Dow Industrial Average

The Dow Industrials held up surprisingly well on Thursday, considering the scary news about tariffs. Two months ago, talk of a global trade war sounded like just another ginned-up story from a news media desperate for headlines. In fact, however, Trump's latest levies, which effectively cancel existing exemptions for steel and aluminum imports from Canada, Mexico and Europe, are sufficiently punitive to have provoked an instant, $12.8B retaliation by Canada. It was characterized as "the strongest trade action Canada has taken in the post-war era" and will take effect on July 1, matching the U.S. levy dollar-for-dollar.  The tariff will add 25 percent to the cost of steel and 10 percent to aluminum, meaning consumers will feel it down to the level of canned soups and key rings. The fact that the Dow Average managed to close down a mere 250 points suggests that the money-managing chimpanzees who are paid princely sums to throw good money at a relative handful of U.S. stocks are as oblivious to events in the real world as their simian progenitors. My hunch is that they will catch up with the bad news in the days and weeks ahead with a string of days like today, punctuated by an occasional really bad day. Even so, from a technical standpoint the worst I could see would be a nearly 2000-point drop to 22544. I'd suggest jotting that number down if you want to get ahead of it.

On a rather ho-hum day buyers were able to refresh the bullish impulse leg by taking out the 24,977 March 21 peak. Zooming into the hourly the P 24,989.89 was tagged on this clear pattern using a one-off 'A'. As we are still in "consolidation" mode I expect more of the same mundane activity for a bit while longer although I wouldn't blame you for wanting to get long using a mechanical buy at 24,853.7.

For the second time in a week the Dow has bounced sharply from the 23,806 midpoint Hidden Pivot support shown. How far will the rally go?  That's impossible to predict, nor do we pretend to have a crystal ball. However, the fact that both reversals occurred almost exactly at the pivot makes one conceivable sequence of events very predictable, as follows: If the Dow should decisively breach the pivot intraday (meaning by at least 40-50 points), or if it should close for two consecutive days beneath the pivot, that would imply more downside to exactly 22,754. Alternatively, and for all we know, the uptrend begun off today's 23,808 low could be the start of a move to new record highs over the next several months. We will probably not have to wait long for Mr. Market to tip his hand, since the strength or perhaps weakness of the uptrend cannot but reveal itself on the intraday charts over the next few days. Yes, it will still be a guessing game; but our guesses will be sufficiently 'educated' that we are unlikely to lose money acting on poorly informed hunches._______ UPDATE (May 3, 5:20 p.m.):  Today's 400-point reversal somehow failed to impress. In any event, it would take a print exceeding the 24,977 'external' peak recorded on March 21 for bulls to demonstrate they are serious. I should mention a 22,544 target that is equivalent to my new target for the E-Mini S&s. It uses the 'marquee' high at 26,616 as a point 'A' rather than the one-off 'A' at 26,338. _______ UPDATE (May 7, 8:20 p.m.): A modest rally by Wednesday afternoon exceeding 24580 would generate a promising impulse leg on the daily chart. Here's the picture.  ________ UPDATE (May 9, 8:59 p.m.): The Dow slightly exceeded our 24,850 benchmark,

Sellers shredded the 24,042 midpoint support I'd flagged here yesterday so easily that there should be little doubt about the likelihood of a further fall to the 23,225 target.  In retrospect, we can see that the Indoos were a fetching 'counterintuitive' short at the green line (24,450). If they should rally back to it, keep in mind that that would trigger a equally enticing 'mechanical' short. We'll interpolate using DIA puts if and when the opportunity arises, but for now let's move to the sidelines. _______ UPDATE (April 26, 9:57 p.m. EDT): Today's 238-point rally looked leaden in comparison to the ballistic moves that were occurring in AMZN and a couple of other institutional favorites at the same time.  It illustrates the point I made in The Morning Line -- i.e., that the broad averages will no longer be able to keep up with lunatic-powered rallies in the small handful of stocks that have tugged the market higher. AMZN et al. may continue for a while to make new record highs, but the bullish effect this will have on other stocks has probably peaked.

Bulls gave back 25% of Thursday's substantial gains in the final minutes of the session, presumably to preserve some buying power for Friday. A robust surge would hit the 24,837 [corrected] rally target of the pattern shown, but buyers will have to do a little better than that to leave themselves in good shape for next week. Specifically, they'll need to surpass the 24,977 'external' peak to remain in command Sunday evening. It lies exactly 494 points above and is crucial to the health of the intraday charts. If the Indoos were to close above the peak ahead of the weekend, that would add to a picture of short-term strength. But you should set a screen alert at 25,449, where an even more important peak was recorded nine days earlier. It is the most significant supply obstacle the Dow will have faced since the initial bounce off early February's lows. ______ UPDATE (April 15, 5;08 p.m. EDT): Last week's tedium changed nothing in the analysis given above, although I'll mention that a pullback to the green line (24,012) would trip a 'mechanical' buy signal. Traders keen on leveraging it can interpolate using DIA. (Please note that the 24,837 target given above corrects a 50-point error.)_______ UPDATE (April 16, 5:25 p.m.): Today's 200-point rally was most unimpressive, since there were no significant obstacles in its path.  Let's see how well buyers handle the two impediments shown in this chart. _______ UPDATE (April 17, 11:22 p.m.):  Today's equally unimpressive 213-point rally topped a millimeter from the lower target, 24837, so the jury is still out. _______ UPDATE (April 19, 7:22 p.m.): If the Indoos continue their retreat from Tuesday's high, expect them to fall to at least 24,042, a crystal-clear midpoint support.  If this occurs early in the session, don't hesitate to

