Dow

The stock market was in the throes of a monster rally as this tutorial session got under way, with the Dow up more than 400 points and the E–Mini S&P inches from a target that could temporarily cap the rally. More important than all of this was a T-Bond selloff, the resolution of which may tell us whether the Western World is about to embark on a hyperinflationary course. We set a screen alert at a key downside target of the December T-Bond futures, there to await a result.

If DaBoyz can squeeze a 500-point Dow rally out of yesterday’s administered easing of dollar “swap” rates, just imagine what they can do with a little Santa seasonality and a dollop of year-end window-dressing.  Let’s be straight about a couple of things. First, no one expects the latest easing of global credit lines to resolve Europe’s debt crisis. And second, the 800 points the Dow has tacked on this week represent little more than trading machines masturbating each other amidst a short-covering panic. Some observers merely yawned, noting that the swap arrangements that make it easy and cheap – and now even easier and cheaper, if such a thing were imaginable -- for foreign banks to borrow dollars have been in place since 2007.  However, others saw the announcement by the central banks as nothing less than a bold step by the Federal Reserve to begin monetizing the debt of Spain, Italy, Greece, France et al. It’s a moot point whether the U.S. has begun bailing out Euro-deadbeats, however, since the U.S. is a deadbeat itself, albeit one in sole possession of the world’s reserve currency and therefore of the ability to gin up unlimited quantities of the stuff at will. Meanwhile, there’s little point in pretending that the U.S. is somehow not immersed in the bubbling cauldron of toxic global finance. U.S. banks had stopped lending to their European counterparts, and that’s why the Fed stepped in to pretend it has the situation under control. This may work for another week or so, if that long, but it’ll be interesting to see whether reducing swap rates to near-zero will help suppress sovereign borrowing rates that recently topped the 7% “red zone” for Italy. Would you lend the Italian government hundreds of billions of dollars at 7%? That’s what we

With the Dow off as much as 300 points on this particular morning, we nevertheless found a profitable trade against the trend in the E-Mini S&Ps. Our success entailed simply going with the flow, since the flow at the time we were looking for action was “up” on the very lesser charts that we typically use for camouflage. This session will be especially useful to index futures traders, since we rationalized each and every price squiggle up to and beyond the moment the trade was initiated. It was a “successful’ trade to the extent that it reached the ‘p’ midpoint where partial-profit taking was possible.

So comfortable had I become with the stock market's daily, thrusting assaults on rationality that I neglected to consider even the possibility of a decline, especially one so refreshingly nasty as what we saw yesterday.  My good friend Doug B, The Savviest Financial Advisor I Know (the number two guy on the list is not even close, by the way) thinks this is the beginning of a devastating correction that will bring valuations more realistically in-line with an economy that we both agree is headed into a full-blown Depression. While he has logic on his side, and even some contrarian boost from the hordes of advisors he insists are too, too bullish these days, I'm going to fall back on technical analysis alone to tell me what might come next. So check out today's touts for the E-Mini S&Ps and the Dow if you're interested in a closely reasoned look at the charts using Hidden Pivot Analysis. Incidentally, I'll be taking a look at the technical runes in real time later this week. Details will follow shortly, but this will be an online analysis session open to all and to which you can invite your friends.

Ahhh, it’s those old Greek worries again!  Yesterday they were blamed for undoing a nearly 150-point rally in the Dow, although the question of what had caused the rally to begin with seemed of less concern. We’ll proffer the usual, technical explanation: Yesterday’s ups and downs were caused entirely by algorithm-driven machines with nothing more on their tiny digital brains than a bunch of zeroes and ones.  And if they had a smattering of human help, the humans undoubtedly applied the same tried-and-true tactic that has carried the day for the hedgies time and again in recent months – i.e., letting the index futures fall on thin volume, exhausting sellers overnight; then inducing a short-covering panic ahead of the opening bell. Would that Greece were driven by algorithms and polymath dervishes!  Granted, this wicked combination could send millions of Greeks into manic-depressive fits and potentially suicidal lows. But, oh, just think about those highs -- just like the ones we thrill to nearly every week on Wall Street, where even the glowering menace of a Second Great Depression evidently cannot kill the insensate ardor of buyers.  So, if 300-point Dow rallies are still possible, why hasn’t the same kind of exuberance seized the proletarian mind in Athens?  The answer, of course, is that Greece’s mood is driven not by “technical factors,” but by the grim realities of a failing economy and an economic future utterly bereft of hope.  Greek businesses cannot get bank loans to tide things over while their customers try to scrounge enough cash to redeem their IOUs. This has by now developed into a vicious cycle that can only spiral outward until it has encompassed all economic activity. In the meantime, a Europe desperate to save the euro and a transnational political confederation that had been dreamt about by

