The spyders rallied to within 0.30 points of our hidden-pivot target at 131.77 yesterday – close enough to imply that a correction could be in the works, though not quite close enough for us to get short at the high. We attempted to do so by purchasing some April 131 puts for up to 1.35; however, they traded no lower than 1.50 intraday. Our 1321.75 projection for the Mini-S&P got even closer to the actual high, since it occurred at 1321.50, just a single tick from where advertised. We were not attempting to short the S&Ps, though, only to monitor their interaction with some well-defined hidden pivots. Had the futures bettered the 1321.75 target by more than a point or so, we’d have inferred that higher prices – perhaps significantly higher – lie  ahead. As things stand, the target will remain useful as a trigger threshold for yet another running of the bulls.

(Click on chart to enlarge)

There are also a couple of targets in the DJIA that bear watching: 11410 and, more importantly, 11351. That last number is not a hidden pivot, but rather a point of reference that sits one tick above a pivotally important high made almost five years ago. Any rally exceeding it would create a fresh, bullish impulse leg on the monthly chart, implying that bulls would remain in charge for the foreseeable future.

I should also note that, if the downturn begun from yesterday’s highs gains momentum over the next few days, it could queer the bullish case in a New York minute. That’s because the rally which has unfolded over the last 30 months has been accompanied by declining stochastic peaks and is in fact occurring right now on declining volume. Bottom line: Until such time as the DJIA exceeds 11350, stocks are an extremely risky buy.