Free

I like the 301.60 target shown in the chart enough to suggest a play linked to it. Buyers took a couple of days to get loft above the 291.61 midpoint pivot, but it looks now like it is about to become support for a shot at D. If we assume that it will take perhaps two weeks to get there, we can use the target to set up an option trade that will risk very little if we are wrong but produce a substantial gain if we are right (aka 'leverage'). Accordingly, I'll recommend  buying the March 6 299/302/305 butterfly spread four times for 0.32 or better, contingent on DIA trading 292 or higher, good through Friday. If you can leg into the position for less using, for one, an rABC pattern to do the long side first (i.e., buy four 299s; the 305s can be acquired later, since they won't move that much), then by all means do so. If you don't know much about butterfly spreads, you should pass up the trade and wait for an opportunity you fully understand. A simpler strategy would be to leg into a vertical call spread, such as the 300/302.50 for 0.30 or less. Stay tuned to the Trading Room for further guidance on this, since it will require real-time strategizing. You can help out by letting me know of your interest. _______ UPDATE (Feb 18, 8;22 p.m. EST): In the Trading Room this morning 'Hammer' reported doing the butterfly for 0.32, so I'm establishing a tracking position of four spreads. The worst loss possible is $128 for a shot at a gain of up to $1,000 -- pretty good odds if you think the bull market will continue to shrug off the coronavirus threat. _______ UPDATE (Feb 23, 9:45 p.m.): Far

Stocks seem to be shrugging off disquieting news about the coronavirus a little too easily, so be careful.  Most of the bad news has concerned the apparent spreading of the disease more rapidly than had been anticipated just a week ago. Far from peaking, the virus seems to be gaining momentum. Wall Street took the most recent headlines about this not merely in stride, but used them to beat stocks down Wednesday night in order to set up some bargain hunting opportunities ahead of Thursday's opening. We should pay particular attention to AAPL, the most important stock-market bellwether of them all, because there are technical signs that its flirtation with new highs over the last month or so has masked distribution by the usual sleazeballs. All too often, the firms they work for tout stocks like AAPL to make it easier for them to unload shares on the unwary. If that sounds shocking, then you've been living on Mars.

The dollar's steep rally this month is close to generating a powerful impulse leg on the daily chart. Just another 0.15 points (see inset) and DXY will exceed an external peak at 99.25 recorded back in early October. That would refresh the bullish energy of the chart while increasing the odds that any weakness, unless severe, would be corrective and therefore a buying opportunity. This scenario is congruent with my bullish outlook for T-Bonds, but it would also keep gold under pressure. This could turn out to be less threatening than it sounds, since precious metals have held up well recently not only against a strong dollar, but in the face of a stock-market rally that has been nearly relentless. _______ UPDATE (Feb 19, 7:34 p.m. EST): The Dollar Index is closing fast on a clear Hidden Pivot resistance at 100.01. If bulls blow past it, that would suggest that still higher prices, possibly  significantly so, lie ahead. Here's the chart. _______ UPDATE (Mar 2, 11:11 p.m.): After missing the 100.01 target by a dime, DXY has plummeted $2.61. The key to the chart lies in the fact that the high was bullishly impulsive because it exceeded a small but distinctive 'external' peak at 99.89 recorded in May 2017. This suggests the plunge of the last two weeks is corrective and that when it ends bulls will regain dominance.

I've unfurled the yellow flag, since the E-Mini S&Ps topped Tuesday slightly above a 3369.25 rally target I'd been drum-rolling for more than a week. Monday's price action was both peculiar and deceptive, since the day began with index futures extending an overnight rally with their usual brio. But about an hour into the session they turned south, presumably correcting to recharge for another rally. Your editor took the bait with a buy recommendation that turned into a loser when the bounce sputtered out just shy of a profit target. This is unusual, since nearly all of the tricks we've been using to get long have been working perhaps 80% of the time. Not this time, however, and the fact that it did not should temper our enthusiasm for bottom-fishing until we've seen a few more abcd patterns play out in both directions. _______ UPDATE (Feb 12, 9:37 p.m. EST): Just when it seemed as though the futures would never fall, they've plummeted nearly 20 points tonight in mere minutes. The purported reason is a jump in coronavirus cases, but as far as Wall Street pros are concerned, this ranks right up there on their worry list with a Martian invasion. Let's see how DaBoyz maneuver this sleazy shakedown before we place any new bets. _______ UPDATE (Feb 13, 7:56 a.m.): Hidden Pivot supports got crushed overnight. This implies DaBoyz are starting to think the coronavirus story could be robust enough to help them push stocks down to relative bargain levels. The risk is that the virus will spread sufficiently to become a true menace even on Wall Street, where heedless complacency has had more than a decade to become as entrenched as the worst cancers.

Wall Street and the conference room at Goldman Sachs are apparently the only places on earth where no one seems terribly worried about the growing spread of coronavirus. Crazed investors have driven U.S. stocks into a nearly vertical ascent that will soon push the Dow Industrials to 30,000.  Over at Goldman,  a couple of their perennially bullish analysts are predicting the virus will not have much impact on the global economy and even less of an effect on America's consumption-driven, debt-financed GDP. Tell that to China, India, Canada, Africa and a dozen other countries where officials are bracing for a dramatic slowdown. Read more about it  at ZeroHedge.  Complicating the picture for U.S. stocks is the fact that they are being viewed as a haven asset by foreign investors. Just what stocks needed 11 years into a very mature bull market that could use a rest, even in the estimation of the most wildly bullish fund managers. There is also the problem of a very strong dollar that is certain to bite deeply into the earnings of U.S multinationals. Even so, it's hard to imagine what could possibly end America's decade-long shopping spree or even slow it down. We'll find out eventually, of course, but for now it's either drink the Kool-Aid or enjoy the show from the sidelines.

