July 2009

A 'hidden" support at 1566.00 can serve as a minimum downside objective for Thursday night, but if it's breached, brace for additional weakness to as low as 1554.00. That number can be bottom-fished with a stop-loss as tight as 1.00 point.

The Gold Bugs Index is stealing up on an important midpoint resistance at _____ that is tied to a _____ target. The so-far high has been _____, but let's stipulate that HUI close for two consecutive weekly bars above the midpoint before we look for ways to step up the buying in this vehicle.  

TLT breached a midpoint support at 90.80 by 0.23 points yesterday, hinting of more weakness to come. If so, we can use the support's 'D' sibling at _____ as a minimum downside target next week.  That would imply the long bond is headed for a nasty spill.  

Yesterday's bounce came from a too-obvious place -- just 0.09 points above a key low at 78.33 recorded in early June -- suggesting that traders were not exactly tripping over each other to make sure they got a piece of a potentially important low.  We'll monitor the dollar's vital signs closely in any case, since a thrust today or Monday exceeding ____ (see chart) could significantly improve the outlook for the near term.

After Thursday's close, on word of punk earnings from Microsoft and American Express, DaBoyz took the futures down 4 points and leveled off. This implies they think that Dow will open down by about 30 points Friday morning, although expectations could easily darken as the evening wears on.  If so, I'll recommend bottom-fishing at 955.75, stop 955.00, provided 966.00 has not been exceeded to the upside first. _______ UPDATE (11:22 a.m.):  The futures went no lower than 962.50 on the opening, negating our bottom-fishing strategy but also hinting that, before too long, bears could once again be on the ropes.  I'm somewhat surprised that the 955.75 bid didn't fill. On the other hand, the fact that AXP shorts are getting hung out to dry -- the stock is off a mere 20 cents at the moment after opening a dollar lower on a gap -- is no surprise at all.  Microsoft is having a bit more trouble, however, and has not yet rallied into the $2 down-gap on which it opened.

Although two big companies, Microsoft and American Express, reported atrocious earnings yesterday after the close, we shouldn't expect the news to slow the relentless rise of stocks for long. Investors were obviously blithely unconcerned about earnings on Thursday, showing their eagerness to buy stocks by pushing the broad averages to their most impressive gains in nearly two weeks. The S&Ps settled at 976, up 2.3% on the day, and looked like an even-money bet to achieve their biggest back-to-back weekly gain since March. The index has risen almost exactly 50% since bottoming in early March at 666, but it wasn't even breathing hard after yesterday's steady climb. Our forecast calls for a potentially important top at 998, but the S&Ps would have to do a little better than that, hitting 1008 before pausing for more than a day, in order to firm the case for significantly higher numbers into summer's end. In any event, the milestone number 1000 can be expected to exert an irresistible, magnetic pull on the S&Ps.    Taking Bad News in Stride It is of course bullish when the stock market is able to take bad news easily in stride and to see the bright side of every statistic. Yesterday, for instance, investors ignored word of yet more weakness in home prices, focusing instead on the third straight monthly rise in existing home sales. Friday's opening will put investors' blithe mood to the test, however, since trading will reflect universal knowledge of problems at two very widely held companies. After the market closed on Thursday, Microsoft announced that earnings had fallen by 29; American Express's earnings for the same period were off by 48%. Shares of the latter fell 4.6% in after-hours trading, to 28.05, while MSFT was down 7%, to 23.73. If the stock market continues a

If I had to pick and choose from among the rally targets given for the broad indices lately, I'd tout the 9158 target in the Dow Industrials as the one to trust. Even so, a print below 8754 this week would turn me bearish.  The blue chip average settled yesterday at 8881, off an intraday high of 8950.

I am no longer recommending a short from 159.88, since, if Apple is consolidating from its recent push to 158.73, it will likely better the target on the next thrust.  The target itself remains viable, however.

The futures look imminently bound for at least 13.915, a Hidden Pivot target that is analogous to the one trumpeted in today's Gold tout.