Dow Industrial Average

I drum-rolled a 21,101 target a while back that lies a little more than a thousand points higher. An adjustment I've just made may seem like splitting hairs to some of you, but in the interest of getting the rally exactly right, I've lowered the target a tad, to 21049. The change entailed simply shifting to a different point 'A' low, in this case the 15503 'secondary' bottom recorded almost exactly a year ago. This does not alter the fact that buyers of the Dow Industrials crushed the midpoint Hidden Pivot resistance of the pattern shown. While the original pivot was 26 points higher, in either case the implication is the same: The move is so powerful that there is probably no stopping it until the D target above 21,000 is reached. There are many ways to trade this prediction, but it will probably be easiest to focus on opportunities in DIA.  Stay tuned to the chat room and The Scoreboard if you care.

The 19727 target we were using to stay on the right side of the rampaging bull has gotten trashed, suggesting buyers are in need of no rest, even after climbing 2550 points from the election night low. A run-up to 20,000 seemed in-the-bag when 19727 got taken out a week ago, but here's something more ambitious to contemplate: 21,101, the rally target of the pattern shown. Judging from the ease with which the Dow blew past the 19492 midpoint pivot, odds of a further run-up to 21,101 in the first quarter of 2017 look quite good -- about 75% in my estimation. The chart also implies that a pullback to the red line would be a 'mechanical' buy if it were to occur four to six weeks from now. ______ UPDATE (Jan 18): I've refreshed the chart to show how the Indoos are rolling over after having smashed through the midpoint Hidden Pivot resistance. A pullback to the red line would be a 'mechanical' buy in theory, but a further 600-point fall to the green line would be a less risky place to try it. For now, though, getting short looks like a better bet.

The chart included with yesterday's DJIA tout showed a big-picture pattern going back to early 2016 that projects to as high as 19727. This one, tracing back to early July, points to a somewhat less ambitious target at 19489.  It is more suitable for trading because Hidden Pivot levels x, p and p2 are closer together, yielding theoretically lower-risk 'mechanical' entries from any of the three levels.  It has also been loosely confirmed by an intraday high on Wednesday at 18650 that fell within spitting distance of the 18686 midpoint pivot. The Indoos will have to breach it decisively to become and odds on shot for a run-up to 19489, so we'll wait and see what happens before we look for opportunities. Stay tuned to the chat room for guidance in real time, since the any trades will require interpolating the various levels using DIA. A possible play might involve, for instance, legging into a vertical call spread pegged to the 195 strike once 186 has been exceeded. _______ UPDATE (Dec 7, 8:59 p.m. ET): Today's decisive thrust past 19489, my minimum upside projection for the last month or so, has put the 19727 target solidly in play. I'll recommend shorting there with a tight stop (using DIA, perhaps, or the Mini-Dow futures) only to traders who have been long for at least part of the ride higher. _______ UPDATE (Dec 8, 9:59 p.m.): If the Hidden Pivot resistance at 19727 fails to contain this binge, we'll soon be looking at 20000. As I've noted above, that would be congruent with a 2299.00 target still outstanding for the December E-Mini S&P.

Lest we be seduced by the wishful notion that the Comey rally is the bull market's dying gasp, consider the chart featured with this tout. It suggests that a nearly 1500-point rally to 19728 is possible for the Dow Industrials if all hell breaks loose. In fact, a theoretical buy signal for a ride to that target has already been tripped, and the Indoos need only spike through the red line, a key Hidden Pivot resistance that lies just 132 points above Monday's high, to make the target an odds-on bet. A lesser, bullish pattern with the potential to hit 19509 would trip a similar signal if buyers touch 18305. That's just 42 points above Monday morning's high. In any event, we shouldn't underestimate DaBoyz' ability to turn a merely nasty short squeeze into a rabid one.  Even they don't know at this point whether this is possible, but you can bet they will leverage to-the-max whatever occurs on election day, especially if Hillary wins. Both of the rally patterns have three Hidden Pivot levels that can be used to get long or short with little risk, depending on your inclination. For a detailed look, check out the recording of today's 'impromptu' tech-analysis session online, since it offers precise, tradable coordinates for the Dow that are designed to take the randomness out of whatever nuttiness is about to ensue. I'll post a link to the recording in the chat room shortly. If you don't subscribe, you can access it by clicking here for a no-risk, two-week trial subscription to Rick's Picks. That will also get you into the chat room, where savvy traders from around the world share ideas and tactics 24/7.

