Since today’s guest commentary concerns the seemingly absurd prospect of a Dow rally to 20,000, I thought it might be a good time for me to at least pretend such a thing is possible. As it of course is.  Technically speaking it’s simply a matter of looking at the E-Mini S&P’s chart the way I’d look at Gold’s — which is to say, with as a bullish bias that I can justify based on hard evidence.  There are two things to notice in that regard. First, the rally from purple A to B is genuinely impulsive, having exceeded an important external high at 1459.75 recorded in December 2007 (albeit by just 2.00 points). Second, the 1461.75 high recorded in mid-September exceeded a clear ‘D’ target at 1422.25 (green line) by a whopping 39.50 points. Moreover, a significant portion of the price action since then has occurred above the D target, suggesting it’s a consolidation.

Even for someone who expects the economy to tank in 2013, as I do, there is no evading the bullish implications of the facts cited above.  Most immediately, the logic of it suggests we’ll see new all-time highs near 1553.50 in the weeks ahead. That would represent a rally of about 7% from these levels. Notice that the 1443.75 midpoint resistance (purple p) of that pattern has already been decisively breached by about 14 points.

Much as I’d like to say we can go back to being bearish now that we’ve at least considered the bullish case, we are in fact obliged by the evidence to be bullish.  If there’s any hope I can hold out to permabears, it is that a high at 1553.50 — representing a headline breakout, by 34 points, above the 2007 top — could in theory set up one of the most enticing bull traps in stock-market history. While this may be fun to contemplate, and seemingly logical, we shouldn’t get our hopes too high for a collapse until such time as the futures either 1) reach the target;  or 2) turn down with an impulsive vengeance without having reached it.