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Crude oil prices are collapsing, but not quite as shockingly as commentators with little understanding of commodity markets would have us believe.  Expiring May Crude futures ended the day at minus $37.63, meaning anyone stuck with a contract when the music stopped either had to pay someone that much per gallon to take that contract off his hands, or take delivery. A single contract covers 1,000 barrels of oil, or 42,000 gallons -- enough to fill quite a few swimming pools in Scottsdale if you were an at-home trader unfortunate enough to have to held a few contracts when Monday's extraordinary long squeeze climaxed. Assuming your Arizona neighbors would not have been keen to help out, there is just no good place to put all that oil. Storage facilities, including tankers at sea, are filled to the brim even as demand is still falling because of the pandemic. Delivery problems are a common cause of breathtaking price anomalies in markets where forward contracts are traded. This one will probably go down in history as the granddaddy of all contangos, a millennial event that sent spot quotes nearly $60 lower than forward prices. Just so you are aware, similarly crazy things can happen even with garden-variety puts and calls. In 1981, for instance, PSE traders who shorted October $30 calls in Santa Fe International, a contact driller, for small change got a rude surprise when it was announced that the Kuwaiti government had tendered a $51 offer for the company.  The call options in theory were worth only 'teenies', or $6 apiece, just before the announcement, but their price soared to $1425 before regulators halted trading in the stock. Market makers initially lost millions of dollars after selling thousands of call options to brokers working large orders from -- surprise! -- 

The news media and the pundits flailed around over the weekend trying to come up with reasons why the broad averages have rallied to within 10%-20% of record highs even though the global economy could be headed into a depression. ZeroHedge is usually able to provide plausible answers to such questions, but here's an attempt that fell short. It places commodity trading advisors at the center of the action: "CTAs, which are computer-driven models, do not care about such trivial facts as mass layoffs, millions of people infected with a deadly virus, and instead they only care if others are buying at which point they too join the buying frenzy." I agree that CTAs don't care about facts, even world-changing ones. I also agree with the author's prediction that stocks eventually will fall much, much lower. But who are the "others" he says are attracting momentum players? And how could they rally stocks with sufficient vigor to not only overcome intense hedge-fund selling, but to build velocity against it? Surely they are not simply bullish buyers, as a Nomura quant quoted in the article seemed to imply. It taxes the imagination to think anyone could be bullish these days, with fallout from the pandemic threatening to inundate the economic world. Even financial advisors who have been telling clients to sit tight could not be so foolish as to think stocks are actually a buy at these levels, could they? Tesla a Quick Doubler So who's doing the buying, and why? There is just one, simple answer: short-covering bears, many of whom have been getting crushed by margin calls. I've always insisted that merely bullish buying is never sufficient to drive stocks through prior peaks and supply zones, even during bull markets. But short-covering can, and does, with power that correlates

The Trumpster sounded so hopeful at Thursday night's briefing that one could almost think we're headed into a summer of baseball, barbecues, fireworks, lawn concerts and kids' birthdays with piñatas.  If only. Still, traders are at least pretending that all of these staples of American life will be returned to us in the foreseeable future. They've pushed index futures into a steep after-hours rally, every tick of it supported by short-covering from bears who evidently believe economic reality should count for something. The rest of us should enjoy this simulated state of exuberance while it lasts, since bear rallies are notorious for flaming out just when they start attracting true believers. For you chart-watchers, I've adjusted my rally target for uber-bellwether AAPL to 313.58, at which level new record highs of up to 347.27 would not be unthinkable.

The hopeful, decisive pose struck by the President during tonight's briefing has touched off a spirited short-covering rally, powering this dervish past a major Hidden Pivot resistance at 291.45 that I hadn't expected to give way so easily. Actually, I'd planned to get short there, but fortunately the gap-up move in after-hours trading rendered my bold dream impossible. The move has opened a path to p2=313.58, a well-wrought secondary pivot shown in the chart. It will likely be a better place to try shorting than tonight's erstwhile Maginot Line; however, when we are doing so, it would be careless to ignore the magnetic allure of D=347.24. At that price AAPL would be in record territory, as blithely oblivious to the realities of pandemic economics as a tin of sardines. ______ UPDATE (Apr 20, 12:20 .m.):  Goldman's spinmeisters unloaded on AAPL Friday, driving the stock sharply lower. Although the selloff generated a bearish impulse leg on the hourly chart that merits our attention, I still expect a rally to at least 313.58 before a top is in. ______ UPDATE (Apr 21, 12:08): If bulls are about to regain command, we should see AAPL turn from either 275.20 or 272.61. Both of these Hidden Pivot supports are shown in this chart. ______ UPDATE (Apr 21, 9:22 a.m.): Sellers breached 272.61 shortly after dawn and now AAPL will fall to at least 268.38, a target calculated using night bars.  For the moment, however, Buffett and DaBoyz are using bears like a speed bag, sending the stock into a short-covering rally before they let the stock grope its way down to a 'natural' low. Here's the chart, with a 268.82 target that is derived from overnight bars.

