Traders opened the new year with headless-chicken feints in both directions, but when the dust settled bulls appeared to hold a small edge. (See inset for my short-term forecast, with a precise target.) The ho-hum outlook would improve significantly if and when the March contract pushes decisively past 2270.00 or closes about that Hidden Pivot resistance for two consecutive days. The target was ten months in coming, so we shouldn’t expect it to give way easily. The futures have been stalled beneath it since mid-December, looking for any kind of news that might spook bears into covering short positions. Short-covering panics are the main source of buying power capable of taking out heavy supply and prior peaks, but it is always unpredictable as to what news will trigger them, and when. In the past, the news invariably involved the Fed’s serial postponement of promised tightening for…years. The idiotic, will-she-or-won’t-she game could come into play once again, since the Fed, by way of ‘managing our expectations’, has said recently that it plans to tighten perhaps three times in 2017. However, unless the economy lurches back to life, that will prove to be an idle threat, much as it has been for nearly ten years. Does loosening have a chance? Maybe. Although it could take several months for the U.S. economy to go slack enough to allow Yellen & Co. to back off their rate-hike promise, this could happen much sooner if the stock market were to take a hellacious dive out-of-the-blue. At that point the Fed would be talking about easing, even if it would be too late to lift stocks. _______ UPDATE (Jan 4, 7:46 p.m. ET): Today’s rally performed exactly as expected, topping within ticks of the 2266.00 Hidden Pivot target noted here yesterday. Can buyers now summon the energy to lift the so-far ceiling at 2270.00 — or will they instead give up after a single try? Stay tuned — if you can stand the suspense. _______ UPDATE (Jan 5, 9:35 p.m.) No decision, but the suspense is slowly mutating into tedium. Don’t be lulled! The chat room is a great place to stay alert, and to share your observations.
