No sooner had we resigned ourselves to the vertigo-inducing logic of a “Santa Rally” than the stock market surprises by swan-diving from a three-meter height. Talking heads attributed the weakness, as well as the upward skew of bullion and gold quotes yesterday, to Benazir Bhutto’s assassination, but since when have the markets cared about what was going on in the real world, especially when the news concerned mere homicidal mayhem in a country so distant as Pakistan?  We’d be surprised if one fund manager in a hundred could even locate Pakistan on a map, so we seriously doubt that they were much shaken by the murder of Bhutto yesterday by a suicide bomber. Pakistan’s bourse was said to be rattled, but who knew that it was one of the hottest stock market’s in the region to begin with?

Concerning the U.S. stock market, we’ve speculated here before that even the sight of a nuclear mushroom cloud over L.A. or New York would not likely unsettle shares for more than a day or two. Why should it, when stocks have barely flinched at the prospect of a full-blown real estate deflation -- or almost as bad, a Hillary Clinton presidency? And it’s not just the events of the real world that equities have contrived to ignore; they have also flouted time-tested technical and cyclical indicators that have only very rarely been wrong. One such indicator held that in years ending in 7, stocks have shown an overwhelming tendency to plummet in the four-week period between early October and early November.  The declines have averaged about 15%, and until  this October the indicator had worked more than 90 percent of the time. Not this time, though.

Bull That Wouldn’t Die

The Bull Market That Wouldn’t Die (TBMTWD) has reproached an even more time-honored Wall Street adage -- that the stock market cannot abide uncertainty. If this was true before, it appears to be true no longer. How else to explain the fact that the Dow Industrials are trading within less than six percent of record highs despite the fact that valuations for practically every fixed-income security currently in play have been cast into chaotic uncertainty by the subprime mess?  If you think this is an exaggeration, then you must have missed a Wall Street Journal story a while back that ran under the headline, "Credit Pressure Filters Down to Muni Market". That's right, the staid, rock-solid $2.5 trillion market for tax-free municipal bonds has developed a case of the jitters because of bond insurers' exposure to troubled mortgages. Are the insurers good for it?  Yeah, sure -- as long as the American taxpayer is alive and breathing, they are.

Meanwhile, TBMTWD continues to behave as though the powers that be have everything under control – and never mind the holiday-shopping bust that has become the obsession-of-the-hour on the business pages. But if you think Mr. Market is about to get in step with reality by declining for more than two consecutive days, don't hold your breath.  The stock market is so clearly in the thrall of money-manager mindset that we will not see it discount the housing bust, recession, a credit contraction, a collapse in consumer spending  and rising unemployment until institutional investors have been seized by outright panic. And then, how low might stocks fall once the panic has run its course?  To answer that question, ponder this: Who will be the buyers of stock, and at what price, when the big pension funds start to dump shares willy-nilly?

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Learn My Secrets

“While perusing some of your posts chronologically from months back, I'm truly struck by the remarkable prescience of many of your fearless calls. The results are uncannily accurate. Thanks again for this opportunity to profit from your usually directionally correct analyses. The subscription is worth every penny - and then some.”

-- Colin L. MacVeagh, a subscriber

Aloha Rick.  I just want to thank you personally for all of your posts in Comex Gold and Silver.  I have traded gold/silver futures for a decade and there is NO ONE who has identified prices as accurately as you do. FACT:  Your New Year's Eve call of a high at 643.10 call was dead-on (even if floor traders ran it up a few days later to flush the momentum traders.) But your subsequent forecast of a pullback low at 603.00 was mind boggling! I Sold my longs at 643.10 and covered my shorts at  603.00 -- the exact bottom.

   -- Mark Johnson, Hawaiian subscriber

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Want to learn exactly how I do it? Then click here for details concerning the upcoming online Hidden Pivot Seminar on January 5-6 (Saturday/Sunday morning). Sign up now while there are still some seats left. The goal of this course is nothing less than to teach traders and investors of all levels of experience how to forecast stocks and commodities at least as accurately and confidently as those who do it successfully for a living.

With just a cursory understanding of the material taught in the course and a little bit of follow-up, you will never again have to ask an “expert” what he thinks about a particular stock or “the market.” That’s because you will be better equipped yourself to answer the question simply by looking at a few charts.

The course is not about technical analysis in the conventional sense, with its tired and overly scrutinized trendlines, its familiar oscillators, channels, volume indicators, and all the rest, Rather, it is a way of looking at charts with a fresh eye – to see charts as “art,” with emphasis on visual elements of harmony, symmetry, and, indeed, beauty. My annotated charts do not look even remotely like those of other technicians, and that is why the “buy” and “sell” signals that come from them rarely coincide with those favored and used by the herd.

Never Again Rely on ‘Experts’

The online class will be a particularly good opportunity for those who were unable to attend my classes last year in New York, Sydney, Vancouver, San Francisco and Denver. If you’ve visited the Rick’s Picks chat room and marveled at the forecasting skill of seminar grads, this course is designed to quickly bring you up to their level. While I cannot guarantee that the course will turn you into a fabulously rich trader,  I can promise, as stated above, that with a little diligence and practice, your ability to precisely predict price reversals in stocks, indexes, options and commodities will be at least as good as anyone whose forecasts you have ever paid for.

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