DJIA

Although today’s E-Mini S&P forecast predicts lower prices, a cursory look at the Dow’s hourly chart obliges us to give the begrudging benefit of the doubt to bulls, since almost no technical damage has resulted from the scuddling price action of the last two weeks. Bulls would regain control on a thrust today exceeding 12810, but otherwise we should presume the correction has at least a little ways to go, to a minimum 12461, or possibly to 12427 if any lower.

Friday’s low came within four ticks of a calculated low (see chart), so perhaps we should dogtail the Dow for a while as long as it’s being so cooperative. The blue chip average looked bound for at least 12356 at the close yesterday, although that Hidden Pivot’s dubious, sausage-y pedigree makes it unsuitable for shorting.

Technical considerations aside, the Indoos look like they are getting ready to blast off for the relatively short thrust it would take to achieve new recovery highs and extend the Mother of All Bear Rallies into its 26th month.  Looking at the chart, the impending “liftoff” is so palpable, in fact, that we should view it with every ounce of contrarian skepticism we possess.  Practically speaking, this means we’ll be looking to get short — via camouflage, if possible – at any Hidden Pivot worthy of the name. Stay tuned!

A friend who runs a heavily trafficked gold site asked me where I thought the stock market would be trading in six months. I replied as follows:  I don’t usually go out that far in time, but if I had to speculate I’d say the Dow will be groping for traction at 9057 – a “midpoint” Hidden Pivot — come September, provided the recent highs are not exceeded. (And if they are exceeded, I don’t think it will be by much.)  All bearish bets would be off, though, if DaScumballs somehow contrive to pop the Indoos throught the May ’08 peaks around 13136.

The bottom of yesterday’s selloff came within 30 points of an 11525 Hidden Pivot that can continue to serve as our minimum downside objective.  However, any slippage beneath that support would portend more weakness to at least 11355.  For anyone looking to catch a trampoline bounce, that number looks like it would be an excellent place to moor a speculative bid with a tight stop-loss.  The provenance of both targets is shown in the accompanying chart. _______ UPDATE (9:52 a.m. EDT):  The Dow began the day with a not atypical short-squeeze, disdaining to curtsy toward our lowball bid.  The thrust was impulsive, implying that whatever pullback that occurs here is just that.

The Dow has a clear rally target at 12572, although the lengthy sideways movement since mid-February suggests bulls are not in great shape to take their epic hoax to a new level. Hoax or not, we can continue to look for a breakout, and to play it with relatively little risk, by focusing on impulse legs that develop on charts of 15-minute-degree or less. Alternatively, if the Indoos drop dead, reconciling themselves with natural law, look for the first air pocket to hit 11876.  _______ UPDATE (3:20 p.m. EST):  With the Indoos off as much as 240 points so far today, it’s become pretty obvious which  of the two targets is going to get hit.

A Hidden Pivot target not far above, at 12484, is as clear and compelling as the 1356.00 target we’re using for the E-Mini S&P.  And just as the crystal clarity of the target inclines us to treat it with skepticism each step of the way, we’ll plan on shorting it aggressively if it should be reached.  Keep in mind that the Hidden Pivot midpoint — in this case 11684 — is always going to be in play either until the target is reached, or point ‘C’ (10930) is exceeded to the downside. An implication of this is that a 350-point plunge to the pivot would not necessarily be bearish.