The Dow was up nearly 300 points at its highs yesterday, savaging bears who may have gloated over last week’s equally impressive decline.  These short-squeeze rallies are usually catalyzed by economic headlines, and it doesn’t seem to matter whether the news is good or bad, since the markets have a mind of their own and can sometimes surge on the gloomiest data. U.S. markets actually seem to thrive on bad news as long as it does not emanate from Europe.  But it is probably just force of habit that causes shares to rise at such times, since, for nearly a decade, ostensibly bearish stories came to be associated with a likelihood of further easing by the Fed. Easing is of course no longer possible with administered rates already at zero, but any news that might help us cling to the notion that things can’t get much worse is arguably a plus for stocks.  So what were the day’s headlines? The top stories could not have been much gloomier. For starters, we learned that the inflation-adjusted income of male workers has not increased since 1978. Nor have households fared so well in more recent years despite Keynesian and monetary stimulus amounting to many trillions of dollars. Even with all of those digital bucks flooding the financial system, however, the income of the typical American family appears to have dropped for a third straight year and is currently at 1996 levels after adjusting for inflation.  A report on this in the Wall Street Journal noted delicately that the statistics showed “how devastating the recession was [our emphasis], and how disappointing the recovery has been.” Rodney Dangerfield That’s putting it mildly – not to mention, in a way that denies what we all know – i.e., that The Great Recession never left us…has

Considering that yesterday was the last day of the month in a week typically bursting with bullish Labor Day seasonality, the Dow's 54-point rally ranks pretty low for Wow factor.   On the other hand, the fact that a 1241.00 Hidden Pivot target in the E-Mini S&P demands that bulls -- all two of them -- slog at least somewhat higher before they take a rest, is testimony to staying power of this presumptive bear rally.

We must always be on the lookout for subtle technical signs on the long-term charts, since they can provide important clues concerning the temperament of a bull or bear market. It is on the monthly chart of the Dow Industrials that we looked for and found small details with potentially large significance. Has this summer’s 2200-point crash in the Dow marked a resumption of the secular bear? This session provides some illuminating details that bear directly on that question.

Now that was impressive! An earthquake, of all things, shakes the Big Apple yesterday as it hasn’t been shaken since 9/11, and Wall Street never even breaks stride. Early reports suggested that some denizens of the Bowery were fearful the city might be under attack again.  They may have breathed a sigh or relief, however, when it became clear that the tremor was “only” a magnitude 5.8 earthquake, not a suitcase nuke. Before the Virginia-centered quake hit shortly after 2 p.m., a strong rally was already in progress from the night before, propelled by who-knows-what.  The temblor had no discernible on the markets, but it rattled big cities up and down the Middle Atlantic coast.  Breaking news pushed Hurricane Irene temporarily off the front page even as the mounting storm, with sustained winds above 90 mph, threatened to wreak havoc on the East Coast this weekend. Traders were unfazed by it all, however, and by day’s end the buying spree had become a runaway freight train, sending the Dow up 322 points. The mania steepened in the final hour, sellers evidently having realized that resistance was futile.  At the same time, Gold and Silver were getting pummeled, as so often occurs when the stock market behaves as though all were right with the world.  December Gold came off its overnight high by $93, hitting a low of $1819 in the late afternoon, while September Silver was off a whopping $2.78, or a little more than six percent.   As the Great Recession tightens its grip, we look forward to a resumption shortly of the buying in bullion and the continuation of the stock market’s penitent decline. Even so, we are forced to acknowledge that there is nothing in the technical picture that would preclude a very strong bounce here – to new highs, even. We said as