There are unfulfilled rally targets at 3769 and 3802 that have kept us confidently on the right side of the trend regardless of news or mood swings. More immediately, however, last week's powerfully impulsive price action has created a lesser, bullish pattern with a 3727.50 target that is all but certain to be achieved, probably by no later than Wednesday. A tradeable stall at this Hidden Pivot seems likely, and I am therefore recommending a tightly stopped short to anyone who has made money on the way up. As always, an easy move through a target implies the trend is likely to continue, usually after a correction. _______ UPDATE (Dec 8, 5:03 p.m.): Time to start paying attention, since the futures are closing on p=3728.00 (slightly adjusted from above), the first place where a major trend failure could occur. Although I still believe the somewhat higher targets for the larger pattern cited above will be achieved, you can attempt a very tightly stopped (i.e., 1.25-2.00 points) short at 3728.00. Here's the chart, and although it lacks a one-off 'A', the pattern otherwise is quite appealing. _______ UPDATE (Dec 9, 7:52 p.m.): The futures traded no higher than 3715, so we were unable to squeeze off a short on our terms. The downdraft created an impulse leg on the hourly chart, but let's give it a day to see what bears can do with it. _______ UPDATE (Dec 19, 5:52): The selling turned gutless on day two and is struggling to reach a 3630.25 downside target. If DaBoyz can squeeze this hoax above 3681.25 overnight, they will likely be in charge as the week comes to an end. Here's a fresh chart that shows everything. _______ UPDATE (Dec 11, 9:55 a.m.): The 3630.25 target came within two points of nailing a
Last week's 12540 high came within 10 points, or 0.08%, of a minor Hidden Pivot target at 12550 target. However, the pullback from that number was shallow, and the futures looked like they were raring to go when time ran out. If they are up and at 'em on Sunday night and trading above the target -- as why should they not? -- I'd suggest using the 12804 target of a larger pattern that has been theoretically in play for more than two months. The pattern is sufficiently clear that we should expect a pullback from very close to it. However, it looks too obvious to be worth much for trading purposes. A tw0-day close above 12804 would put 12969 in play (daily, A= 10,942 on 11/2). Using the smaller pattern, you could get long 'mechanically ' on a swoon to 11869, stop 11502. _______ UPDATE (Dec 8, 5:25 p.m. EST): The futures spent two days consolidating above a middling Hidden Pivot resistance at 12,550, implying there's buying power enough to take them higher. _______ UPDATE (Dec 9, 8:11 p.m.): If the futures touch the red line, that would trigger a 'mechanical' buy with a stop-loss at 11,992. I suggest this trade only if you are able to forge a 'camouflage' entry trigger that reduces theoretical initial risk to no more than $300 per contract. Please note that the straight-up entry as given above would carry entry risk of $4,880 per contract. _______ UPDATE (Dec 10, 6:10 p.m.): A 'mechanical' bid placed where I'd advised would have caught the low of a rally worth as much as $4400 intraday. Only one subscriber expressed an interest in the trade or a variant of it, so I have not established a tracking position.
Although no one can predict when the dam will break, plunging the economy into hard times to rival the 1930s, we can be quite certain that a day of reckoning is drawing near. Speculative mania across a wide swath of assets is at a millennial peak, stoked by out-of-control fiscal and monetary stimulus. To further destabilize the system and push insanity to untold heights, the Fed has led speculators to believe it will continue to do whatever it takes to sustain the illusion of economic growth. Reflections from two economists who have remained aloof from the popular wisdom explain why this cannot last. They do so not with jeremiads warning of doomsday, but with clear, hard logic. Here's Hoisington's Lacy Hunt, PhD: "Each additional dollar of debt in 1980 generated a rise in GDP of 60 cents, up from 54 cents in 1940. The 1980’s was the last decade for the productivity of debt to rise. Since then this ratio has dropped sharply, from 42 cents in 1989 to 27 cents in 2019." In case you missed his point, let me state it another way: It is taking roughly $3.70 of borrowing to create a dollar's worth of economic growth at the margin, and the ratio is continuing to worsen. How long can that go on? A Bubble Unimagined I wrote on this subject myself -- for Barron's, two decades ago, in a think-piece about money velocity. At the time, debt was nearly three times as productive as it is today. Even so, in comparison with post-War numbers, it looked like a disaster in the making. I thought it was curtains for the economy, but in retrospect my overblown fears reflected a failure of the imagination. All we got was the relatively piddling Dot-Com Crash. It was a picnic in
You need only watch Giuliani's hearings on election fraud for an hour or so to understand how the computer geeks could overturn Biden's win. It's like having a seat behind the scoreboard for Bobby Thomson's "shot heard 'round the world." Forget all the supposed right-wing-conspiracy stuff, including charges that Dominion, the voting-machine company, shares DNA with Hugo Chavez. It turns out that this is verifiably true -- has been verified, actually, even if no one from the Washington Post or the New York Times could be bothered with such a trivial task. Neither, quite evidently, have they looked at Dominion's operator's manual, which apparently explains in so many pages how to hook up their equipment to the internet. Dominion has flatly denied this can be done, so confident are they that no big-league reporters would think to ask them for a copy of the manual. No matter. The truth about the company will out eventually, but it's not crucial to Trump's case; nor for that matter are strong accusations from Trump himself. Amidst the din of denial, The Wall Street Journal embarrassed itself last week with a laughable item about how the President has been telling those closest to him that he knows he's lost the fight. Yeah, sure. Watch him the next time he's on TV and judge for yourself whether he's ready to pack it in. With recounts continuing, the news media have sustained an ostentatious yawn for nearly a month. If this were Nuremberg, they'd be high-fiving Bormann's defense team. Keep pretending nothing happened, you jag-offs, because the forensics whizzes are about to knock you on your ass. Their Einsteinian grasp of election math may not provide the hard evidence skeptics say has been missing, but it will point auditors in precisely the right direction to determine
