Ah, would that it were true!  Yes, we did come within two ticks of nailing Friday’s spike high with a forecast made several weeks ago. And some Rick’s Picks subscribers evidently did get short at the exact top, reaping a windfall gain from the 21-point selloff that followed. But it doesn’t look like the coming week will afford bears much time to gloat. Notice in the chart below how the Mini-S&P futures were in recovery mode by day’s end, finishing five points higher on the day.  That’s not the kind of performance that would have made headlines, but it should suffice to warn bears against becoming too complacent.  So by all means, pat yourself on the back if you shorted the top -- but just make sure you’ve purged complacency from your outlook when the new week begins. In all probability, this was not the Mother of All Tops that we witnessed on Friday, merely one more psychotic short-squeeze that did almost nothing to ameliorate the underlying bearishness that has kept stocks buoyant.

Of course, nothing has changed fundamentally, even if the Sage of Omaha now apparently believes that the worst is behind us. For our part, we still see the economy headed into something far worse than the 1973-74 recession, and the Dow Industrials eventually slipping below 1000. But what does that have to do with the stock market?  In the long run, everything. But over the short-term? Apparently nothing. And that means that, much as we’d love to simply “short the market” and forget about it, we must instead content ourselves with trading the intermediate swings from both the long and short side.

No Illusions

But we have no illusions about being short at the final top, since all of the juiciest shorting opportunities we’ve seen in our lifetime ultimately proved to have been unshortable for one reason or another. Often, it was a case of bull market tops being made on spikes so violent that no bear could have survived. How will it happen this time? There are many possible scenarios, but how about this one:  a Thursday-Friday short-squeeze so steep that even the most determined, deep-pocketed bears are forced to bail out. It would be followed by news over the weekend that causes stocks to gap down catastrophically, making new shorts impossible.  Most likely of all is that the U.S. stock market will unravel while New York traders are sleeping, due to some catastrophe that has scared Asian and European shares into a free-fall. But rather than guess about such things, or obsess over “shorting the top,” we prefer to do our trading one bullish or bearish cycle at a time.

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Free Chat Room Pass

The Rick’s Picks chat room is the place to be if you’re looking for tradable ideas in real time.  Gold and silver traders in particular can benefit, since the room attracts experienced traders from all over the world at all hours of the day, particularly during U.S. market hours. If you would like a free one-day pass to check it out, click here, and then on the green banner.

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Hidden Pivot Seminar May 21-22

Because seats for the recent Hidden Pivot seminar were nearly sold out, I’ll be offering the course again in May – on May 21-22, from 6 p.m. to 9 p.m. Mountain Time.  Click here, and then on the “Upcoming” tab to register;  or here if you would like more information as well as a detailed description of the Hidden Pivot Method and a free Hidden Pivot calculator (our latest model, perfect for beginners).