Monday, January 5, 2015

The dirtballs and hosers charged with minding the store Sunday night took the E-Mini S&Ps down 10 points -- no surprise there -- but they've brought the futures back to unchanged perhaps too early in the night for us to infer they're planning to squeeze stocks higher at the bell. It looks more like DaBoyz are trying to extract as much mileage as they can in the wee hours in order to distribute stocks ahead of the opening.  We should be on our guard in any case, since two weeks of trying did not get the futures to the clear and ostensibly 'easy' 2105.00 target shown -- or the even easier 2092.50 target of a lesser pattern. This could be remedied with one nasty short squeeze, but for the time being we should treat it as a suspicious. Whatever the case, it's a cinch that traders and investors were extremely bullish as 2014 drew to a close --reason enough for us to unfurl the yellow flag. ________ UPDATE (11:37 a.m. EST): The futures have gotten whacked this morning, in line with our expectations. They've been down as much as 30 points, while the Dow has been off by as much as 270 points.

I don’t often feature technical analysis as the topic of the week. In this case, however, the Dollar Index is at a crucial threshold that deserves a drum-roll and our close attention.  Notice the two tightly spaced purple lines near the top of the chart. These are ‘Hidden Pivot’ rally targets of medium importance, albeit of slightly different degree, and if they were to be easily exceeded it would suggest that the steep 15% run-up since May could be just a warm-up. To be sure, one or two technical resistance points getting brushed aside does not a rip-roaring bull market make. However, given the clarity of these two targets in particular, it would be quite impressive if buyers were able to push past them without pulling back for at least a few days for a running start.  In any case, any progress above the higher target at 91.99 would put the 92.35 target of an even larger pattern in play, with similar implications. Which is to say, if the Dollar Index takes out that Hidden Pivot as well, and does so with ease, it would suggest that the bull is all but unstoppable. A parabolic rally in the dollar would unleash pent-up deflationary forces in the financial sector that the Fed, even acting in concert with the central banks of Europe and Japan, would be powerless to stop. While the banksters have been able to manipulate short-term rates without much difficulty, there will be no holding the dollar back when global demand for greenbacks starts feeding on itself. Where else are you going to put your money? Lately, the dollar has been ratcheting higher because the U.S. economy is perceived as the strongest in the world. It is also regarded as the safest, and that is why the dollar’s strength

There have been five rally attempts since gold made what looked like a promising low in early November, but none has been anything to write home about. The term 'sucker-bait' comes to mind, or perhaps 'bull traps', mainly because each of the rallies has come off a low that occurred just beneath some prior low. This implies that more than a few bulls would have gotten stopped out near the respective lows, lightening the selling load ahead of the ensuing rally.  Under the circumstances, it's somewhat surprising that the rallies have been so fleeting and feeble. This is not the behavior of a commodity that wants to go higher, and so you should exercise particular caution if you incline toward trading gold only from the long side.  If and when it heads lower, which is what I expect, look for the February contract to fall to at least 1114.80 in search of traction. (My long-term target is still $810, by the way.) This Hidden Pivot support was first broached here nearly two weeks ago with  gold trading around these levels. As I mentioned last week, I'd happily change my mind and wax as bullish as the next guy, if not quite bullish as all get-out, if and when the February futures hit 1256.30. That would generate a robust impulse leg on the daily chart for the first time since August 2013. However, you should keep mind that that rally, promising as it seemed at the time, proved to be...sucker-bait.  Meanwhile, and most immediately, the futures appeared to be consolidating Sunday night at an 1190.80 midpoint pivot for a further push to 1203.80, its 'D' sibling.  They'll need to exceed it, though, to imply that buyers are not fixing to roll over yet again. _______ UPDATE (11:33 a.m. EST):  The predicted