What's Your Take?

[The markets will be closed on Monday for President's Day, but I am putting out fresh touts and commentary because DaBoyz are required to briefly let the beast out of its cage on Sunday evening. Up-to-the minute updates from Rick's Picks will resume on the home page and in the trading rooms on Tuesday.  RA ]
  
Technicians use charts to get a precise handle on trends and price reversals. However, even the unschooled eye can sometimes form a tradeable opinion by merely glancing at a chart. Does the one displayed above tell you anything that might be actionable? To my eye, and without resorting to any of the proprietary tricks that are possible with the Hidden Pivot Method, I see the Dow Industrials rolling over due to the presumptive weight of heavy supply. There are many reasons we could adduce for this; however, pondering 'reasons' would negate the value and usefulness of technical analysis, which shuns 'reasons' as mere noise in order to focus on how an infinitely complex conflation of 'reasons' are actually perceived and acted on by traders and investors.

The chart above does not make it possible to infer with confidence that a full-blown bear market is about to unfold. But there is still the visually intuitive sense that: 1) a major rally from these levels is unlikely; and, 2) a large drop is needed to form a base before spectacular new highs could conceivably be achieved.  Again, using only the eyes rather than the brain, how far do you think the decline would have to go in order for a base to form?  There is no correct answer, but my subjective eye 'needs' a selloff into the void between the pink and red lines. Respectively, the levels are a 'secondary' Hidden Pivot at 31,306 and a Hidden Pivot 'midpoint' at 26,762. If the Dow were to fall to the exact middle of that range, it would be at 28,899, a 16% drop from current levels. Drawing on my technical experience, I would say that that's where the Indoos are headed at a minimum. Hidden Pivot voodoo can sharpen this outlook considerably, so stay tuned.

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