Enthusiasm is high in the chat room for shorting this hoax, but I’m not so certain myself. A key question is whether the dirtballs who manipulate the stock market for a living have lost control. I don’t think so. Last week, over the several days when the Dow sold off more than 2000 points, there was only a brief period when stocks were actually plummeting. This occurred in the first hour following last Monday’s avalanche-like opening. The hard selling that had proceeded this washout was more or less orderly, with prices ratcheting lower as though the powers that be were methodically trying to find a bottom. When they did, on Monday, with a flood of climactic selling, they made good use of the low, with a trampoline bottom and a memorable short squeeze. We saw shares bounce twice over the next two days from lows well above Monday’s, and then on Wednesday the chop mutated into a second powerful short squeeze. The week ended with the apparent consolidation pattern shown. It has been shallow enough that bears should think twice about getting aggressively in its the way. Looking at a bigger picture, permabears should remain open to the possibility that stocks will be trading at new record highs in another month or two.
Regardless, I’ll continue to call ’em exactly as I see ’em, suppressing my own, bearish bias with whatever coldly mechanical evidence I can find on on the lesser charts. At the moment, that means paying heed to the bullish pattern shown. Although we should expect a stall at or very near the 16763 midpoint pivot shown, a decisive move through it — or even more bullishly, a two-day close above it — would telegraph more upside over the near term to the pattern’s 17203 D target. It’ll be tempting to short each of the three resistance levels — p, p2 and D — but if you do so, keep your mind open and your stops tight. The market is out to fool us all, but we’re not exactly patsies. ________ UPDATE (1:23 a.m.): Considering the beating stocks are taking in Asia, the so far 240-point drop tonight in the Dow (via the E-Mini futures) has been relatively subdued. The usual, clueless mainstream news sources were attributing this to perceptions that the Fed had left the door open to a rate hike in September. This is some of the dumbest claptrap I’ve ever heard, and it makes me wonder whether even the brainless twits evidently trading in Asia at the moment believe it. Meanwhile, I am still looking for someone to lay me odds on the rate hike, since the answer to the question, “When will it happen?” remains, as we have been insisting for years, “NEVER!!!” From a technical standpoint, the E-Mini Dow looks like it could fall to as low as 16284 by morning. That would equate to a 350-point drop in the Dow — no big deal if seen in the context of last week’s hysterics. P here is 16403, and P2=16344 — both possible swing prices.