The selloff since Friday may seem momentous to trade-desk denizens, but so far it has barely caused a blip on the Dow's weekly chart (see inset).  Would another thousand-point selloff seem scary? As you can see for yourself, even that would not exceed any important prior lows. It would in fact require a further decline of 1638 points to do so -- to suggest that the post-Brexit plunge is anything more than a nasty shakedown by those who control the markets with practically unlimited borrowing power. The foregoing is intended to remind you that Brexit is not necessarily the end of the world. Indeed, there are as many positive arguments to be made for the outcome as negative, and that's why the reaction of securities markets globally already seems overdone. Yes, we still should keep close tabs on the selling, since there's always the chance it could snowball into a bear market that seems long overdue. But my gut feeling is that stocks are about to reverse, perhaps as early as Tuesday, a statistical turnaround day. If so, a logical price where this might occur is from 17008, the 'secondary' pivot of a minor pattern on the 15-minute chart (a=18011, b=17356); or perhaps from 16845, the pattern's 'd' target. Neither of these Hidden Pivot supports corresponds to the 1973.50 target I've proffered for the E-Mini S&Ps, so both vehicles will have to be monitored and traded separately, presumably with very tight stop-losses if bottom-fishing. Alternatively, if these levels give way very easily, it would imply significantly lower prices ahead. We'll wait and see.

Non-farm payroll numbers are due out Friday, and it looks like DaBoyz are fixing to use the alleged news to put the squeeze on bears. This is not to imply that I can guess whether the numbers will be bullish or bearish. In fact, pretty much all economic news these days is treated as bullish.  Lest we get caught up in the frenzy that statistical navel-gazing tends to stir up on Wall Street, however, we should ask ourselves why anyone on earth should possibly care about payroll data. The fact is, no one actually does -- except for newsroom flunkies, economists, MSNBC talking heads and assorted other knee-jerk artistes. But that doesn't stop institutional traders from going bonkers every time the NFP datum is announced. They're simply frightened by the thought that competitors might get the jump on them by buying the alleged 'news' first. _______ UPDATE (June 3, 11:40 a.m.): And go bonkers the traders did, although the move in stocks was down rather than up. This is ostensibly because 'bearish' payroll 'news' has caused the Fed junkies to reassess their expectations of tightening this summer. Things will be back to normal next week once this shakedown by DaBoyz has run its course.

Although the broad averages ended the week with a short-covering rally sprung from Thursday's lows, the decline that preceded it did serious damage to the daily chart. Specifically, it surpassed three prior lows, two of them 'external', before a modest recovery set in.  The bounce would have to continue for another 435 points to negate the effects of the breakdown.  That would surpass two prior peaks, the higher of which, 17935, was recorded on May 10. Even then, with the creation of 'dueling impulse legs' on the daily chart, the futures would be a better bet to muddle sideways for a spell than to challenge the old record high at 18167. ______ UPDATE (May 25, 7:20 p..m.): Mission nearly accomplished, since the 17891 peak of today's short-squeeze fell just 44 points shy of the 17935 benchmark given above.

Thursday's exhilarating plunge has given bears a ray of hope in the form of a minor impulse leg on the daily chart. I've labeled it in red, but it will be bucking the larger and more significant uptrend labeled in green. We should know by next mid-week or so whether the selloff is going to get legs, since, if this becomes likely, the evidence will come in the form of a downtrending ABC pattern that exceeds its D target. We'll keep out fingers crossed, since the only way for the economic world to return to something like normalcy will be for the Dow to shed 10,000 points and bring everyone, not just investors, back to earth. From a purely technical standpoint, however, and strictly speaking, the pattern shown is so far looks like just another correction in a bull market that has been running loco for more than seven years. ______ UPDATE (May 1, 9:35 p.m. ET): Two straight down days have given bears a little momentum, notwithstanding the weak short-squeeze rally that closed out the week. Now, if the selling were to continue without pause, exceeding the 17,399 'external' low recorded in late March, the decline would start to look interesting. _______ UPDATE (May 3, 12:36 a.m.): Although the Indoos rallied 117 points yesterday, the move was merely corrective relative to the bearish impulse leg created by last week's two-day decline.  I doubt that buyers have the gumption to push this brick to new highs straightaway, so we should look for the Indoos to roll down today or tomorrow in search of oxygen.

From January's fleeting, bombed-out lows, the Dow has rallied ferociously into a no-man's land that lies within spitting distance of new record highs. It is bullish that the most recent thrust exceeded the trendline shown. How bullish? Bullish enough that we shouldn't be too terribly surprised if the blue chip average goes on to exceed last May's all-time high at 18351. That would represent a 638-point gain, or about 3.6%, over current levels. However, the Dow need only exceed November's 17978 peak to generate a very powerful bullish impulse leg on the weekly chart. It would be quite powerful indeed, considering that it would not have corrected even slightly during the so-far nine weeks of the ascent. The putative power of the rally would be even greater if, still without correcting, it were to exceed yet another 'external' peak at 18137 recorded last July.  We should wait to see how things plays out before we jump back on the bullish bandwagon, but let me say up-front that I will let the charts guide me rather than my deeply held conviction that the bull market is a hoax, one that is soon to come crashing down as global recession spreads from Europe and China to the U.S.  Naturally, I would be very strongly inclined to see a rally to new record highs as the ultimate bull trap. Even then, however, I would continue to call the turns from day to day, based purely on coldly technical indicators rather than on mere gut feelings.