We’ve been using a 1469.50 rally target in the mini-S&P -- a so-called “hula number.” This is a term that I apply to forecasts about which I am so certain that, if they do not pan out, I have pledged to don a grass skirt and dance the hula in Times Square in the middle of winter. (Look for me in front of the Marriott Marquis if the forecast goes awry.)  In this particular instance, the 1469.50 price objective looked like such a lock that, for good measure, I’ve promised to add a cocoanut brassiere to my outfit.

Considering that the S&P futures did nothing last week but screw around, coyly lapping at a ceiling a few measly points below my chiseled-in-concrete price objective, shouldn’t I be getting a little nervous? Well, yes and no. (You didn’t think I’d make such a ridiculous offer without having some fine print to extricate myself, did you?)  No, because the fact that a hula number is not quite reached tells us, not that the forecast was wrong, but rather that the trend itself is about to reverse. The purpose of the hula number is to allow subscribers to very confidently get long or short at projected swing points, using stop-losses that risk mere pocket change if we are wrong. If the hula number is not reached, then it becomes a case of nothing ventured, nothing gained.

But if I am not nervous about having to don a grass skirt, I am a little concerned about a bull cycle that has become so constipated that, in an entire week, it couldn’t even deliver a few measly points to get us to the target. My hunch is that this problem will resolve itself either today or early next week, and that the futures will provide the minuscule thrust needed to reach the 1469.50 target. But I am obliged to mention that a failure to do so would turn stochastic indicators on the daily chart menacing, if not to say rancid.

I’ve reproduced a chart above so that you can see how the downward slope of the two most recent stochastic peaks diverges from the upward trajectory of the E-Mini S&P’s most recent price peaks.  This is an unmistakably bearish divergence, and if it is not corrected via an upward price thrust by Tuesday or so, the condition will go from a blinking yellow to a flashing red. That would not necessarily cause us to throw in the towel on the 13045 DJIA target that has kept us on the right side of this demonically possessed stock market for so long, but it could presage a painful delay in getting there.

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Wogga Wogga  Seminar

Wogga Wogga?!?  I just wanted to see if you were paying attention. In fact, I’ve received numerous requests to offer a Hidden Pivot seminar in Boca Raton, Florida, though not in the South Pacific, and will do so if there is sufficient interest. Please let me know if you would be seriously interested in attending a Florida class.  The two-day session would be held sometime in the Spring of 2007. To get on my mailing list, drop me an e-mail, including your contact information. The cost would be $1,500 USD.