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The Indoos dove more than 300 points last week after topping at the precise intersection of a well advertised trendline and an important Hidden Pivot target. The two obstacles together represented the most formidable technical challenge bulls have faced in more than a year. Ordinarily we might expect a correction lasting at least four to six weeks. But these days, four to six days of weakness seems more likely, given the relentless enthusiasm of buyers and the very narrow list of stocks on which they have trained their buying power. So where to next?  I'd suggest using a 30299 target for now. It comes from the weekly chart and is the secondary (p2) Hidden Pivot of a rally pattern begun from A=15,503 in February of 2016.

What a year it was! Those fortunate enough to have been substantially untouched by news have reason to be thankful. Today's touts will be the last for 2019, but stay tuned for updates, most likely perfunctory, as stocks inch toward the finish line of this maximally truncated holiday week. May the year ahead be bountiful in all good ways.

After watching the bull market break all the rules for the last ten years, we know better than to think that even the most formidable-looking technical barrier will slow it down for more than a day or two. Indeed, seldom have we seen prices fall for three consecutive days -- a rarity even in the good old days. (Old-timers may recall that the October 1987 crash, when many traders might have thought the world was ending, lasted but for two full days and a fraction of a third.) Still, it would be careless to ignore the double barrier which stopped the DJIA's ascent on Friday: a Hidden Pivot resistance and a trendline that both trace back to the first quarter of 2019.  Instead of getting all worked up about the prospect of a healthy correction to end the year, however, we'll simply assume that bulls are capable of holding things steady for at least a few more days, come what may. Since everyone expects this, or perhaps a continuation of December's wilding spree, we should be on our guard against a (very) contrarian surprise.

For more than a decade the bull market has flouted trendlines, Hindenburg Omens, Hidden Pivot resistances, cycles, channel tops and other ostensible rally killers, so there's little reason to think it will not soon overcome the double whammy of some new impediments it encountered on Friday (see inset). We recently discussed the imposing DJIA trendline shown in the chart because it precisely capped three rallies earlier in the year; on Friday it came within a few points of nailing the high of yet another. What I hadn't noticed before is an additional resistance, a 28,738 Hidden Pivot target that fell within a tenth of a percent of Friday's high. Long experience has taught us that bulls are likely to be frolicking above this seemingly crucial technical threshold soon, presumably bound for Dow 30,000. Even so, there are reasons to doubt they will do so before 2019 ends, and that even if they should push the Indoos to new record highs early in 2020, they are unlikely to blithely ignore the unsettling problems of two corporate giants, Boeing and FedEx. Rather than get worked up about the possibility of a major top, we'll simply adopt a cautious, if not to say mildly bearish, trading bias for the remainder of the year. In practice this will entail monitoring minor, downtrending abc patterns for signs of waxing strength. If they should start exceeding their 'd' targets, that would mean the dominant trend -- a.k.a. the bull market -- is weakening or worse. ______ UPDATE (Dec 30, 5:15 p.m.): A good start!  Bears were understandably skittish about going on the attack for a rare change, but they did manage to push the Dow down by 183 points. Interest in the markets is next to nil at the moment, especially in the chat room, so

Bears don't have it wrong -- this spectacular bull run is not going to end well. Its days are numbered, if only because of the double whammy of Boeing and FedEx, two global giants whose very considerable problems will be weighing on institutional investors for the foreseeable future. At the margin, this will create enough psychological drag on them to make a Dow push much above 30,000 unlikely. In the meantime, short-covering is the main force powering the broad averages into a steepening ascent. "This market reminds me of KrispyKream, when everyone knew it was going to zero but the shorts were being carried out in body bags," wrote one long-time subscriber. "I think it's fair to say that trying to pick tops is suicide. The blow-off top will probably give you an entry using your new system but in the meantime sitting on one's hands is probably a good idea." An even better idea is to surf the wave using the bullish targets published in Rick's Picks as minimum upside objectives. Better to be guided by a skeptic who can read a chart without bias than by a permabull who would have had clients invested up to their eyeballs in the summer of 1929.

