-- Posted Thursday, 29 November 2012 | | Disqus

With the U.S. headed into deepest recession under our socialist president’s second term, we should view any significant stock-market rally as a golden opportunity to get short. Under the circumstances, yesterday’s 107-point effusion in the Dow Industrials was a mighty tempting hors d’oeuvres. Be that as it may, and as always, we’ll let purely technical indicators tell us exactly when to initiate the trade. From a subjective standpoint, however, any market-watcher with olfactories could tell you that the broad averages, currently trading within easy distance of new all-time highs, stinks to high heaven. Consider the backdrop: taxes are about to rise very significantly; public spending at all levels must fall; corporate earnings have already begun to sputter out; new hiring will be absolutely crushed by Obamacare; and the fraudulent housing “recovery” will soon breathe its last.

That last item has been a source of hope and comfort for the Administration and Wall Street, but why should we be comforted as well by a story spun by thieves, mountebanks, liars and worse. When you consider what went into creating the current real estate blip, you begin to understand why it cannot last. Granted, the Fed can continue to monetize mortgage securities at the rate of $40+ billion a month, and to warehouse bad paper associated with a vast inventory of unoccupied dwellings. Unfortunately for us all, the supply of qualified buyers and re-financers is certain to run dry before the economy’s impending dive has gone very far.

Heavy Supply

Concerning the stock market, look at the Dow chart above and you can feel the weight of supply as each distributive rally struggles harder and harder to match the last. From a technical perspective, we’ll be watching most immediately for shorting opportunities at ‘x’ and ‘p. If you don’t subscribe but would like to know the exact location of these “hidden” resistance points, click here. Please note as well that Rick’s Picks seldom advises initiating long or short positions at Hidden Pivots. Rather, we look for “camouflage” entry opportunities near these numbers, with the goal of dramatically lowering our entry risk. With luck and good timing, we can actually hope to make money even when we are wrong. Drop by the chat room and ask some traders yourself if you’re skeptical.

-- Posted Thursday, 29 November 2012 | Digg This Article | Source: GoldSeek.com

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