Stocks were weak all day, but bears were too timid to deliver the haymaker. The Dow Industrials dropped 133 points, but if sellers had meant business the way they did in December, the blue chip average would have been down at least 500 points. Permabears shouldn’t give up hope, though, since it looks like the dam is about to burst. The evidence can be found in the failure of some key stocks controlled by institutional buyers to reach clear rally targets sent out to Rick’s Picks subscribers over the last couple of weeks.
The most telling example is Boeing, a lunatic-powered, sunny-story stock that has been in a nearly vertical climb since Christmas. A week ago it was on track to hit a Hidden Pivot target at 454, a prospect we we’d planned to leverage with some call calendar spreads. The trade never had a chance to ripen, however, because BA turned sharply lower from 446 last Friday. The target is still valid in theory, but as a practical matter out-of-the-money put options are looking more enticing. Rallies that fail well shy of our proprietary targets tend to accelerate to the downside. Indeed, that is what we should expect in the days ahead, so buckle your seat belts.