Like frightened little rabbits, shorts panicked once again late in the session, goosing the Dow 100 points in the final 30 minutes (see chart below). In the end, predictably, they wound up doing exactly what they had sought to avoid. Don’t these guys understand that if they all hung together and chilled for a rare change, the broad averages would come cascading down like a tropical downpour, ending a selling drought that has persisted for more than a year. You’d think that the May 6 “clerical accident” might have emboldened at least some of the “Don’t Pass” bettors. Evidently not.
The way things stood Thursday afternoon, the rabbits had only set themselves up for more punishment later in the day, since nothing short of Armageddon could cause DaBoyz to relinquish the choke-hold they had around the rabbits’ necks at the closing bell. A silly image, we know – a mustachioed, Simon Legree character with a bunny locked in his armpit, its little pink eyes bulging from their sockets. But in truth, those who have been betting against the market lately don’t deserve to be called bears. They don’t roar, they don’t rear up ferociously on their hinds when challenged — they just nibble on lettuce and extrude little pellets when nervous.
Fresh Pellets
Friday morning could produce a fresh pile of pellets if there’s any good news on the tape to help DaBoyz maintain their short-squeeze choke-hold. The Dow closed at 10434, but according to our proprietary Hidden Pivot forecasting system, there’s 138 points of open space just above if bulls are in command at the bell. That implies a run-up to at least 10582, which is the next place the rabbits could attempt to impede the rally without getting damaged too badly, at least not right away. But if the pullback we might expect from 10582 proves feeble or short-lived, woe to the bunnies, since they could wind up chasing the blue chip average all the way up to 11000 before they get a real breather.
A Bullseye in Gold
Speaking of the Hidden Pivot forecasting system, it produced a bullseye in Comex Gold yesterday after we’d sent out a heads-up to subscribers the night before identifying a 1250.30 target for the August contract. The futures did in fact rally $20 — precisely to 1250.30 — before tracing out a shallow correction over the next two hours. We expect the next leap to achieve 1272.60 just as precisely and easily. Judging from how quickly the futures got second wind yesterday, a move to that Hidden Pivot could occur as early as Friday morning.
I think most of the market moves on the Dow/S+P are GS/JPM/Hegde funds/etc. intramural sport.
If deflation continues most people will be avoiding the casino, especially if the muni bond market starts imploding. I myself am about done searching for conservative funds that won’t go Ponzi on me. I think I will keep about 5% for the futures market day trading and park the rest in insured CDs for whatever I can get.
Deflation makes it a smart move, I don’t need any home runs, just to keep what I have. You are as likely to get robbed going for 7 or 8 percent as you are going for 100 percent gains in this world. Everyday I see another Ponzi scheme imploding in the newspaper for 30 or 100 million dollars with investors getting wiped out. Very sobering.