The twelve years we spent on the trading floor conditioned us to view all rallies and declines as manipulated to some extent. With respect to yesterday’s dog-and-pony show, it was the nature of the manipulation itself that suggested benighted bulls are slowly wresting temporary control of the stock market from enlightened bears. Specifically, the rally occurred in three stages, reflecting a relatively daring and elaborate ruse that probably would have been too risky for DaBoyz to attempt last week, when stocks were reeling in chaos. The crucial stage occurred Sunday night in thin markets, when most traders were sleeping. Our forecast had anticipated a 13.25-point drop, precisely, from Friday’s settlement price, and we had even advised night-owl subscribers to try bottom-fishing at the target, 1314.50, with a very tight stop-loss. But when the dust had settled, the futures had made their overnight low fully 3.25 points beneath the target, hinting of further weakness to come.

Gamble Paid Off

And so it did, but not straightaway. For, by taking the futures into such a steep dive in the dead of night, DaBoyz temporarily exhausted sellers, clearing the way for a modest short-squeeze on the opening. This would have caught those who follow the stock market only casually by surprise, since stocks had been falling hard when the markets closed on Friday.  Monday’s rally in the opening minutes of the session was therefore predictably brief, but what followed was less so.  Instead of being protracted and painful as we had expected, the ensuing decline was over in half-an-hour. DaBoyz overnight gamble had paid off, the steep decline they had engineered successful in taking out all but a handful of the most desperate sellers.

With little to weigh them down, stocks rose steadily for the rest of the day, generating upside projections that are likely to test the last ounce of fortitude of bears in the days or perhaps even weeks ahead. The rally is also likely to go on for just long enough make permabulls believe that perhaps the weakening economy and housing market are about to turn around. We see this as about as likely as a blizzard in Miami in July and will be looking to establish aggressive short positions when the time is right. In the meantime, we would caution bulls and bears alike against dropping their guard, since this rally is designed to ream gaping new apertures in both.

***

Seminar Is Sold Out

The Hidden Pivot seminar scheduled for February 9-10 is filled to capacity, so I’ve added an additional session on March 8-9. If you’d like to attend, click here  for further details and instructions on how to register. The class will be held on Saturday/Sunday from 9:00 a.m. to 12:30 p.m. Mountain Time.  If you want to learn how to forecast stocks and commodities as confidently and precisely as top pros, this is an opportunity you should not pass up.

A Class for Aussies

I will also be offering a class in February that is tailored to the scheduling needs of students from Australia, New Zealand and Singapore.. If you live in Sydney, this seminar will take place on February 21-22 (Thursday and Friday), from 3:30 p.m. to 7 p.m. These hours will also work for early risers in Western Europe.  For further details, click here.  You can also register directly by clicking here, then on the “Upcoming” tab.

***