Even with Covid-19 fear-mongering ratcheted to-the-max, the stock market continues to defy gravity and common sense. A Dr. Andre Campbell warned over the weekend that “we could be facing an apocalypse by Christmas” due to the growing number of hospitalizations. Does he mean apocalypse in the Biblical sense, implying the final destruction of the world? We await clarification, although there are reasons to be skeptical about his claim. For one, he is a trauma surgeon, not a virus expert. And for two, he is speaking for Zuckerberg San Francisco General Hospital, known as ‘San Francisco General’ when, decades ago, I lived in the Portrero Hill neighborhood where it is located. The facility was notorious back then for stuffing its corridors with Medicaid patients on gurneys. All praise to the Zuck if he has improved the level of care, but he would be doing the world a kindness by confining his chief means of thought control to Facebook. Concerning the stock market in these all-too-interesting times, it has shown scant concern not only about the economically crippling course of the pandemic, but also about an unsettled election that could produce the most anti-business administration in U.S. history. Some Trump advisers reportedly have told him to give up the fight. But considering the President’s not exactly groundless charge that Biden won by fraud, as well as his reputation for never backing down, there is close to zero chance he will concede before the courts have heard him out. (If you think the effort is doomed, as the news media would have us believe, read this when you've finished my commentary.) Jot Down This S&P Target So what can we expect from the stock market as investors' hopes rise toward a generational peak? I wrote here earlier that you should prepare to sell
The stock market is under heavy distribution, and for good reason: Even if the vaccines we've been reading about lately are as effective as claimed, they will be too late to prevent tens of thousands of U.S. business from going under. Supposedly, vaccines from Pfizer and Moderna are nearly 100% safe and 95% effective. This is wildly speculative, since no one knows how long immunity will last; whether those who get vaccinated will still be at risk for transmitting the virus to others; and whether mRNA vaccines will cause serious autoimmune reactions. These are hardly niggling concerns, although they didn't stop investors from bidding shares into the ozone when Pfizer announced encouraging trial results two weeks ago. Stocks were already priced for perfection, discounting not only the prospect of a Covid-free world, but the possibility of the U.S. economy returning to the 3%-plus growth it enjoyed under Trump's stewardship. These are just pipe dreams, and crazy ones at that. Biden is not Trump; he is a political wimp, and the Democratic Party to whom he owes his apparent victory is extremely anti-business. They have said as much, and that's reason enough for investors to brace for a 'Trump rally' in reverse starting sometime before Biden takes office. The coming bear market will draw irresistible power from the vaccine's inevitable failure to effect an instant cure, and from the economy's inability to return to anything even remotely resembling its ebullient old self in the foreseeable future. Folly's Apogee Under the circumstances, there has probably never been a better time to 'sell the news', since shares have been ascending heavenward since March on hopeful 'rumors' of a global cure. The effect has been supercharged by unprecedented credit stimulus flooding into shares, real estate and the consumer economy. When the downturn hits, the
The smell of stock-distribution is as pungent as wood smoke these days, but you've got to give DaBoyz credit for levitating a million tons of swill while they work their special brand of magic and deception. Usually Wall Street is pushing the 'Santa rally' narrative hard at this time of year, always leavened by urgent speculation about how "green" Christmas will be. But Santa obviously won't be making the rounds in 2020, especially in department stores where his beard would become a superspreader to rival the hydrogen bomb in killing power. Definitely not the Kris Kringle of our childhood. One holiday fixture that is certain to survive is endless TV showings of It's a Wonderful Life, the Jimmy Stewart classic with a conclusion that could bliss out Jack the Ripper. Not any more, though -- not since, metaphorically speaking, financier George Soros suited up to replace the no longer believable banker, George Bailey. Will there be anything about 2020 to look back on with nostalgia? If so, we are in for a very rough decade. A successful vaccine is everyone's best hope at the moment for 2021, but few believe it will return things to normal. For in fact, given the rancid political climate and the vast swaths of the economy that have been laid waste, most of us are finding it difficult to even imagine what "normal" might be. Something will sustain us in any event, but that old standby, bread and circuses, is going to ring hollower than ever.
