November 2010

The 25.440 rally target flagged here yesterday is still the number to beat, since a close above it would portend more upside over the near term to as high as 26.225.  Once again, I'll suggest looking for 'camo' opportunities to get long on the very lesser charts. However, it will be preferable to do so in sideways patterns following short drops of about 15-20 cents, rather than after rallies of a similar or greater size.

We shouldn't doubt that higher prices -- make that, much higher prices -- are coming in 2010, but the futures seem in no great rush at the moment to make it happen.  Any 'abcd' pullback is a good place to try to get long, though, since downtrends in all time frames continue to struggle for yardage.  A 1371.60 midpoint target remains viable for the near-term, but it wouldn't take even that much to refresh the bullish trend on the hourly chart via the creation of a new impulse leg. The accompanying chart shows how this would occur.

That's twice now that the little s.o.b. has played peek-a-boo with the 1196.50 peak spotlighted in today's commentary. My gut feeling is that DaBoyz will eventually drop kick the futures through the goal posts, further hallowing this the Mother of All Bear Rallies in the record books.  In the meantime, although the constipated price action is theoretically tradable, I'll leave the devilish details to you, dear subscribers. Keep in mind that churlish, stupid, gratuitous price action such as we are seeing is ideal for camouflage day-trading, provided you are satisfied with bunting and hitting singles all day long.

The futures have already tripped a buy signal at 82.34 for a ride to as high as 89.82, but confirmation would come via a decisive breach of the Hidden Pivot midpoint resistance at 84.83.  Because this is three ticks above a visually obvious peak recorded on  October 14, I wouldn't advise buying the breakout, since too many others will be trying to do the same thing.  However, a less risky way to attempt getting on board would entail looking for camouflage just before the futures reach 84.83.  The three- or five-minute chart is where you should focus your attention, since that's where the easiest and most "exclusive" opportunity is likely to arise.

Stocks took a nasty reversal off yesterday’s fleeting high after falling an inch shy of a benchmark where we’d warned that bears would have to start worrying. Specifically, we’d said that if the E-Mini S&P futures exceeded 1196.50, that would set them up for an even more vicious short-squeeze that could last for weeks if not months. In the actual event, the E-Mini topped Monday at 1192.75, four points beneath our bullish trigger threshold, after rallying the equivalent of 100 Dow points Sunday night on near-zero volume.  Low-volume rallies have been the bulls’ modus operandi since the Mother of All Bear Rallies began in March of 2009.  Typically, index futures that trade round-the-clock get squeezed higher on extremely light volume in the dead of New York’s night. It is no great trick for firm traders to accomplish this with relatively modest capital outlays and very little risk – especially on quiet Sunday nights when there is but a mote of faintly positive economic news on the tape. Once the short-squeeze fuse is lit, DaBoyz sit back and wait for bears to come stumbling out of their lair, choking and coughing on smoke, when the NYSE opens.  Typically, bears will be in a panic to catch up with the index-futures rally that has occurred overnight. The sure-fire money-making scheme concludes with DaBoyz selling into the rally that they themselves stirred up. Often, the short-covering is sufficiently urgent to keep stocks buoyant even after bears have thrown in the towel and taken their losses. The “big news” out Sunday night was that consumer spending had risen a very modest 0.2% in September. There was also this kicker: manufacturing activity expanded faster than expected in October.  Taken together, these two items don’t add up to a hill of beans.  But in a market where

Words to live by if you're a Chicago ward-heeler. Based on the polls, the Windy City's favorite son is going to need all of the illegal votes his lackeys can scrounge to keep Illinois safe for Democrats. The key race to watch, according to the Wall Street Journal's Peggy Noonan,  is in New Jersey, my old stomping ground, where Anna Little, Republican mayor of tiny Highlands, is seeking to unseat an 11-term Congressional veteran, Democrat Frank Pallone.  If she can win, says Noonan, than any Republican who is running this year has a chance.

Facing an easy opportunity to score last week, the Dollar Index retreated tail-between-legs without even having surpassed October 20's internal peak at 78.36, let alone the "external" I'd drum-rolled at 78.69. Although it would be premature to write off this sorry sack of manure just yet, the failure of the rally to break through resistance must be considered further evidence of the dollar's terminal condition.

The 25.440 rally target shown in the accompanying chart looks like a lay-up from here, but any higher and we'd be looking at a minimum 26.225 over the near-term.  Night owls should scrutinize the five-minute chart for camouflaged boarding opportunities, since it has already worked twice so so far tonight.

The futures easily surpassed the "soft" peak at 1358.90 on the hourly chart, so it is appropriate to shift our focus toward bullish targets rather than worst-case correction scenarios.  Two logical rally objectives shown in the accompanying, hourly chart deserve our attention:  1406.70 and  1427.50.  Their respective midpoints lies at  1361.20 (already surpassed) and 1371.60.  The latter Hidden Pivot ('p') can serve as a minimum upside target for the moment, but if it's exceeded on a closing basis or by more than two points intraday we'll raise our sights to 1406.70.