I hesitate to use the word ‘ominous’, but the S&P 500 (shown here in ETF form) is close to generating a very bearish stochastic signal on the long-term chart. When ascending price peaks are matched by descending stochastic peaks, this is often a harbinger of trouble. In this case, there are not the usual two tops headed toward such a divergence, but three, each diverging relative to the other two. A simple way to interpret this is to say that the S&Ps have been unable to get as overbought with each successive, record peak. The implication is that traders/investors have grown less enthusiastic about buying as the S&Ps have achieved a series of record highs spaced weeks apart.

What to Watch For

The divergence would become menacing if the blue line were to roll down through the red line. This would occur if, over the next several weeks, each new price bar closes on successive Fridays toward the lower end of the bar as the S&Ps go higher or sideways. Alternatively, if the rally continues for a couple more weeks, with Friday closes toward the upper end of each bar, that would negate the divergence and turn the stochastic indicator benign (or at least in more felicitous agreement with the uptrend).

We won’t know for at least another 2-3 weeks which is about to occur, but because a third diverging peak could have such dire implications, the chart is worth monitoring closely. _______ UPDATE (Jul 14): Friday’s close at the very top of last week’s price bar diminished the odds of a bearish stochastic divergence like the one described above. Another strong close this week and the chart would look much less threatening.

August Gold pulled a Pearl Harbor on bears and skeptics Tuesday, reversing early morning weakness with a surprisingly sharp rally. I’d expected another two weeks of corrective action myself after bullion’s impressive run-up in June. However, the chart (inset) shows the futures to be bound most immediately for at least 1446.90. If so, that would be a new recovery high and an encouraging sign that even bigger things lie ahead. Specifically, a 1504.00 target would be in play if the August contract closes for two consecutive days above 1444.40 or trades more than $12 above that price intraday. Please note as well that a $150 plunge from around 1460 would not be the disaster it might seem at the time; rather, it would set up a textbook buying opportunity according to the proprietary rules Rick’s Picks subscribers follow for ‘mechanical’ trades. ______ UPDATE (Jul 7, 5:05 p.m. ET): Last week’s surge peaked just shy of the 1444.40 midpoint resistance, implying that bulls have run out of steam for the moment. Here’s a chart that shows it. The futures will still need to close above 1440,.00 for two straight days, or trade more than $12 above this Hidden Pivot intraday, in order to clinch a follow-through to 1504.00. In the meantime, there is no ‘mechanical buy’ set-up to use on the daily chart, since the rally topped well below our sweet spot before the pullback. _______ UPDATE (Jul 10, 9:29 p.m.): The futures are in the third week of the correction I’d forecast above, seemingly eager to break out of a 60-point consolidation range. The pivot at 1444.40 remains crucial to the completion of this task.

We have a sequence of rally targets at 205.51, 209.18 and 216.08 to keep us in stride with the bullish herd, but there’s an alternative picture that deserves caution. Notice that AAPL has rallied back to the green line after falling beneath the midpoint Hidden Pivot support at 174.20, producing a valid signal to get short ‘mechanically’ at 194.75 (stop 215.31). The signal is weak, however, because the dip to around 170 did not quite get down to our sweet spot near 164, and that’s why I am not recommending the trade. Regardless, the signal itself is reason not to get too comfortable with the idea that a push toward 2018’s record high at 233 is inevitable. _______ UPDATE (Jul 8, 3:44 p.m. ET): Friday’s 205.08 high came within a millimeter of the first of our three targets, 205.51, so consider it fulfilled. AAPL underscored the accuracy and importance of the target by plummeting $7 since.

The lunatics are back, pushing bitcoin with the same psychotic zeal they showed blowing the 2017 bubble. I am updating with a new target at 21,032 that is based on a slightly revised rally pattern (inset). Judging from the way buyers impaled the pattern’s 12083 midpoint resistance today, it seems extremely unlikely this surge will fall short of the target. I try to avoid the use of the word ‘extremely’, but in this case my confidence that 21,032 will be achieved is close to absolute.