We've become used to seeing gold struggle for loft when stocks are rallying because the chimpanzees who move the markets can't handle the implied mash-up of risk-on/risk-off strategies.  Lately, though, bullion has notched some sweet gains with stocks in their by-now reflexive rally mode. Bulls should take encouragement from the moderate surge in gold under way late Wednesday night. With the E-Mini S&Ps trading five points higher, Comex February Gold has been up as much as $5, extending a $25 gain recorded over the last few sessions. If it picks up a little steam, the rally could soon reach the 1529.50 target first broached in Rick's Picks two weeks ago, when a 'buy' signal triggered at 1491.30.

Because this vehicle was designed to tempt suckers into buying puts and calls, we don't bet on it very often. Only when it has fallen to a compelling, precisely targeted low do we consider buying options, and even then we buy only cheap ones with just a week or two left on them. This time, a 15.66 target that seemed too enticing to pass up drew our interest. On Friday, $200 worth of calls we'd bought a week earlier to satisfy a gambling jones vanished in a puff of smoke when they expired worthless. Looking ahead, I see little likelihood of jumping back in until such time as the 9.92 target shown is hit or closely approached.   The S&Ps would probably have to rise well above 3400, and the Dow above 30,000, before this happens. It seems incredible, but that's what the chart says, and it says it clearly.

Friday's modest leap narrowly missed our still-interesting trendline, which came in at around 28,661.  Because it is rising with a slope of about 12 points per day, we should look for resistance on Monday at 28,673, moving up to 28,721 by week's end. If and when it is hit, plan on buying some cheap DIA puts with about two weeks left on them. Be ready to jump on it if this happens on the opening bar. Otherwise, I'd suggest waiting till the close for a better deal. It will always be highly speculative to bet against a bull market that has been chugging  along for more than a decade, so don't overdo it. This is just to have a horse in the race. ______ UPDATE (Dec 23, 6:05 p.m.): The trendline comes in Tuesday at around 28,705, as near as I can make it.  My gut feeling is that the Indoos will get within 10-15 points of this 'hidden resistance' before feeling its downforce. If you are keen on getting short, the instruction above still applies. ______ 'UPDATE (Dec 26, 12:30 a.m.): For Thursday, I estimate the trendline will be at 28,712. The trading guidance given above remains viable. Last week's 28,608 high got close enough to the line that we should be open to the possibility that the anticipated top has already occurred. _______ UPDATE (Dec 26, 5:14 p.m.):  Use 28,721 for Friday. If it's hit, don't be surprised if this occurs four seconds before the closing bell. Buy a few puts anyway -- what could possibly could go wrong over the weekend?

My 3229.75 target precisely contained last week's rally, but we shouldn't kid ourselves that it will turn out to be the Mother of All Tops. Assuming buyers make short work of this Hidden Pivot resistance, the next stop on the path to infinity would be the 3252.75 target shown.  Notice that the pattern's point 'A' low is just a little pisher and therefore unlikely to produce an important 'D' high. Sliding 'A' down to the much more compelling A2 would yield a weightier 3348.75 with a midpoint resistance at 3209.88 that was decisively exceeded last week. I mention it just to be on record with a seemingly absurd -- at least for this permabear -- prediction. My gut feeling is that we'll eventually see the E-Minis trading at those levels, implying Trump actually is a shoe-in for reelection. Paradoxically, the only thing that could derail him would be a bear market. Even then, it's difficult to imagine any of the Democrats, including Hillary, beating him. _______ UPDATE (Dec 26, 12:38 a.m. EST): I expect the 3252.75 resistance noted above to show stopping power, potentially short-able, but if the futures slide past it the next resistance, unnoted above, would be at 3260.50. This is the secondary (p2) Hidden Pivot of a major ABCD pattern where 0n the daily chart A=2882.00 on 10/10. _______ UPDATE (Dec 29, 8:55 p.m.): The 3252.75 target was exceeded, but only by 1.25 points. A short from my number with a tight stop could have been worth as much as $800 per contract so far.  Anyone on board? I haven't established a tracking position because no subscriber mentioned it. _______ UPDATE (Dec 30, 5:21 p.m.): This pattern produced an rABC trade Monday from p=3128.88 that could have been worth as much as $350 per contract. The 3205.75