Monday, December 1, 2014

The chart shows the crushing weight of the downtrend that has unfolded since October 21. At the moment, the selling is being impelled by news that Swiss voters rejected a measure that would have required the country's central bank to hold a portion of its assets in gold. The futures were on a weak bounce Sunday night off a so-far low at 1141.70, but the penetration thus far of the midpoint Hidden Pivot support at 1145.00 is already sufficient for us to infer that more weakness to at least 1082.40 impends.  By implication, a rally from around 112o would be 'mechanically' shortable, although 'camouflage' shorts got a green light on Friday via a signal at 1176.30. A rebound exceeding 1167.90 would reverse the short-term weakness, but traders should be wary of any uptrending abcd pattern that falters at the Hidden Pivot midpoint of its c-d leg. _______ UPDATE (9:15 a.m.): The futures rebounded sharply overnight, turning a selloff into a swoon, albeit a very nasty one.  Now, use this true, bullish impulse leg from the 60-minute chart not only to get long, but to gauge the mettle of buyers: a=1167.50 at 8:00 a.m.; b=?.

Index futures were trading only moderately lower Sunday night on reports that the holiday weekend was a disaster for retailers. We should assume that the stock market's weakness is only a hint of things to come on Monday, since the news will make it much harder for the fraudsters on Wall Street to pretend there's an economic recovery going on. The simple fact is that consumers have borrowed themselves comatose to make ends meet.  Night owls looking to trade the move should use the Hidden Pivots shown to guide them.  They lie, respectively, at 2056.00 and 2049.75. If the first is easily breached, assume the second will be reached. ______ UPDATE (9:36 a.m.): The futures have bounced from the exact middle of the range noted above -- a rather unusual occurrence, although not indicative of any great strength or resilience.

With the biggest shopping weekend of the year behind us, it is being reliably reported that retail sales cratered -- down 11% from last year. Christmas shopping is of course crucially important to a U.S economy that is 70% driven by consumption. You do the math. Despite this, index futures were down only marginally Sunday night, suggesting either that traders had not done the math themselves, or that they were doing their weasely best to prop up the markets until morning.

I’ve never had a good word to say about Barack Obama, and I’m not going to start now. But it would be disingenuous to blame him for the Great Recession that has persisted for most Americans since the downturn ended officially in 2009. Politically speaking, there is nothing Obama or any other president could have done to alter the course of economic events after real estate prices collapsed in 2007-08. This happened on George W. Bush’s watch, but he can’t be blamed either, since the factors leading up to the crash had been gathering strength for more than a generation. Economic cycles are far bigger than the presidency, and anyone in the White House when times are good is simply lucky to be in the right place at the right time. Luckiest of all was Bill Clinton, who, for all his personal failings, is recalled almost nostalgically because of the relatively prosperous economic times America enjoyed during his tenure as president. Obama, on the other hand, inherited a mess that no president, Democrat or Republican, could have cleaned up. There was but one solution that would have worked: Let the system fail, and then regenerate itself. Of course, that could never have happened in the real world -- even with Ron Paul in the White House and a veto-proof Libertarian majority in both houses of Congress. Yes, they initially would have stood on principle. But not for long, and certainly not for the full length of an election cycle. If laissez-faire economics had obtained during the Great Financial Crash, it seems likely the entire banking system would have collapsed rather than just a few big players such as Lehman and Bear Stearns that were sacrificed to make it appear the government had control of the situation. Why Risk Collapse? The