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A stall has turned into a power dive on
Wall Street, with some bellwether stocks plummeting
toward key supports flagged here a short while back. One of those stocks,
IBM, actually breached a “midpoint Hidden Pivot” support
yesterday at 187.78, and that spells more rough days ahead for bulls. The
actual low at 185.25 was not far beneath our proprietary support, 187.38, but
the latter number should have held very precisely for the stock to avoid yet
more carnage. Now, it looks like IBM will fall a further $8, to at least
177.56, before it will have another chance to gain traction.
Meanwhile, Google, another stock whose
year-end performance will weigh heavily on portfolio managers’ bonuses,
relapsed to an important Hidden Pivot support of its own, 650.69. We’d
drum-rolled a possible rebound from that number last week, and it came in the
form of $20 rally from exactly 650.30. But if Google were about to recover
its mojo, the rally should have lasted perhaps 8-12 days. In fact, it appears
to have petered out in just a day-and-a-half, strongly hinting of
significantly lower prices to come. Our minimum downside projection for the
stock is now 605.83, a number you should jot down if you trade this vehicle
or hold it as an investment.
Apple at
Cliff’s Edge
And if portfolio managers didn’t
already have enough to worry about, Apple was threatening to take another leg
down after having fallen nearly 25% since mid-September, when it recorded an
all-time high of 705. Technically speaking, the stock’s best hope for
the near-term would seem to lie in continuing a head-and-shoulders pattern on
the long-term chart. The stock is working on the right shoulder now, and if the
pattern traces out a textbook ending, it could propel Apple into a last-gasp
rally of as much as $100. But hoping that this pattern continues to develop
by-the-book is like hoping, when your parachute has failed to open, that
you’ll be able to find a fluffy haystack to land on in the backwoods of
New Hampshire.
A welcome exception to yesterday’s
weakness was Facebook, a stock in which Rick’s Picks subscribers
were told to accumulate March 30 calls at prices ranging from 0.50 down to
0.25. Yesterday, with the Dow Industrials on their way to a 185 loss, our
calls doubled in value, yielding a theoretical gain of 50% over their 0.375
average cost. The underlying stock rallied 2.50, to 22.36, for a one-day gain
of about 12.5%. Terrific as the stock looked, however, we’ve warned
subscribers not to expect Facebook to continue to buck the tide. However, our
hunch is that even if the Dow were to take a thousand-point plunge right now,
whatever factors that have been pushing Facebook shares higher are probably
sufficient to put a floor under the stock near $20.
Winds of War
There are so many factors weighing on
the market right now that it’s difficult to single out any one of them
as the cause of the sharp break since early October’s highs.
There’s Obama’s re-election, of course. And although that could
prove to be the worst political disaster in the nation’s history, it is
not likely to have any economic bearing on the deflationary juggernaut that
has been gathering force for nearly 30 years. Perhaps the most significant
piece of news to have emerged in recent days, overshadowing even headlined
rioting in Spain, Portugal and Greece, was the heightened threat of war in
the Middle East. In retaliation for the nearly 200 rockets that rained on
southern Israel from Gaza a few days ago, Israel took out Hamas’
military chief officer and a few others with some air strikes. Things took a
turn for the worse, diplomatically speaking, when Egypt yesterday recalled
its ambassador from Tel Aviv. Israel has warned that any Hamas operative who
shows his face above ground will be dead meat. For its part, Hamas has
threatened to step up its rocket attacks.
Petraeus: Who Cares?
Meanwhile, the same unregenerate,
anal-masochistic, leftist shitheads in the news media who took a see-no-evil,
hear-no-evil approach toward scandal before the election are tripping over themselves
to expose every sordid detail of Petraeus’s
love afffair. Will the orgy cease when it threatens
to engulf Obama himself? Who cares. Whatever
happens, we’ll stay focused on Gaza while tuning out all distractions
related to the so-called fiscal cliff. As we all absolutely, positively know
by now, the shiftless jerks we’ve elected to Congress are only going to
kick the can further down the road when it comes time to fix the budget.
If war is about to break out in the
Mideast and become above-the-fold news in America, the so-far 1120-point drop
in the Dow Average since early October would not even begin to discount the
economic damage that will come in its wake.
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