The Smell of Napalm in the Morning

It took nearly two weeks for bears to recoup their mojo after getting sucker-punched by a suspiciously buoyant market following the October 7 Israel massacre. Although the attack could lead to a nuclear conflagration and world war, Wall Street kept its cool while trade desk sleazeballs deftly distributed shares to the rubes. But Friday’s are often clarifying, since they force traders to guess how America’s mood might change or intensify over the weekend. That would explain why stocks fell hard to finish the week. But this followed nearly two weeks of perverse strength, presumably because there is virtually nothing for anyone to be bullish about at the moment. Geopolitical news grew still grimmer last week, even as shares hovered until Wednesday as though they were gathering strength for yet another psychotic upthrust.

A ‘Theoretical’ Buy

We should never discount this possibility, as the chart reminds us. What it says, in coldly disinterested technical terms, is that the Dow Industrials became a theoretically enticing buy when, with dubious prescience, they bottomed on the green line just hours before the Hamas attack. Under the simple rules of the Hidden Pivot System, this triggered a ‘mechanical’ signal to get long . This doesn’t’t mean we should expect the Indoos to rocket to new all-time highs any time soon; rather, it portends a rally at least to the red line (34,455) before such time as the DJIA falls beneath the pattern’s point ‘C’ low at 31,428. This set-up usually works, so don’t be surprised if a preternaturally powerful rally develops amidst growing darkness in the real world.

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