It would have taken some imagination to foresee that just about every asset class save stocks would get hit yesterday.  Although the Dow Industrials, for one, began the day 200 points in the hole, the blue chip average went no lower intraday, and it ultimately settled 21 points above Friday’s close.  In retrospect, no one should have been too surprised that U.S. stocks bucked a global fire sale, since they’d already been sold to the point of exhaustion Sunday night in futures markets around the world. That might not sound very auspicious, but we cannot recall a single instance when punitive selling begun on a Sunday night carried into the NYSE opening on Monday. Some may recall that the 1987 Crash occurred on a Monday, but that was before index futures were traded around-the-clock. Had that been the case back then, we have little doubt that the worst of the selling would have been over before dawn on Monday, and that the short-squeeze that brought the stock market roaring back the next day would have occurred a day earlier, sparing investor's the agony of Black Monday.

(Click on image to enlarge, if you dare)

On Monday, commodities in particularly got knocked for a loop, presumably because they were so very overbought. Crude plummeted more than $8 from its highs, palladium was off nearly 10 percent, and the softs -- wheat, corn and soybeans leading the way  – got pummeled.  Gold was a notable exception, ending the day about even with Friday’s settlement price after being up more than $30 overnight. Treasurys rose moderately, with future contracts on the Ten-Year Note and 30-Year Bond up about ¾ of a point – hardly enough to suggest that a flight to safety was on many investors’ minds. It felt more like liquidations by financial players who may have gotten on the ropes as portfolio values fell below margin thresholds.

On the Ropes

Nor do we think the selling is over, even if short-covering in the wake of Sunday’s manipulated washout prevented stocks from crashing. There could even be some high drama later in the week, not just because of today’s Fed meeting, but because three-day weekends such as the one that will begin on Good Friday traditionally provide investors with an extra opportunity to lose their cool, such as it is. Also, March stock options will cease to trade after Thursday, and that could easily exacerbate whatever nervousness develops as the week wears on. Whatever happens, precise targets that we have disseminated to subscribers imply that shares remain very vulnerable to a selling avalanche.  

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You Can Take the Seminar at Night

There’s good news if you’ve wanted to take the Hidden Pivot course but have been unable to attend on weekend mornings, when the class has typically been held.  In mid-April, I’ll be conducting the six-hour class over two consecutive evenings – Wednesday and Thursday, April 16-17, from 6 p.m. to 9 p.m. MDT.  Click here, and then on the “Upcoming” tab to register; or here if you would like more information as well as a detailed description of the Hidden Pivot Method and a free Hidden Pivot calculator.