Free

The shockingly powerful rally from March's bombed-out low has stalled in a very unshocking place, three ticks beneath a secondary top recorded just before stocks really fell apart.  So far, the pullback has been shallow, implying bulls are sizing up the challenge presented by all-time highs achieved in mid-February.  Getting there would be quite a feat, considering the global economy is probably no better than a 50-50 shot to avoid a full-blown depression. We're more interested in the technical aspects of the rally, however, since an 'impulsive' thrust exceeding the peak by even a penny would refresh the bullish energy of the daily chart. How Not to Be Fooled If this happens it could always be a fake-out, not that that would necessarily fool us as long as we diligently monitor the strength of corrective abcd patterns on the intraday charts. My gut feeling is that the maniacs driving this epic short-covering rally have come too far to leave the offending secondary peak unbloodied, and that's why we ought not be too aggressive betting it will hold. Once the futures are decisively above it, however, a dose of skepticism will be warranted, given the obvious challenge of all-time highs that Wall Street's wack-jobs will see as a dare. Mr. Market will be watching, of course, presumably wanting the sunniest optimists to make his day.

The Nasdaq 100, bloated with helium-inflated FAANG stocks that portfolio managers never sell, appears all but certain to achieve new record highs, probably within the next 2-3 days. With the index trading 250 points lower a week ago, I'd said that a two-day close above 9585 would all but clinch a move to at least 10,575, a Hidden Pivot target derived from the E-Mini Nasdaq's weekly chart. That would be a little more than 8% above the old summit at 9780. The futures have in fact closed decisively above my benchmark as required, hinting of significant buying power percolating below the surface. We will soon be reading about how the relative handful of companies whose shares are responsible for this maniacal rally are going to single-handedly save the day for the global economy. If you are inclined to help make this fatuous prediction come true, I'd suggest using your $1200 check from Trump to buy an iPhone over the weekend.

With the nation in deep crisis, stocks continued on their heedless path higher. The seemingly demented rally is demonstrating yet again that bull markets at some point decouple so completely from reality as to mock those who thrive by promoting them. By now, the spun story that investors are looking past the pandemic and focusing on renewed growth is sounding increasingly farfetched. Some economists estimate that it could take more than a decade for economic activity to return to what it was before Covid-19. We don't need economists to prepare us for the worst, though, since we can see the truth of what they are saying all around us. Huge write-offs yet to come will dwarf the relatively paltry trillions pushed, in the name of stimulus, into economic dead zones.  What the money has stimulated, mainly, is the markets, but with some big holes. For example, the collapse of just one category of financial derivatives -- ETNs, or exchange trade notes -- threatens investors with losses of as much as $7 trillion. It is never coming back. $$ Trillions Are Trapped But there will be vastly larger losses coming in real estate -- in New York City, among a dozen urban centers, where hundreds of thousands of workers will not be returning to their office-tower jobs. The ripple effect from this will devastate businesses on the surrounding streets, turning Gotham itself into a gangrenous appendage of workers who needn't ever leave their homes or travel to distant centers. Out-of-town business meetings will be moved online, causing huge swaths of the nation's transportation infrastructure to wither. Planes, trains, buses, subways, taxi fleets, cruise ships and Uber cars will trap tens of trillions of dollars' worth of investment capital as the cost of storing and maintaining idled resources continues to mount.  Hotel

Just when toilet paper supplies were starting to loosen up, we learn there's a run on pepper spray. Do people who live in or near big cities dare leave home without it?  You may be in greater danger than you think, what with Antifa threatening to fan out into the suburbs. More effective than pepper spray would be a lawn sign advertising your zealous support for the Second Amendment. Concerning the looting and riots, which seem to have quieted now that the weekend is past, seekers of 'social justice' missed a historical opportunity to make a magisterial impression with candlelight vigils across the land for the late George Floyd. The impact that peaceful marches might have had has gotten lost in a blaze of looting, mayhem and rage, much of it captured, with horrifying explicitness, in videos that ran 24/7 over the weekend on the major networks. The lingering images will pose a serious setback for the aspirations of black Americans while boosting the electability in November of candidates known for taking a strong stand on law and order.

Index futures have done a tentative alley-oop Sunday night, feinting lower before moving as though to challenge Friday's nutty highs. They occurred, apparently, because Trump was not as hard on China as he could have been when he addressed the nation ahead of the closing bell. Anyone mystified by the stock market's latest burst of exuberance hasn't been paying attention to the steep rally that has occurred since late March with a global depression looming. For a market that appears to be thriving on bad news, the headlines over the weekend could not have been more encouraging: looters running amok in America's largest cities; record unemployment; millions of rents and mortgages going unpaid; a menacing chill in U.S. relations with China; bankruptcies sweeping through nearly every sector; the devastation in particular of travel, dining and entertainment; the huge capital write-downs coming in the energy sector as subways, buses, trains and planes worth hundreds of trillions of dollars face obsolescence and enormously costly overcapacity. Under the circumstances, need we even ask why stocks are holding up so well? Investors, as we noted here earlier, are mentally ill. Kudlow and Mnuchin might dispute this, but the rest of us know better.

