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DaBoyz were unable to goad bears into covering short positions on Thursday, so stocks went limp. "Bullish news" overnight could change that, but the sordid tale of actor Jussie Smollett, who evidently lied about being beaten up by MAGA thugs,  has so completely dominated the headlines that a bullish story concerning the economy is unlikely to stir up much of a response.  However the day unfolds on Wall Street, we're inclined to go short over the weekend for reasons detailed in the DJIA tout below.

On Wednesday the Indoos poked marginally above a key peak at 25,908 recorded in December. This would likely have caused a multitude of technical traders and algos to smack their lips with anticipation, since such breakouts, even when slight, are among the most bullish events that can occur on charts. Of course, it could also be a great way for Mr. Market to set a ruinous trap for bulls, since they are already giddy over the steep run-up in stocks that has occurred since late December. That's why we are unfurling the yellow flag with tonight's updates. The chart shows how a 921-point drop to the green line would trigger a theoretical short sale. As a practical matter, we don't have to wait for something that significant to happen in order to take a bearish position. We like the short at these heights, ahead of the actual signal, because Wednesday's breakout smells like such a rat. Fed Murmurings By treating Thursday's moderate selloff as the potential start of something big, we risk little. Even if the broad averages were to move somewhat higher, drawn magnetically toward October's record peaks, that would only heighten our skittishness about bulls' heedless climb up a wall of worry that looks primed to collapse. It's surprising that stocks were able to make any headway at all in the wake of the Fed's latest murmurings. Dovish they were not, but index futures still upticked for modest gains after the close on Wednesday. They peaked in volumeless trading overnight, however, and DaBoyz began Thursday unable to corral enough bears to keep the faux rally alive. If stocks open higher on Friday, or if they continue upward during the day, it'll be tempting to fade buyers by acquiring some cheap put options. [This just in: Existing homes sales

On Wednesday the Indoos poked marginally above a key peak at 25,908 recorded in December. This would likely have caused a multitude of technical traders and algos to smack their lips with anticipation, since such breakouts, even when slight, are among the most bullish events that can occur on charts. Of course, it could also be a great way for Mr. Market to set a ruinous trap for bulls, since they are already giddy over the steep run-up in stocks that has occurred since late December. That's why we are unfurling the yellow flag with tonight's updates. The chart shows how a 921-point drop to the green line would trigger a theoretical short sale. As a practical matter, we don't have to wait for something that significant to happen in order to take a bearish position. We like the short at these heights, ahead of the actual signal, because Wednesday's breakout smells like such a rat. Fed Murmurings By treating Thursday's moderate selloff as the potential start of something big, we risk little. Even if the broad averages were to move somewhat higher, drawn magnetically toward October's record peaks, that would only heighten our skittishness about bulls' heedless climb up a wall of worry that looks primed to collapse. It's surprising that stocks were able to make any headway at all in the wake of the Fed's latest murmurings. Dovish they were not, but index futures still upticked for modest gains after the close on Wednesday. They peaked in volumeless trading overnight, however, and DaBoyz began Thursday unable to corral enough bears to keep the faux rally alive. If stocks open higher on Friday, or if they continue upward during the day, it'll be tempting to fade buyers by acquiring some cheap put options. [This just in: Existing homes sales

Just when bulls thought it was safe to go back in the water, the obscurantists at the Fed start mumbling hints again about tightening. Are index futures moving higher tonight anyway simply because the players have grown tired of treating the central bank's tiresome little game with deference? After a while, this can become more than a little silly, sort of like trying to find existential meaning in Bozo the Clown's body language. Even so, we hesitate to ascribe intelligence or discernment to the headless chickens, miscreants and algos who move the markets. More likely is that the same mysterious, cyclical forces that determine trends happen to be bullish at the moment, irrespective of what the Open Market Committee implies or intends.

If you're a taxpayer, you may have something to celebrate soon. On an otherwise dull news day, there was word Tuesday evening that President Trump would attempt to claw back as much as $3.4 billion in earmarks and grants for California's high-speed rail project. The line was originally conceived as a link between San Francisco and Los Angeles, but this was never more than pipe dream -- a guaranteed boondoggle that had as much chance of completion as a sky-bus shuttle to Mars. Huge cost overruns and delays have caused California to scale back on the line so that it connects, not big cities and millions of commuters, but the sparse, Central Valley citizenries of West Podunk and Palookaville (see inset).  That sounds do-able -- mere tens of billions of dollars will probably suffice -- but it supposedly would be cheaper to buy a Honda Prius for each and every person who might conceivably use the rail system. Throwing Good Money After Bad California Gov. Gavin Newsom will undoubtedly sue to hold onto Federal dollars that have been allotted so far, and he will claim that the project, although drastically reduced, is still worth finishing. For his part, Trump tweeted on Feb. 13 "We want that money back now. Whole project is a 'green' disaster!" It surely is that, and even if the funds go unsurrendered, it will be entertaining and enlightening to see the project exposed for the grandiose 'green' scandal that it is.

