Zuckerberg’s Huge Branding Problem

Yet another punk Friday suggests that the longest bull market in history is running out of gas. Considering that the war with Iran is a mop-up operation at this point, and that global jihad has suffered an extraordinary setback, the stock market should be celebrating. Instead, the S&P mini-futures couldn’t even muster the last dozen or so points to reach a 6911.50 rally target I’d considered a lock-up.  The futures could have returned to the green line (x=6766.94) for a running start and another try; instead, they kept falling, canceling an ostensibly bullish pattern with a dip beneath its point ‘c’ low at 6718.75, just ahead of the opening bell. To complete this picture of feebleness, buyers went nowhere on Friday, even unburdened of bulls who were stopped out with the gratuitous dip beneath 6718.75. Now all DaBoyz can do is wait for “news” conducive to a short squeeze, which, as I never tire of reminding you, is where nearly all of the serious buying power comes from in bull markets.

But if a decisive victory against the chief agent of evil in this world is not enough to spark such a rally, then what is? Instead, the focus of the hacks who invent the news is on the disruption of oil markets. It has been years since Wall Street much cared about events in the real world, much less a mostly imagined problem with oil shipments in the Persian Gulf (as evidenced by Israel’s resumption of commercial air flights.) The Masters of the Universe should be looking past this, toward the resumption of business as usual. And yet, their dim lackeys in the news media seem crestfallen over Iran’s impending defeat. (Tune to CNN for 30 minutes if you don’t believe this.) Something is wrong with this picture, and it is looking increasingly unlikely that another big, underserved leap in stocks will remedy it. Meanwhile, since I never like to leave you without a price target, I’ll suggest using 6612.00 as a minimum downside objective for the near term. The reverse pattern yielding that Hidden Pivot support is not hard to find on the daily chart, so it’ll be a do-it-yourselfer.

Rates on the 10-Year Note came within a hair on Friday of lows not seen since October. My suggestion is to enjoy it while it lasts, since the intraday bottom closely coincided with a Hidden Pivot target at 3.952%. The actual low was 3.956%, which was near enough to consider the target fulfilled. Alternatively, if the downtrend continues on Monday, breaching not just the target but October’s 3.976% bottom, be ready for more slippage to 3.917%, a voodoo number worth bottom-fishing with as tight a stop-loss as you’re comfortable with. _______ UPDATE (Mar 7): It looks like the prediction of an important low hit a bullseye, since this vehicle has since trampolined as high as 4,188 after bottoming a split hair from the 3.952 target. Here’s the chart.

GDXJ had a constructive week, exceeding p2=152.56 just days after shredding the midpoint Hidden Pivot resistance at 142.01. This one-two punch has all but guaranteed more upside in the days ahead to at least D=163.11.  Given the clarity of the pattern, there is almost certain to be tradeable resistance there. But the coordinates are too visually obvious to expect precise stopping power, so you’ll need to fashion a ‘camo’ trigger if you plan on getting short. Naked-shorting call options is another way to go, provided you understand the risks.  This is the best way to get short if you expect a few days’ worth of evasions, feints and obfuscations as GDXJ attempts to shake off traders who will be trying to get short at ‘our’ D target. ______ UPDATE (Mar 5): So much for my seppuku-worthy guarantee. Bears turned tail at 157.49, nearly $6 shy of the 163.11 target. wouldn’t it be crazy if the ‘mechanical’ buy about to be signaled at x=131.46 went on to achieve 163.11? I wouldn’t bet the ranch against it, since stranger things have happened. ______ UPDATE (Mar 8):  Actually, the ‘mechanical’ buy alluded to above does in fact have a chance of reaching the 163.11 target. Last week’s low at 136.11 not only came within 0.05 of the target, it gave way to a bounce that has so far gone as high as 137.81. No one mentioned this in the chat room, so I can only infer that none of you much cares about this symbol, let alone trades it. Correct?

The chart is featured in the current commentary, but let me add a cautionary note for subscribers only. The 50K milestone that lies just a hair above Friday’s record settlement closely coincides with the 49,355 ‘D’ target of the pattern shown in the inset. My gut feeling is that the so-far slight overshoot of the target happened because traders were intent on hitting 50K regardless of any Hidden Pivots that may have stood in the way. We should infer in any case that there is double stopping power here, and that a significant pullback is distinctly possible, even if it turns out not to have been the start of a bear market. Since we should always have a higher target ready just in case, the 53,022 Hidden Pivot noted in the upper-right corner of the chart can serve that purpose. Assume it will be achieved if the Indoos close for two consecutive weekly bars above 50,600. _______ UPDATE (Jan 30):  The Dow has been jerking bears’ chains with a Wile E. Coyote dance inches from the potential top I’d warned about at 50,000. Sellers will need to penetrate the red line (p=48,270), however, before I can diss this gas-bag with enthusiasm and still sound credible.  Even then, it would be a good bet to fall no further than D=46,918, hinting that the broad averages, unlike bullion, are in shallow correction that will cause little pain or even anxiety. _______ UPDATE (Feb 8): The Dow broke out last week, but the follow-through could be less than spectacular. This chart shows a compelling Hidden Pivot resistance at 50,819, just 704 points, or 1.4%, above Friday’s closing price. _______ UPDATE (Feb 20): No change: 50,819 still looms as a potentially important number.