Dow Industrial Average

The Dow blew past a 14897 target last week, obliging us to find another. I'll suggest using the 15193 Hidden Pivot shown, although the blue chip average hasn't yet closed above another at 14969 that comes from the weekly chart (A=10404 on 10/7/11; B=13339 on 5/4/12).  If and when that occurs, 15193 will become an odds-on bet as a minimum upside objective.  However, the pattern from which it is derived is sufficiently clear and compelling that we should expect short-able stopping power to materialize thereupon.

The rally target shown roughly corresponds to the marginal new high I've identified in the E-Mini S&Ps. The Dow would need to lag the S&Ps somewhat, but the two targets are sufficiently close that we should be alert to the possibility of a breakout turning into a bull trap.  Trading bias should be bullish until the target is reached, but we can re-short the Diamonds if and when that occurs.

Although I'd emphasized the importance of a longstanding rally target at 14969 here yesterday, we should allow for the possibility that it will not be reached and that the recent high at 14887 could turn out to be the elusive Mother of All Tops. Odds will naturally remain in bulls' favor for now simply because the bull market has been running for more than four years. However, because Monday's downdraft created a bearish impulse leg on the hourly chart, we can at least speculate that 'The' top is in, even if it is only 'a' top at this point. We'll have a better idea of the selloff's power once we've seen how the follow-through leg plays out (see inset).

Last week, the E-Mini S&Ps and Diamonds came within a hair of important rally targets. However, we should treat a still-outstanding target at 14969.26 (see inset) in this vehicle as the most important of them all -- implying that the Fat Lady has yet to sing. We already hold a bearish position in the Diamonds, but a last-gasp thrust in the Dow could give us a second opportunity to get short in the E-Mini S&Ps.  We might also conisder doubling down in the Diamonds, so stay tuned.

Permbears should take a look at the graph accompanying this tout, lest they get the crazy idea that bad economic news and lowered earnings forecasts alone are capable of slowing down buyers for more than a few minutes. Both of these negatives were in evidence and waxing last week, and one might have inferred that they were the cause of Monday's soft opening. Alas, it proved to be little more than a modest shakedown to begin the week, and within an hour bulls were at it again, driving stocks higher with such persistence that the 'effect' looks like a good bet  to reinforce the bullish mood till week's end. Meanwhile, you can cling to the hope that the 14632 rally target shown will show a little stopping power, but I wouldn't recommend opposing it aggressively.  A bigger picture available on the monthly chart still suggests that a major Hidden Pivot resistance at 14970 (broached here earlier) is likely to impede the stampede. The coordinates are as follows: A=10404 (10/31/11); B=13339 (5/31/12); and C=12035 (6/29/12).

Permabears shouldn't get their hopes too high over the Cyprus affair, since the hourly DJIA chart is not exactly screaming "Sell!"  In fact, you can see that recent downthrusts have failed to create impulse legs on the hourly chart, much less the daily where real trouble shows up. Yesterday's low failed by a hair to take out Tuesday's, implying that the selling was just traders marking time in preparation for the next short-squeeze buying binge. If you're looking to get in on the ground floor, keep a close eye on the 14405 midpoint support shown in the chart. Assuming the upturn its coming soon, that's the most logical place for it to start.  _______ UPDATE (1:15 p.m. EDT): The selloff didn't even make it down to the 14405 midpoint before DaBoyz seized control. They opened this hoax at 14421 and ran it 50 points higher on the opening bar, goosing it yet another 50 points shortly thereafter.  ________ UPDATE (March  25, 1:33 p.m. EDT):  Before plummeting 170 points today, the Indoos head-faked their way on the opening to within 9 points of a target I'd drum-rolled a while back.  Here's the original tout (and if you managed to get short, please let me know in th chat room): The 14572.39 target shown is one that I like, for reasons that seasoned Pivoteers will appreciate. Mainly, it’s the clarity of the ABC price points amidst a hot mess of steroid-addled, psychotic upwardliness.  When I say that I ‘like’ the target, I mean to imply that it has the potential to stop this rally in its tracks.  This would be no small feat, since the stock market’s surreal ten-day winning streak reportedly hasn’t been equaled since 1996.  Keep in mind that our target is not chopped liver, as I am fond of

The 14572.39 target shown is one that I like, for reasons that seasoned Pivoteers will appreciate. Mainly, it's the clarity of the ABC price points amidst a hot mess of steroid-addled, psychotic upwardliness.  When I say that I 'like' the target, I mean to imply that it has the potential to stop this rally in its tracks.  This would be no small feat, since the stock market's surreal ten-day winning streak reportedly hasn't been equaled since 1996.  Keep in mind that our target is not chopped liver, as I am fond of saying, and so if it is easily breached we should infer that bulls are preparing to rampage next week, pushing the rally into an even steeper parabola. Were that to occur, my minimum upside objective would shift upward to 14981.16.  In any case, subscribers are encouraged to improvise tightly stopped (i.e, 2-3 points) shorts from 14572.39. _______ UPDATE (March 18, 1:14 a.m. EST): Friday's 14539 finishing stroke missed our rally target by 32 points, a wider margin than I might have expected. The implications are neither bullish nor bearish as yet, but the outlook would shift toward menacing if the hourly chart goes impulsively bearish without 14572 having been hit. That would imply a print below 14411, a prospect that seems quite possible if DaBoyz are not able to bring stocks back from Sunday night's Cyprus sell-off before the opening bell.  The significance of 14411 is shown in the new chart. _______ UPDATE (12:20 p.m.): This morning's low hit 14404, but the short-squeeze recovery has been so ferocious as to sneer at any bearish interpretation.  Even so, the selloff that follows this rally will hold the key to our immediate outlook. Keep in mind that if that selloff were to occur from a new all-time high, it would

It was  during last night's Hidden Pivot Webinar that I realized how easy it would be for the Dow to fulfill a 14969 target that I aired here a while back, albeit without much conviction. My reason for considering the A-B impulse leg shown as 'uncorrected' are too technical to get into right now, but the bottom line is that the power of this thrust implies that the current, follow-through leg should be given every benefit of the doubt. Moreover, a pullback to the 13502 midpoint pivot should be regarded as a back-up-the-truck buying opportunity.  Click here to sample Rick's touts and trading room free for a week.

It creeps me out to think that if the Dow breaks out here, our next logical target would be somewhere up around 15000.  Fortunately, there are several lesser upside targets that comport more easily with the not unattractive idea that the broad averages are close to the Mother of All Bull Trap highs.  Assuming yesterday's top at 14105 gives way, a Hidden Pivot at 14142 is my favorite of the bunch, probably because a mere 70-point rally from Wednesday's settlement is all it would take to turn the last few holdouts super-bullish. Today's chart shows not only that target, but several more, each persuasive in its own way, along with their respective midpoint resistance pivots.  I have used a separate color for each pattern, and you should consider the chart as a whole a "matrix" of the kind discussed in the final hour of the Hidden Pivot Webinar.  Trading the various price points will be up to you, but each will probably be worth at least the small risk incurred in doing so via camouflage.  Fills should be reported in the chat room if you want me to track positions, whether long or short.