A hundred points here, a hundred points there, and pretty soon you’re talking about a real rally. Yesterday’s 208-point thrust in the Dow didn’t quite qualify as a powerhouse, however, since it failed to exceed a peak “along the wall” of the daily chart.  That quirky little rule has saved us time and again from jumping headlong into trouble, since it provides a generally trustworthy benchmark for distinguishing bogus rallies from the real McCoy.  The chart below shows the peak that will need to be impaled by the end of today’s session in order to signal the kind of buying power that’s likely to last more than a mere day or two. According to the Hidden Pivot Method that we used to trade and forecast, a push above 10719 today could sufficiently re-energize the bull trend to keep it going for the whole month of August.  As you can see, it won’t take much, since the as-yet-unconquered peak lies within spitting distance of yesterday’s close.  How close? Exactly 44.48 points, which is about how far the Industrial Average leaps, on average, in the first 30 seconds of sessions that have opened on a short-squeeze gap.

Yesterday’s squeeze goosed the Indoos 135 points in the first two minutes, locking out all but a relative handful of true believers who went home long on Friday. We know there couldn’t have been many of them, relatively speaking, since the broad averages would not have soared with such devil-may-care lightness if they had been burdened by profit-takers the whole way up. The news helped too – as when has it not? — with Eurobanks reporting an upbeat second quarter and an unexpected climb in June construction spending.  We’ve learned to take these ostensibly bullish statistical outliers with a grain of salt, although Wall Street seems not to care whether the news is bullish, bearish or outright horrifying. Stocks rise on any kind of news at all, and the only real selling we’ve seen in nearly two years occurred when some clerk triggered the May 6 Flash Crash by toggling the wrong switch. Assuming he’s been reassigned, investors can probably look forward to a blissful finishing stroke to a summer that seems to be thriving on airless tedium.

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