Could it possibly get any better?  Trump has shrugged off impeachment and taken a well-earned victory lap, the Democrats are headed for a landslide loss in November, and the U.S. consumer economy is hitting on all twelve cylinders, powered by shop-till-you-drop exuberance that has made even the ongoing, trillion dollar writedown of shopping malls a relatively niggling concern. There are job opportunities for every American who wants to work, and real wages are rising for blue collar jobs. As for the stock market, it is not merely at a permanently high plateau, as it was famously described in the halcyon days of the Jazz Era; it continues to rampage skyward without ever selling off for more than two consecutive days. Third-day bets on the pass line haven't enjoyed such surefire odds since Secretariat bolted out of the gate in the 1973 Belmont. A Bull's Checklist Just look at Tesla, the feistiest stock of them all.  The price of a single share recently came within an inch of $1,000 (shades of RCA, aka 'Radio'!) after nearly quadrupling since October. Some analysts are saying the stock eventually could hit $6,000.  Need more reasons to be crazy-bullish? Here's a checklist from John Jay, who posts regularly in the Rick's Picks forum: 1) easy access to low interest car loans -- “No job, No credit, No problem!”; 2) a vast 'off the books' business universe; 3) 22 million people working for some level of government, almost twice the number working in manufacturing; 4) God-knows-how-many-people from #3 above now retired with great pensions/healthcare + COLAs; 5) the “Port Royal” effect, as buccaneers from all over the globe come here to buy mansions and kick back; 6) easy access to HELOCs for those home equity to burn; and, 7) Silicon Valley-types cashing in on stocks, options,

What's powering the U.S. economy? 'It's a mystery,' concludes a think-piece by Noah Smith posted Wednesday at Bloomberg.com. He ultimately settles on a boring economic environment as the main reason why U.S. consumers continue to spend. While we may be living in all-too-interesting times from a geopolitical standpoint, the U.S. economy is arguably on a modest glide path, with no misguided Fed policies, oil price spikes or wild speculation to trigger a recession, Smith writes.  Of course, the eternal optimists who nurture and sponsor bull markets have voiced similar thoughts just ahead of every recession that has ever occurred, so we should probably take what they are saying now with a grain of salt. Stocks are priced, if not for perfection, then for expectations that nothing will go seriously wrong. Paradoxically, the worst thing that could actually could go wrong, and eventually will, is the onset of a bear market. It is predictable that it will begin for reasons that will not be apparent until we are all waist-deep in it.

Gold continues to bide its time, coping with seemingly limitless strength in the stock market.  Precious metals have held up well, considering that even two-day selloffs on Wall Street are becoming an endangered species. The chart shows nearly a month's worth of tedious oscillations punctuated by a couple of gratuitous feints higher. One of these days buyers will catch fire and complete the pattern shown in the chart, pushing this vehicle to a target at 1690.20 flagged here earlier. In the meantime, unless there's a dip beneath the 1542.80 point 'C' low, our minimum upside objective will remain p=1616.50.  We can trade it from either side of the market almost at will, as a $2200 scalp demonstrated on Tuesday, but this will require more patience than most of us have got. ________ UPDATE (Feb 19, 7:01 p.m.): After rallying sharply over the last two days, April Gold has stalled just 60 cents from the 1616.50 target we've used as a minimum upside projection. Two consecutive closes above it would put the 1690.20 target also flagged above in play. The move has been easily tradeable, even by doubters and nervous Nellies, using mechanical set-ups like this one. ______ UPDATE (Feb 23, 10:14 p.m.): The little sonofabitch exploded higher on the opening bar tonight, recording a peak at 1684.10 that missed my longstanding target by just $6.10. How could you have exited on the fleeting spike? Check out my posts Sunday evening in the Trading Room for the simple secret of the 'dynamic trailing stop'.

Bulls are in good position for another shot at Dow 30,000, not that anyone should have doubted they'd be back. Few could have foreseen, however, that their second-wave assault would come so soon. It was only last Friday that stocks were getting hammered on fears that coronavirus would take a toll on the global economy. It will, of course, but this has had little net effect so far on stocks that are constantly being pumped by giddy portfolio managers who are paid to throw Other People's Money at a small handful of high-profile stocks. Oil Traders Know Better Oil traders know better and have pushed quotes down into bear-market territory in response to the already significant curtailment of economic activity in China. Copper prices have fallen sharply as well, with the implication that the Fed may soon be battling deflation. Again. But with what? The interest rates the central bank controls are already too low to get much pop from easing. The alternative is prayer -- that China and the world are able to contain the virus quickly and convincingly. This can't happen too soon if U.S. stocks are going to sustain altitude. A short ascent to Dow 30,000 seems inevitable in any event, but there will remain the possibility that this historical benchmark could become the Dow 1000 of this era: very closely approached in 1966, but not exceeded until 17 years later.