price action at 'p' to tell us something of value.

The futures were having trouble getting loft Thursday night, suggesting they might take the path of least resistance to the 1623.75 target shown.  The wide oscillations around the midpoint pivot suggest, however, that it's not likely to be much worse than that, and that bulls in any event are not going to be easily pushed around as the week draws to a close. For 'camo' traders, the micro-peak at 1657.00 that I've highlighted has the potential to be the most opportune spot on the chart for getting long.

Yesterday’s rally recouped a 200-point overnight selloff in the Dow, but because it was unpersuasive from a technical standpoint, we expect the week to end on a whimper at best. At worst, the selling could carry into next week, and if it persist so that shares fall on a Tuesday – something that has not occurred in more than four months – then we would view that as further evidence that Wednesday’s high was an important one.  Regarding “weak technicals,” notice in the chart below how buyers of DJIA index futures failed to surpass even a single important peak on the hourly chart after devoting an entire night and day to the task. From our perspective this is telling, since, according to our Hidden Pivot Method of analysis, rallies destined for greatness, or even just goodness, must exceed a new peak on the hourly chart with each new thrust.  Not this time, though, and that’s why we would classify yesterday’s rebound – all 200 points of it – as a bust. Wednesday night, index futures had gotten pounded into a deep hole after bulls got trapped celebrating Bernanke’s latest appearance on Capitol Hill. The man had said absolutely nothing of importance, as usual, and although that has rarely troubled investors in the past, this time it evidently did. The result was that U.S. markets appeared to be in avalanche mode in the wee hours, gaining momentum following the previous day’s bull-trap reversal. Although, as we have noted above, yesterday’s ascent from the depths was not impressive by itself, the ability of DaBoyz to arrest a slide that should have carried strongly into the opening was a pretty good trick. We doubt the Plunge Protection Team was involved, although it would have been a cheap trick for them to turn the