September 2009

The _____ target given here yesterday remains valid, but the bullish case for the near term was weakened by the fact that all of yesterday's action took place below the 1027.75 peak recorded on the way down a week ago. Because the plunge from that peak would have trapped many bulls, we should regard it as daunting if not impermeable.  If the futures take a stab at it today, the effort will be futile unless it exceeds the look-to-the-left peak at _____ recorded on _____.

From one Brian Heyliger, editor of Market Trigger Alert, I received a promotional letter -- "The One Myth About Trading You Should Know" -- that deserves to be widely shared. It offers some very useful tips on how to get your mind right for trading regardless of what system you use : I want to tell you something about trading you won't hear often... Trading has nothing to do with indicators and everything to do with you. Let me explain... The easiest things to learn are indicators and setups, but they have nothing to do with trading. You can memorize them, you can buy them, you can even program your computer to alert you when they occur. But the Achilles Heel of trading is this: YOU! There are numerous sites and gurus touting their products as the "Holy Grail" of making money in the markets. "Just buy my trading system and you'll make a million." Well, that's not actually true, because winning, stand-alone trading system won't work if you are broken... To trade a system successfully - whether it's something you've purchased or developed yourself - you need to have the correct mindset. The Paradox of 
'Holy Grail' Systems This may surprise you, but you can learn a perfectly good trading system, trade it, and lose money, while someone else trading the very same system makes a fortune. The only difference is between the winner the loser is the person trading - that's it! The traders who lose simply aren't following the rules of the trading system they designed (or purchased), unlike the winners. The key to making a system work is developing the discipline to follow the instructions. This is the hardest part about trading. Let's illustrate this with an example ... You just lost $1,000 on the last trade and

Index futures were off slightly Sunday night, but so far it looks like the kind of stage-managed weakness that buyers use to determine the level at which selling dries up.  However, a pop above 1031.00 in the E-Mini S&P would give DaBoyz' game away, leaving shorts to run for cover.

Look at Friday's rally on a daily chart before you get too excited.  This glue horse would need to print 10.76 today to give bears reason to be nervous. Upside potential for the moment looks to be only 9.74, but bulls would get a recharge if they can push that Hidden pivot resistance aside.

We took a small speculative position on Friday's close, buying four September 93 puts (DAVUO)  for 0.86 apiece. I'll recommend closing them out at-the-market if the Diamonds are trading 94.60 or higher an hour into the session. Otherwise, you can offer two to close for 1.16, day order. _______ UPDATE (11:22 a.m.):  The post-Labor Day surprise we'd anticipated was not to be, so we exited our puts for 0.63, realizing a trading loss of $92 on the position.  The fact that the market passed up a perfect chance to  catch investors with their pants down and is headed higher on the first day of the new season suggests that it will continue in bullish mode for a while, at least.  If we are to look now for an "October Surprise," the trick will be to determine which would be the more surprising: a melt-up or a melt-down?

Considering that the Dollar Index broke down decisively in early August by smashing the watershed low at 77.69 recorded nearly nine months earlier, the action recently has been pretty copacetic. It suggests that the dollar is being easily supported at these levels, but only because there are no sellers bold enough to challenge the central banks' resolve. If and when that happens -- signaled, perforce, by a two-day close beneath _____ -- the futures will be on their way down to at least ______, the nearest Hidden Pivot of significance on the dailychart.  Otherwise, it'll take a pop to ____ to turn the daily chart bullish for the first time since last February. 

With the G-20 meeting coming up in Pittsburgh at month's end, a breakout by gold above $1000 right now would be about as welcome as an elephant stampede at a garden party. This should therefore be an interesting month, since, if the central-bank conspiracy to suppress gold prices should be operating at full strength in the weeks ahead.  I'll stick with the ______ minimum upside target nonetheless, but I'm making no guarantees above that Hidden Pivot.

The futures are off a couple of points Monday evening, but they've already divulged buying interest by trading a full point above the 1022.00 midpoint resistance show in the chart. If they should break decisively above it on Tuesday, that would signal upside potential over the near term to as high as _____ -- equivalent to a _____-point rally in the Dow.

Recently, I told the story here of Louis Piro, a Mountain View barber who made millions by plowing every dollar he could save into the shares of growing companies that paid generous dividends. Following is another uncharacteristically bullish column that I wrote for the Sunday San Francisco Examiner around that time, in the late 1990s. It ran under the headline “New Global Middle Class Fuels Stocks,” and its thesis is that U.S. multinationals stood to benefit hugely from the rapid rise of an Asian middle class. This scenario was delayed by the collapse of the Thai baht in 1997 and the severe Pacific Rim recession that followed. It now looks like it will be delayed even longer by a looming : Second Great Depression in the U.S.  You can judge for yourself whether such optimism is still warranted U.S. stocks have been in a scorching, vertical climb for months, confounding the bears and effortlessly vaulting the immediate expectations of the most ardent bulls. What factors might account for this powerful rally? Could there be forces at work besides the steady earnings growth and low inflation usually cited as key reasons for the longevity of this bull cycle, now well into its seventh year? U.S. Exporters’ Sweet Spot I believe so. A more plausible explanation may lie in the relatively recent and rapid emergence of a vast, global middle class, particularly in Asia, Eastern Europe and Latin America. To the extent this trend creates a burgeoning new marketplace for a wide variety of goods and services, U.S. companies stand to benefit the most, since they are indisputably the best in the world at meeting its demands. The point was driven home to me recently by news reports that the Malaysian government, with public and private outlays of as much as $15 billion,