When I originally projected a move to 19,850, BRTI, a CME index that tracks bid/asked spreads in real time across many bitcoin markets, was trading for around 8,000. That was a little more than a week ago, and I could not have imagined at the time that we’d be halfway there so soon. I doubt that BRTI will cover the remaining distance as quickly, but if it does, it will describe a mania with a lifespan more meaningfully measured with a stopwatch than a calendar. If the Hidden Pivot resistance at 21,032 fails to stop the stampede — and I do NOT expect this resistance to give way easily, if at all —  I’ll be out of good targets to share with you._______ UPDATE (Jun 27, 5:23 p.m.): Finally, a correction painful enough to rebuke bulls, especially if it lasts for a few more days. They’ll be back, for sure, but many are undoubtedly hanging on, or buying the dip, in expectation of the next explosive rally. They have little to fear if my 21,032 target is to be reached, a prospect that I regard as 90% likely. In the meantime, if the pullback continues to 7609 (shown as a green line in this chart), that would trigger a very enticing ‘mechanical’ buy, stop 3133, for a shot at 21,032. Initial theoretical risk would be $4,476 per bitcoin, and I am not recommending the trade unless you have an account with at least $500,000 in it.  Otherwise, you can trade fractional bitcoins via a Coinbase pro account, as suggested by our resident bitcoin expert, Formula 432, in the Ricks Picks trading room.

Here are three numbers to jot down to get an accurate and potentially useful ‘read’ on the aging bull market: 27,436, 28,738 and 33,161. These are ‘Hidden Pivot’ resistance targets for the Dow Industrials, and any one of them could stop the bull in its tracks. Each is a good place to attempt getting short with a tight stop-loss, but if the stop gets pulped, assume that the next-higher target is in play.  And if the Indoos should hit 29,000 (or so) and then plummet to the green line (24,5740), treat that not as a sign that the long-awaited bear has finally arrived, but as a great buying opportunity. Above 33,161, I have no additional targets to offer. That would be the bull’s final charge, as far as I’m concerned, and the best opportunity to get short that we might see in a very long while.

Why should you trust these numbers? For one, if you’ve followed Rick’s Picks for any length of time, you’ll know that the big-picture forecasts — for T-Bonds, gold, the U.S. dollar, interest rates,  inflation (or lack of, actually)  and major stock averages — have gotten it mostly right.  (But not always, as those of you still waiting for crude to hit $28 a barrel would be ready to attest.)  Another reason is that these sunny numbers come not from a hopped up permabull who thinks that decade-old rally will go on forever; rather, they are from someone who could give you a dozen good reasons why the Dow should be trading at 10,000 now, not heading toward 30,000 as would appear to be the case. _______ UPDATE (Jul 16, 8:30 p.m.): Tuesday’s high came within an inch of our longstanding target at 27,436, the first of three important stair-step Hidden Pivots. Let’s see how buyers handle it before we reassess the strength of the trend.

Rates on the Ten-Year T-Note are positioned to rally in the way we might expect of a ‘counterintuitive’ trade set-up. Yields have come down to test the support of a 2.03% low made in 2017, and it should hold for at least a short while. But because the weakness of the last two weeks somewhat exceeded the 2.11% target we’d been using as a minimum downside objective, any bounce from these levels, or perhaps from slightly below 2.03%, is likely to be merely corrective of the larger downtrend begun last autumn. There could be a ‘CI’ trade in the offing (see chart inset), so stay tuned if you’re interested. _______ UPDATE (Jun 20, 11:33 p.m. ET): Assuming the 1.97% low holds, a rally in yields to 2.28% would trip the ‘CI’ buy signal noted above. Here’s the chart. ______ UPDATE (Jul 2, 5:43 p.m.): The rally in Ten-Year rates was short-lived and now they appear headed down to at least 1.944%. Any lower would put a 1.87% target in play.