Rick's Picks has tracked the Russell 2000 ever since it became apparent in mid-summer that the chimpanzees paid to throw your hard-earned money at a relative handful of stocks and invented themes had agreed to shovel the lion's share of it into small-caps. It should be obvious by now, even to hard-core permabears, that the ballistic skew of the Russell index -- and, in turn, all the others -- is oblivious to such matters as concern us in our daily lives. America polity may be unraveling before our eyes, and a fresh wave of Covid-19 has already crushed hopes of an economic resurgence. But as long as the stock market is held buoyant by a practically limitless inflow of ginned-up capital from around the world, how could it possibly crash? Indeed, it cannot. And yet, charts like the one above allow us to at least imagine a top, even if we have no clue what could cause it. The chart makes clear that nothing is likely to stop IWM, an ETF proxy for the Russell 2000, from reaching the 184.73 target. But this Hidden Pivot resistance is sufficiently clear and compelling to suggest that it won't be a pushover when bulls get there and want more. That is not to say IWM can't pop through. But if it does, we'd have to concede that the small-caps, perhaps joined by FAANGs and other growthies that have been relatively quiet lately, are embarking on a blithe path higher that will see the Dow trading well above 30,000 by 2021. _______ UPDATE (Nov 18, 9:04 p.m.): A wave of selling hit late in the session, offering bears a rare breath of fresh air. Now let's see if the scuzzballs who control the markets can reverse the mood on 'turnaround 'Tuesday, since a mere
Biden, schmeiden. On Wall Street, it would seem, no one cares. Stocks are up substantially since the election even though the unsettled presidential race remains one of two unusually large elephants in the room. The other is the pandemic, which appears close to going out of control in some areas of the U.S. This, too, has yet to have any discernible impact on stocks. We see only evidence that no matter what the news, and however great the uncertainties that govern our lives, the inexorable flow of money into shares is simply too powerful and steady to abate. There was a time when the stock market supposedly hated uncertainty. By now, however, it is clear that investors have become inured to the unknown. Something else will undoubtedly unsettle them at some point, but we can rule out fear of the future. An invasion from Mars would probably fall off the front page in three days. It is in our personal lives that uncertainty is taking a heavy toll. If Biden assumes office and tightens the lockdown, it is foreseeable that many millions of Americans will take to the streets and disobey him. Look for an insurrection over mask-wearing to come first. One might think the question of whether masks have helped suppress the pandemic would be settled by now. But you would be wrong, for the question has been settled only politically: hard-core liberals wear masks in their own homes, in their cars and during sex, while conservatives disdain them and wear them only indoors and out of politeness. Don't They Know? In the photo above, taken over the weekend in my hometown, Delray Beach, Florida, virtually no one is wearing a mask. The restaurants and sidewalks were packed, presumably with diners and pedestrians of all political persuasions. Don't they
Bitcoin's value has tripled since Covid-19 hit the U.S. in March, a spectacular performance that has earned it a spot on the home page. I've been tracking the BRTI symbol for years because its violent price action is ideally suited to 'mechanical' entries. Nearly all of them have been profitable, and we currently have a paper position in BRTI acquired at 7609 with a long-term target at 21,032. That symbol tracks best-bid/offer data in real time across many cryptocurrency markets. I will be covering GBTC from this point forward, however, because it is affordable and because entry risk can be much more tightly controlled. Most immediately, you should notice that the steep rally leg begun in October is within an inch of a potentially important Hidden Pivot resistance at 18.75. If it is impaled the first time it is touched, that would imply significantly higher prices lie ahead. In any event, it is a time for caution no matter how bullish you are. My decision to track and trade bitcoin is completely detached from my strong feeling that digitally encrypted money is an epic con-job. I don't deny that blockchain technology has enormous value for financial transactions and secure record-keeping. But no one has offered a shred of evidence as to why bitcoin should have any intrinsic value at all, let alone more value than gold, as some have tried to argue. My skepticism is irrelevant where trading bitcoin is concerned, however, especially since this vehicle promises to be one of the great bull trades of these digitally obsessed times. _______ UPDATE (Nov 17, 7:36 p.m.): GBTC blew past the 18.75 Hidden Pivot resistance with such force that there can be little doubt that significantly higher prices lie ahead. Even so, we should be curious to see whether BRTI follows