The trek to our longstanding rally target at 1345.50 has been so labored and tedious as to be nearly  untradeable. Rest assured the futures will get there -- although we should expect a stall at 1336.40, a Hidden Pivot resistance related to a somewhat higher alternative 'A' at 1251.60 recorded on December 19.  The rally has consisted of two extremely choppy legs as different in character as Laurel and Hardy. No matter. We knew all along where things were headed, even if the journey provided no good handholds for a mechanical entry. Please note that a decisive push past the target would put in play a more significant one at 1378.70. It will take a bit more than that, however, to create the impulse leg that would refresh the bullish energy of the weekly chart. Specifically, buyers would need to hit 1404.50 to surpass the key 'external' peak made at the start of 2018. _______ UPDATE (Feb 19, 3:16 p.m.): Gold had one of its sharpest rallies in recent memory today -- a $23 surge that has peaked so far at 1345.00, just 50 cents from our longstanding rally target. In the chat room, a subscriber reported exiting a profitable GLD call option position at the top. The futures have stalled, but the pullback thus far has been shallow. The target, a Hidden Pivot, is sufficiently clear that a close above it would be quite bullish, shortening the odds of a continuation to the 1378.70 target noted above. (Note: Numerous subscribers weighed in later with reports of target-related profits in such equity-based vehicles as GLD, Barrick, JNUG, NUGT and GDXJ.) _______ UPDATE (Feb 20, 10:20 p.m.): Buyers failed to reach an easy target at 1354.30 with today's thrust, warranting moderate caution. The bigger-picture target 1378.70 remains valid. _______ UPDATE (Feb

So much for the wall of worry! Bulls have improbably shrugged off steep downturns in the housing and auto sectors, rising interest rates, a costly tariff war with China, the pernicious rise of socialism on Capitol Hill, the economic implosion of China and Germany, a likely peak in corporate profits, a strong dollar that has sapped the earnings of U.S. multinationals; and, most recently, evidence that retail sales nosedived during the Christmas shopping season. All of these things together do not diminish the unstoppable look of the Industrial Average (see inset) as it moves within striking distance of new record highs. The Dow sits just inches from a 25,998 target we've used to stay with-the-flow, even as the trend has seemingly flouted sanity itself. At the target, the Indoos will have exceeded an important 'external' peak at 25,980, but will also lie within easy distance of an even more important peak at 26,277 from three weeks earlier. Speaking as a hard-core permabear who has learned to tune out gut feelings so that the charts can speak for themselves, your editor will mention a 28,110 Hidden Pivot that would become a logical minimum objective once the Dow has conquered the obstacles noted above. That would put it nearly 9% above current levels and 30% above the 21,712 nadir recorded in the final days of 2018. ______ UPDATE (Feb 20, 10:25 p.m.): The rally topped at 25,986, just 12 points shy of the target flagged above. Above it, the next important benchmark would be 26,084, equal to a small but technically significant peak made on November 9. Let's see whether buyers have the moxie to take it on. _______ UPDATE (Feb 28, 9:45 p.m.): The Indoos are primed to fall a further 154 points to the 25761 target shown in this chart. 

Although it's fun to bad-mouth the rally, the yo-yos who have stoked it could win in the end. From the moment stocks took off on December 26, we've been 'certain' it was just a bear rally designed to fool everyone into thinking new highs were actually possible. It would need to be powerful enough not only to convince the rubes that this was so, but to switch off the warning circuits in the brains of hardcore permabears such as your editor.  We remain skeptical that new highs are coming, even as we put our rational thoughts aside to consider solely the evidence on the charts. No matter what happens, let's not forget that Mr. Market's primary mission is to fool as many investors as possible, and to wreak havoc on the best-laid plans of bulls and bears alike.

We're at the end of an era, says my colleague Bob Hoye of Institutional Advisors. Political craziness in the U.S. has peaked with a wacky socialist scheme to soak the rich for money to pay scientists and bureaucrats to control the weather. No less idiotic is the entrenched notion that the Fed can prevent the financial bubble it created from bursting. This delusion will end when the inevitable bear market arrives. As for the Green New Deal, says Hoye, it will collapse when enough voters come to understand that "climate scares have been rigged for grant money and to impose a new world order." For most Americans, the end of these two manias cannot come soon enough. Click here for Hoye's superb essay, which sees parallels in the collapse of Rome and in popular uprisings going back to ancient Egypt.