The big picture still looks bearish, and that's why we shouldn't abandon the 22,251 downside target that has been theoretically in play for the last month or so. More immediately, the modest rally of the last two days promises to deliver a minimum 24,166 (click on thumbnail chart). I've suggested remaining open to the possibility that this so-far crappy little rally could turn savage, sending bears into a short-covering tizzy that would make it far more memorable than it deserves to be. _______ UPDATE (April 4, 7:31 p.m. EDT): Going strictly by-the-book, today's nearly 800-point reversal was just noise, since it failed to exceed even a single prior peak on the daily chart.  However, the picture would turn very bullish in a blink if buyers are able to surpass the 24,977 peak shown. A push above the lower peak at 24,446 would be a downpayment but not quite a clincher for bulls. _______ UPDATE (April 5, 6:26 p.m.)  Today's dithering ascent elevated the rally from being mere "noise" to having a perfunctory claim on our attention. Be prepared for even more boredom than you may have experienced so far.

Now wasn't that refreshing! Sellers drove the Dow Industrials 724 points lower on Thursday, displaying unaccustomed boldness and panache that perfectly matched the spirit of the headline I'd sent out to subscribers the night before:  Stocks Look Primed to Plummet on a Dearth of ‘Good’ News.  And there is even more good news for those who had begun to despair of the possibility that sanity would ever return to the stock market. The next dose of sanity -- call it a second spoonful of castor oil -- is all but guaranteed to knock the Dow Industrials down to at least 22,822, a Hidden Pivot target that lies 1135 points below today's close. (Note: If that number is exceeded by more than a few points, keep 22,544 in mind as an alternative.)  A bounce from either will almost surely be tradable, and I don't foresee this selloff exceeding the lower number, at least not before the Indoos have rallied sharply enough to suck everyone back in. _______ UPDATE (March 23, 6:48 p.m.): Today's plunge left the Indoos in good shape to achieve the target(s) identified above. I strongly expect a tradeable bounce from very close to either number, or perhaps from both. _______ UPDATE (March 26, 11:52 p.m.):  Bulls shouldn't get too excited by today's nearly 700-point upthrust.  Actually, if it continues for another 853 points, the Dow would become a 'mechanical' short.  Here's the chart. _______ UPDATE (March 27, 10:18 p.m.):  Just one small change -- an upward adjustment to 22,856 in my minimum downside target. (The alternative target is now 22,551  - seven points higher than the original.) ________ UPDATE (April 2, 2:04 p.m.): I now prefer the 22,251 target flagged above, mainly because of the precise bounce a month ago from its associative midpoint pivot, 24,176. We should

A bull market target at 26,705 that I offered here on Friday remains relevant, but here is another at 27,456 that could generate a very important top.  Assuming one, or both, are reached, I would expect a tradeable pullback from within a few points of either number. Of course, there is the possibility that the nine-year-old bull market ended with the 26,616 high recorded during the last week in January. If so, we should see the hard selloff that began on February 27 from 25,800 exceed its 22,822 target. This is the first time I've mentioned this number, but because of Friday's price action, I would now rate it no worse than an even-odds bet to be achieved. Yes, the broad averages did recover sharply on Friday due to ferocious short-covering ahead of the weekend. Rick's Picks precisely anticipated this in a tout sent out last  Wednesday that said the Indoos, which had fallen more than 400 points that day,  would become a "screaming buy" if they plunged a further 400-plus points to exactly 24196. In actuality, the Dow on Friday trampolined 375 points after bottoming at 24217 -- just 21 points from the 'screaming-buy' threshold.  Many subscribers, using various trading vehicles, reported using this guidance to get long at or near the intraday low. Let me emphasize, however, that from a Hidden Pivot standpoint, the bounce occurred only after the initial sell-off had seriously damaged the look of the daily chart. Specifically, sellers drove the Indoos decisively beneath the 24,311 'midpoint support' shown in this chart. If the Dow were to close for two consecutive days beneath it, I'd infer that more downside to 22,822 was very likely.

The Dow has fallen nearly 800 points since topping Tuesday just a micron shy of the 25803 'midpoint pivot' shown in the chart.  Now, if the Indoos were to shed another 800 points, we'd probably hear a bearish drumbeat from the usual naysayers. However, from a technical perspective based on the Hidden Pivot Method, the blue chip average would become a screaming 'mechanical' buy if it were to fall to the green line at 24,196. The stop-loss would be at 23,359 -- a big one. Fortunately, we have many ways to reduce it by 90% or more if and when the opportunity arises. Please note that a somewhat riskier 'mechanical'  buy signal was already tripped at the orange line (25032), but the 24,474 stop-loss  it would require to hold the position seems a tad too tight to handle a correction worthy of the name, assuming this is one. _______ UPDATE (Mar 1, 10:021): Sellers made a good-faith ever to kick some butt Thursday, but they'll need to push this brick another 250 lower points to activate the 'mechanical' buy signal noted above.