The futures still appear to be laser-locked on 2921.75, a Hidden Pivot target that I've drum-rolled here recently. I am strongly discouraging shorting there unless you've made at least a thousand bucks on the way up, so please don't announce your intentions in the Trading Room.  I doubt we'll be so fortunate as to see a pullback to p=2771.25, which would trigger an enticing mechanical buy, stop 2721.00. But there are bound to be other opportunities to get aboard, possibly with less risk. Those of you who remember how to do the old-style mechanical entries should look for an opportunity on a pullback to p2=2846.50. Recall that we need a few price bars above that level, with some white space beneath them, to set up the trade. Otherwise, any dip that exceeds a prior low on the lesser charts can be used to set up an rABC entry. _______ UPDATE (Apr 15, 9:33 p.m.) The thousand bucks (see above) was there for the taking for anyone who used the price trigger and stop-loss I posted in the Trading room about 45 minutes before the opening. This gambit went successfully against the day's weighty downtrend and could have produced an actual gain of about $2300 in under 20 minutes. As far as I could tell, only one subscriber, the intrepid MikeS, jumped on it, so I did not establish a tracking position. Looking just ahead, the drum-rolled 2921.75 rally target noted above remains viable, but tonight's weakness offers little encouragement for a bull trade. A dive to the green line (2696.00) would trip a 'mechanical' buy signal, but I'm much less enthused about using it than I was yesterday's signal at the red line. Check the room for guidance in real time, since prospects could brighten after the opening.

The stock market has been acting as though truckloads of oral vaccine will show up on supermarket shelves this weekend. Of course, we know better than to attribute the robust uptrend of the last two weeks to careful or even rational calculation. The market is not a thinking creature, after all, just a dumb beast that has been annoyed by a swarm of flies, or excited by pheromones washing over its olfactories. Far from thinking past the crisis, surging stocks are simply adjusting to the temporary exhaustion of sellers who bailed out when it seemed like the news couldn't get much worse. It didn't, but there is little to encourage at this point, since we all understand that social distancing, with its ruinous effect on the economy, could continue indefinitely.  So, do Warren Buffett, BlackRock's Laurence Fink, Bezos and other whales dive for cover, dumping their shares in a panic? A better question to ask is: To whom would they sell? Since there are no buyers big enough or dumb enough to take these Leviathans out of their positions, they will simply continue to moderate their offers as short-covering bears drive stocks further into the insanity zone. Big sellers dare not pounce, at least not yet, since that might frighten the herd back to its senses. But they will quietly distribute as much stock as they can before pulling the plug. The buyers will be mostly 'don't-pass' bettors whose appetite for stocks has been stimulated by margin calls on bearish positions gone badly awry. DaBoyz will know when that appetite starts to wane, since they are literally making book on it. Their touch is so light that the suckers enticed to do the buying no more feel the weight of massive distribution than someone living in Billings feels the swelling

The June futures have topped so far this evening less than a point from the 1775.10 rally target I'd flagged Sunday night ("Gold is down an unpersuasive $24 at the moment...").  The target may have been especially useful to subscribers who felt discouraged by gold's $30 drop after Thursday's close. I'd suggested buying on weakness using a 'mechanical' bid at 1722.90. It failed by a hair to trigger, but the point of it was to avoid hoping for the gift of a pullback all the way to the green line, where we initiate most of our 'mechanical' trades.  The chart raised the prospect of an rABC short, but it actually triggered at 1772.20 just after the chart was drawn and produced a $370/contract gain on paper. Here's the rABC pattern on the 30-minute chart: a=1772.80 (4/13 at 4:00 p.m.) Bulletin:  Gold's pop just now above 1775.10 means the June contract is on its way to at least 1782.30, a bigger-picture target we've been using for quite a while that could prove challenging to beat.

Gold is down an unpersuasive $24 at the moment, perhaps resting for more-challenging adversity in the wee hours. We remain focused on two rally targets nonetheless: one at 1782.30 that is tied to a big pattern that's been in play for more than a week; and another, lesser Hidden Pivot at 1775.10 that is shown in the chart.  Ordinarily we look to bid patterns like this one at the green line -- here 1696.80, and an implied stop-loss at 1670.60.  That's risking $24,000 on a four-lot trade, so I am recommending it only to those with the Hidden Pivot chops to cut the risk by 80% or more.  A buy at  the green line would entail about the same dollar risk (using a 1696.80 bid, stop 1670.60), although it would be somewhat less hazardous, as well- developed green-line entries tend to be. By that point, depending on the time of day, it may be possible to substitute GLD, or options on it, for the futures contract. _______ UPDATE (Apr 13, 8:15 a.m. EDT): The trade recommended above missed triggering at 11:00 p.m. by a micron. Cancel the order, since I'm not keen on sloppy seconds in this instance. If anyone filled the order using an rABC (a=1731.80 at 7:00 p.m. on the hourly chart) or a camo set-up, please let me know so that I can establish a tracking position. It could have produced a profit so far of as much as $8,600 on four lots.  

Investors who think the worst is over had better prepare for the other shoe to drop. Stocks rallied sharply last week, reflecting the egregious miscalculation not only of bulls who have yet to meet a dip they did not like, but also of bears who evidently fear that the crazed buying binge will continue for no good reason. They should relax, since there has never been an instance where an initial drop of 30% in the stock market did not take at least another six months to bottom. Another reason why bears shouldn't panic to get 'em back is that in bear markets, shares tend to fall by as much as earnings. Assuming that the bottom line is halved over the next six to nine months for S&P 500 companies -- a very conservative estimate, considering the number of businesses that are either headed into bankruptcy or shuttered indefinitely --  the S&P 500 should eventually fall to at least 1700. That is miles below the current 2789, and 22% lower than the March 23 crash-landing bottom. AAPL Is Key, as Always As always, we'll be keeping a close eye on AAPL, the most popular stock in the portfolio world and a reliable bellwether for the stock market in good times or bad. Short-covering nuttiness has pushed the stock as high as 271.70 so far, but you should expect the rally to hit a minimum 282.45, an important Hidden Pivot resistance, before it sputters out. A commensurate target for the E-Mini S&P lies at 2881, exactly 94 points above Friday's close. Enjoy the rally while it lasts, but don't get too caught up in the idea that we are seeing the V-shaped bottom that many financial advisers have told their clients they can count on. Although we often ascribe prescience to