Free

Stocks have arguably never been more vulnerable than they are now. We need only ponder Tesla's chart to understand how Wednesday's highs may have marked a very important top. I'd expected the broad averages to hang tough as the week drew to a close, but their modest bounce on Thursday provided barely enough loft for a modest distribution. DaBoyz will pull out all the stops to keep up appearances on Friday, but however successful the effort, the market will need to fall far enough to test late June's lows before it is even capable of a sustained rally, never mind psychotic leap.  Friday's price action will tell us whether bears have grown comfortable with holding short positions over the weekend. My gut feeling is that increasingly grim news concerning the pandemic is about to overtake an absurdly optimistic vaccine story as the focus of investors' attention. They have gotten so very much so wrong already that it has only been a matter of time before the irresistible force of Fed funny money meets the immovable object of economic reality.

Any time the Dow isn't up a least 400-500 points, you've got to wonder what's troubling investors. The news environment was favorable, at least by Wall Street's current, bizarro standard, since the pandemic appears to be raging out of control.  California has locked down tightly for the second time, and because of the state's outsize impact on the U.S. economy, that too must be regarded as bullish news, since it means the Fed will be stimulating harder than ever to keep the illusory,  financialized part of the economy lookin' good.  There was hope for working stiffs as well, since their $600 weekly unemployment bonus is about to run out at the end of the month. Their plight will give Democrats and Republicans a rare chance to come together, since buying votes with direct infusions of cash is about as bipartisan as legislation gets. It surely warms the heart to see that there are issues on which Pelosi and Mitch McConnell can agree.

Wacky price action can be leveraged using mechanical entries based on the pattern show in the chart. Wednesday's low missed filling a bid at the green line, but if the futures return there it would still be a decent bet, stop 1791.00.  The implied entry risk is more than $4000 on four contracts, so we'll want to cut it down to size using the lesser charts 'camouflage'-style if the opportunity arises. The 1875.20 target of a larger pattern remains viable, but we're taking it one step at a time since gold has shown no signs of becoming a friendly buy-and-hold. More like Chinese water-torture, actually. _______  UPDATE (July 16, 8:50 p.m. EDT):  Gold was more than mildly disappointing today, although its mini-plunge failed to stop out the mechanical bid I'd noted above. With no drama indicated on the chart, I'll suggest watching from the sidelines for now. I'll be curious myself to see whether the trade works.  The tactic is geared to exploiting violent swings, not the kind of gratuitous, sloppy meandering we've become used to in gold.

I've tried to be extravagant with my rally targets, since I don't want the permabear in me to queer profit opportunities just because the stock market has been rallying against every molecule of instinct I possess. But I could scarcely have imagined that when I put out a technically derived 1803.69 rally target for Tesla Sunday night that lay 255 points above the stock's previous close (see chart above), the stock would summit this Everest the next morning. As the chart shows, the forecast didn't do too badly, since the stock topped Monday just four-tenths of a percent below the target before relapsing an exhilarating 300 points.  In my TSLA 'tout' (see below), I'd noted that an 1803 top might actually disappoint some investors who think in nice, round numbers. $1800 is so close to $2000, how can the stock possibly miss, right? But it may actually have done so, since the large number of bulls who got badly trapped when TSLA plummeted from its fleeting high now constitute huge, and perhaps increasingly desperate, source of supply. If TSLA is to exceed Monday's peak eventually, it is likely to entail more of a struggle than we've become used to. AAPL, the second biggest-cap stock in the world, performed with similarly reckless abandon, blowing away a seemingly ambitious target at 391.08 by nearly $9.  This would have put about $40 billion of fresh paper profits into the hands of those with sufficient daring to still be aboard. Much as we'd all like to think anyone holding onto TSLA and AAPL at these levels shares DNA with a hubcap, it's hard to argue with the estimated $40 billion they made on paper.  Of course, they'll have to sell the stock sooner or later to realize those gains, and they'd better not all

Tesla's explosive rally last week stalled almost precisely at the midpoint Hidden Pivot of a pattern projecting to 1803.69. Investors and thrill-seekers focused on the round number $2000 may find the shortfall disappointing, but the target looks like  a decent bet to cap one of the most insane short squeezes in the crazy history of the stock market. All three levels  -- p, p2 and D -- will be in play for purposes of getting aboard, or possible getting short, so stay tuned to the Trading Room for timely updates. Newcomers in particular should pay close attention to the way 'mechanical' trades help us tame and exploit the most rabid beasts. ______ UPDATE (Jul 13, 9:51): I hadn't imagined TSLA would reach my seemingly ambitious target in a single day, but it did. The fleeting top just 0.4%  from my target gave way to a stunning reversal that is going to leave bulls not just cautious, but fearful.  Look for weak, distributive action this week, turning increasingly urgent by week's end. ______ UPDATE (Jul 14, 8:49 p.m. EDT): Bulls stood their ground, settling into a tight range that looked more like accumulation than distribution. The implication is that they will soon be ready to romp again, and to challenge Monday's absurd, bull-trap peak without losing more than a step or two.  Crazy! ______ UPDATE (Jul 15, 9:47 p.m.): Bulls were not as impressive as I'd expected, possibly because there was too much buying interest at the open to take the stock down and deplete sellers. Look for sloppy price action, possibly mutating into distribution, over the next day or two. 

