Tuesday, May 28, 2013

We're into day five of a tedious slog sideways, and it deserves only a small benefit of the doubt as a possible consolidation because of the failure of last Wednesday's spike high to get past the small external peak at 1416.50 (see inset).  That said, if the ABC rally pattern should get second wind, we could expect it to hit a minimum 1430.10 over the next 2-3 days.

The daily chart is starting to look heavy (see inset), but the selling so far has not come even remotely close to generating a bearish impulse leg.  The hourly chart is another matter, even if the flux of bullish and bearish legs recorded over the last several days looks to be no worse than a skirmish. The  duel would tip in bulls' favor on a rally exceeding Sunday night's so-far high of 1657.75 high by just just 1.50 points.  Night owls looking for an easy way to get long should take note of the 'external' peak at 1659.00 (5/22 at 7 p.m.) for this purpose. _______ UPDATE (11:42 a.m. EDT): The first impulsive push above 1659.00 did in fact generate a very tradable pattern: A=1654.50 (5/27 at 11:00 p.m.); x=1663.00.  Since D=1669.75 has been exceeded by a few points, we should infer that the current pullback will give way to yet another upthrust.

U.S. stocks barely flinched last week as shares trading elsewhere in the world got shellacked. The global selloff began with a 7% plunge in the Nikkei early Thursday.  Asian markets dove in sympathy, then Europe followed suit with a 2.1% drop in the FTSE 100. But when it came time for Wall Street to show a little fear, bears were nowhere to be found.  The Dow closed off just 12 points, demonstrating yet again the old adage that if you can keep a cool head while everyone around you is panicking, then perhaps you don’t understand the situation. Then again, why should U.S. investors even care about Europe and Asia? Home prices are soaring, not only stimulating the all-important “wealth effect,” but also creating new collateral that presumably will help catalyze the next consumer-credit binge. That’s assuming one occurs.  For it could happen only after Americans have dealt with a trillion dollar mountain of college loans, staggering increases in the cost of health care, stagnant incomes; punitive new taxes at the federal level; and in ultra-blue states like California, Minnesota, Massachusetts and New Jersey, tax increases implemented by lawmakers who evidently view the fraudulent economic recovery as a great opportunity to enlarge the scope of government. T-Bond Blowoff Coming Meanwhile, there seems to be a growing consensus among my fellow gurus that this market really is different.  Indeed, nothing seems to make U.S. stocks go down -- at least, not for longer than a day or so. Overnight selloffs reverse before the opening bell, and when there is weakness intraday, losses are recouped via short-squeeze buying in the final hour. If there is no good news to lift shares, then bad news is simply ignored. Europe’s deepening slide into intractable recession is no longer even talked about in U.S. newspapers,