Although GDX has not fallen to the green line to put the 30.97 target in play (see inset), I've drawn the pattern with a bearish bias just in case. I am not down on this vehicle at the moment, but a little bit of weakness could set up an attractive buying opportunity at 32.92, the pattern's midpoint Hidden Pivot. I will continue nevertheless to solicit crowdsourced ideas for getting long, and possibly even building a long-term position. But if we are going to attempt a buy-and-hold from the get-go, it will require an optimal entry point with clear opportunities to take partial profits along the way. _____ UPDATE (June 1, 7:13 p.m. EDT): A pullback to p at 2:00 p.m. generated an appealing 'mechanical' buy signal at 34.88.  The subsequent rally appears bound for at least 35.54. No one has mentioned GDX in the Trading Room since Friday, implying there is very little interest in this vehicle at the moment. It is still a crowdsource project. ______ UPDATE (June 2, 5:35 p.m.): Two Hidden Pivot levels I mentioned in the Trading Room this morning look promising for bottom-fishing: 33.65 and, especially, 31.77 (corrected).  Here's the chart. I've suggested using rABC or 'camouflage' to get aboard, but a limit bid and tight stop-loss will do if easy entries are your preference.  ______ UPDATE (June 3, 8:45 p.m.): I'd suggest a light touch if you plan to bottom-fish this cinder block at 31.77 -- a 12-cent stop-loss at most.  If it's hit, we can try again 'counterintuitively' beneath the 31.31 low recorded on May 1. Tune to the Trading Room for rABC guidance in real time. ______ UPDATE (June 8, 9:56 p.m.): GDX tripped a picture-perfect 'mechanical' buy at 32.39, but it went unnoticed in the Trading Room. I'll leave this vehicle

June Gold trampolined off a 1683.10 Hidden Pivot Wednesday, enabling subscribers to get long in their favorite bullion vehicles at or very near the intraday low. I'd posted a heads-up in the Trading Room as the futures began their turn, noting that the 1683.10 'secondary pivot' of a pattern that has been in progress for six weeks was a 'logical' place for a bounce.  The futures rallied $30 from an actual low at 1684.20, and although they are not yet out of the woods, the bounce has turned the hourly chart bullish and breathed new life into targets as high as 1879. ______ UPDATE (May 28, 7:01 p.m. EDT): What would it take to imply the futures are out of the woods? Answer: an upthrust exceeding the 1757.60 peak recorded on May 20. I've set a screen alert to wake me when bulls get there.

Bears eager to get short near the top of the stock market's inexplicable rampage could have just one chance left before shares blast off for infinity and beyond. This is the clear implication of the chart included with my latest forecast for the Nasdaq 100 (see below). On Tuesday the E-Mini Nasdaq futures peaked almost precisely at a long-term Hidden Pivot resistance located in a place that has been known to show magical stopping power. The futures sold off more than 4o0 points after touching it, but they recouped more than half of it Wednesday, showing no sign of fatigue at the bell. The 9604 high could conceivably mark the end of the vertical rally since March 23. However, if the June contract closes above the 9585  pivot for two consecutive bars on the weekly chart, that would make a run-up to 10,571 an odds-on bet. That is a little more than 9% above the all-time high at  9763 recorded in February, and it would make this spring's sensational running of the bulls even more inexplicable and frightening. Although health officials are cautiously optimistic about a vaccine, Wall Street is quite obviously wildly optimistic. ______ UPDATE (May 28, 6:37 p.m. EDT): Subscribers in the Trading Room around mid-day could have jumped on a short I detailed explicitly in the E-Mini Nasdaq futures (see chart above). Check out my posts on this beginning at 12:26 p.m. if you want to determine whether you could have pulled the trigger. It occurred 21 points off the intraday high, just ahead of a 147-point plunge worth as much as $588 per contract. By the close, 75% of the initial position had been covered, with one contract remaining for a  swing at the fences. That was the purpose of this gambit, as the headline stated.

I sometimes joke that virtually every trading vehicle, in every time frame, whether trending up or down, reverses from p2, the secondary pivot, virtually every time. Or so it would seem. I was never really a p2 kind of guy, but my mentor, Ira Tunik, used it so often, and persuaded so many Rick's Picks subscribers that it was important, that I eventually started to pay attention. That's when I began to see that it actually does repel trends almost as consistently as my beloved 'p' midpoint Hidden Pivot. It has also become clearer recently that some of the most successful traders in the room have been using p2 to set up rABC trades that deliver as consistently as a loose slot machine in a Reno bust-out joint. All of which is intended to call attention to the chart shown in the inset, a weekly graph of the E-Mini Nasdaq futures. This lunatic-powered vehicle comprises an invincible core of no-decision stocks that institutional holders would never even consider selling. That is why it is spitting fire at the moment, just inches from record highs. Notice as well that Wednesday's peak, which put a new high on the bounce from March's Mindanao abyss, occurred almost precisely at p2=9585. I wouldn't want to put ideas in your head, but there are worse places to attempt getting short.  Just sayin'. We can use puts in $NDX, so stay tuned to the chat room for timely ideas -- or make sure you've enabled 'Updates' on your account page. The caveat here is that buyers shredded the 8600.00 midpoint pivot the first time they encountered it on the way up. This made it likely that D=10,571 will be reached. As you can see, it sits well above the current record high at  9763.00.  I can't