[A friend who made his fortune in the laundry business has enjoyed enviable returns on his nest egg by staying fully invested in stocks. The following is a personal letter from his financial advisor telling him why, even after the stock market's spectacular run-up since late March, he should stay in equities. The advisor's list of pros and cons nicely sums up the thinking of many advisors with wealthy clients, and that's why I am presenting it here.  RA] Doomsayers always sound smart. I know a few of them who have been wrong for 28 of the last 30 years. I have been positioned very cautiously myself but not outright bearish (thank god, since I would have lost a fortune). Right now I like utilities (defensive, cheap-ish, unloved). I like some healthcare stocks (but worry about the election impacts). I like gold. It's hard not to want to continue to own Amazon, too, and I do. I'm short regional banks because if there are economic issues it will be in loan markets and in real estate and small-to-medium size businesses. That will hurt the regional banks. I do not own puts on any major equity indices. Volatility is elevated and it's just not a cheap hedge. I am short some credit but the Fed backstop makes it a bad hedge, too. But I honestly don't think we have a big market selloff ahead for a few reasons. We should be bullish now, and here are some reasons:  1) the Fed has your back with easy monetary policy; 2) Big Government has your back with more fiscal stimulus; and 3) investors are not long. Positioning isn't a substantial risk. For example, in March everyone was long. So there was a lot of selling by lots of different kinds of funds. Last

The vertical ascent of Apple shares has been especially noteworthy because it is the second most valuable company in the world, just behind Saudi Aramco. When the stock rises just a few points, it puts billions of extra dollars in shareholders' pockets. And when it hangs tough on days like today, with the Dow Industrials getting sacked for a 361-point loss, it fortifies portfolio managers' resolve to stay aboard come hell or high water. They were surely pleased by Thursday's price action: Apple's modest, $2.20 gain was worth $9.3 billion -- enough to fill 147 swimming pools measuring 28' x 14' x 6.5' with tightly packed dollar bills. As a wealth engine, even RCA (aka 'Radio'), Wall Street's most spectacular performer before the 1929 crash, pales in comparison. When Apple shares take wing, it is like watching a 200,000-ton cruise ship rising from the sea on hydrofoils at 70 knots. No stock this big has ever climbed so steeply. Of course, the higher AAPL goes, the more money it takes merely to keep it aloft, never mind push it higher. Like a rocket ship approaching the speed of light, however, it will gain infinite mass before it reaches that threshold. And so shall AAPL. At some level there won't be enough buyers to push it higher. Hell or high water will have arrived, and AAPL, like world-beater RCA before it, will fall to depths few could imagine today.

Bulls now have a path to 3392 in the E-Mini S&Ps, just a few points below the all-time high recorded on February 20. A rally to the target would equate to around 30,000 for the Dow Industrials, a number that seems no less absurd now than in late March as the broad averages began a trampoline bounce from pandemic lows. The news hasn't improved, nor have earnings, making this rally arguably the most peculiar in stock-market history. Fed stimulus on an unprecedented scale has made it happen, even if it seems doubtful that trillions in funny money ginned up by the Wizards will put the U.S. economy on a sustainable path to recovery. Asian stocks have gone bananas as well, which is ironic since it is happening just as top U.S. leaders, including VP Mike Pence, have begun to acknowledge the obvious -- that the U.S. and China have begun a Cold War likely to stoke intense hostilities for years or even decades to come. The difference between this one and the one with Russia is that most Americans, along with much of the free world, seem to understand that Chinese leaders are lying, thieving, double-dealing scumbags. It remains to be seen whether U.S. voters will go along with the arms build-up that will be necessary to prevent China from dominating the skies and the seas sufficiently to squeeze the U.S. in every way possible. Regardless, the prospect of dealing with this threat will raise the stakes in November even higher.

Each of us seeks our own version of the truth when we turn on the news. Tucker Carlson, one of the most courageous and honest journalists of this era, is my choice. He has excoriated Democrats and Republicans alike for their moral cowardice in coddling torch mobs. I can’t get my liberal friends to watch him, however, probably for the same reasons they could never get me to watch Rachel Maddow.  It’s true that Carlson used to give snarky interviews to political radicals whom he never took seriously. But he takes them very seriously now because of the grave threat they have come to pose to individual freedom and to the American experiment itself. I do wonder sometimes what Maddow has been saying about Biden’s supposedly big lead in the polls. This is about as unbelievable as headlines get these days, although it hasn't stopped Fox News and its chief political analyst, Karl Rove, from taking the surveys seriously. The network’s mostly conservative viewers scoff at such twaddle, having learned their lesson when Hillary’s widely predicted victory in 2016 failed to materialize. This time the polls are wrong simply because the news media and the popular culture have bullied millions of Trump voters into silence. There are many quiet converts going uncounted as well. They include not only a significant number of Jews I know who a year ago could not have imagined themselves ever voting for a Republican, but also some well-closeted apostates in Boulder and San Francisco, where I lived, respectively, for 19 and 22 years. Civil War Coming? More unbelievable than Biden’s strong poll numbers are unemployment data that suggest the country is in a strong economic recovery. Trump never tires of telling us how super-amazingly strong it is, but many if not most Americans probably reject