It was ‘dueling delusions’ yesterday:  China’s move toward easing vs Helicopter Ben’s frank admission that ‘monetary policy is not a panacea’.  Isn’t it a bit late in the game for him to be saying such sensible things?  In any event, by day’s end the Fed chairman’s unwonted reluctance to masturbate Wall Street brought shares down from the giddy heights they’d achieved on word that China was prepared to use the West’s number one growth tool:  more debt.  Permabears that we are, do we dare get in the way as every nation on earth with a central bank fixes to ramp up credit?  In a word, yes. As has been demonstrated here time and again, we can short every misguided rally from here till the cows come home, often booking at least a small profit even when we are wrong.

We can also buy the dips in anticipation of the extreme rallies that are certain to occur if the stock market has indeed entered a bear market. Most immediately, that would imply bottom-fishing at the 1312.25 midpoint pivot of the pattern shown. This must be executed camo-style, however, since the Hidden Pivot support is coincident with yesterday’s low.  The objective here is not merely to profit from the rally, but to use the profit to cushion the stop-loss on our next short.  Night owls in particular should note that an easy breach of 1312.25 would imply more downside over the very near-term to its ‘d’ sibling, 1306.50.  Like to learn how to reduce the risk of a trade using the Hidden Pivot Method? Click here.