Except for the weatherman, guys who make a living predicting things can’t be entirely comfortable predicting that “not much is going to happen for a while.” An extended forecast of “partly sunny and mild” may go down easy with TV viewers, but just try telling a bunch of traders and investors that the stock market is about to turn tediously uneventful for the entire summer. What evidence do we have? The very idea of a do-nothing summer seems implausible to me, given that the real estate bubble has already popped, and with it any chance that the consumer economy can continue to waft along on Fed vapors and home equity loans (currently around 9 percent!).

(Click on chart to enlarge) 

But putting aside such logic, there is the chart above, of the Dow Industrials, to consider. No question, the selloff from early May’s highs has been a nasty one – nasty enough that it will have put the fear of recession into many otherwise complacent investors’ heads. Moreover, considering that it follows a dramatic yield curve inversion in February, it would be almost freakish if we were not seeing the first stage of a bear market that is likely to last many months, if not years.

But what troubles me about this interpretation is the unmistakable reticence of the Dow’s most recent down-leg. Steep as it was, you can see that it stopped just shy of breaching a very important low at 10661 recorded back in January.  In the parlance of the hidden-pivoteer, this is an impulse leg that simply lacks guts. If it were otherwise, sellers would have hammered down stocks those last few inches, exceeding the January 20 low. The fact that they did not indicates to me that the bear is too weak to pick a serious fight right now. If true, expect to see the Indoos chop and churn gratuitously for the next several months between 10600 (or so) and 11200.

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Learn My Secrets

Would you like to be able to forecast trends and price reversals as accurately and confidently as Rick’s Picks? Have you tried other trading systems, only to find them too complicated or otherwise unhelpful? Then don’t miss my Hidden Pivot Seminar this autumn in New York City. Plans are firming for a weekend session on October 14-15, so please let me know via e-mail if you think you might attend.

There will be just one more U.S. seminar offered after that, on the West Coast; and another in Sydney, Australia, but they will likely be the last for a long while. The course includes post-grad mentoring via a chat group that some of my former students have set up. If you’ve been impressed with the accuracy of my forecasts, this is an opportunity you cannot afford to pass up. Let me hear from you soon, since the New York seminar is within a few seats of being sold out.