Free

I've set aside strongly negative feelings about the U.S. economy and the stock market to focus solely on the charts, which never lie. Trends are trends, and as long as the one in progress continues to exceed prior peaks with each new thrust, the bull must be given the benefit of the doubt. This is quite a stretch for me, since the U.S. housing and auto sectors are imploding, Q1 corporate earnings will go up against unbeatable year-ago numbers, and the next most-powerful economies in the world, China's and Germany's, are slipping into recession. Under the circumstances, it's hard to imagine the stock market making any headway at all, much less achieving new record highs. (See my DJIA tout below.) That is why I have eliminated 'imagination' from my brain when pondering the markets.  That's the next best thing to eliminating the brain itself from the process. Trust me when I say that forecasting stocks is simply not a thinking man's game. Thinking will only get you into trouble. And if you are very smart, it will get you into a position so far ahead of the crowd that you will doubt yourself, bailing out with big losses at the worst possible time.

The Indoos stalled Monday almost precisely at the 25,440 midpoint Hidden Pivot shown. Buyers subsequently gave up almost no ground, setting up a likely move past the resistance on Wednesday. If it's decisively exceeded, that would all but clinch more upside to the 25,998 target.  This was already no worse than an even-odds bet because the initial thrust, labeled A-B in the chart, exceeded two prior peaks without taking a breather. That created a powerful impulse leg; however, an even more powerful one would occur if the target is hit, since it lies slightly above a key 'external' peak at 25,980 recorded just before the stock market began to fall apart in early December. Technical analysis aside, you can use your eyeballs to answer this question: If the Dow reaches the 25,998 target, will it be close enough to new all-time highs to make them likely? Whatever your answer, the very possibility will be foremost on traders' fevered brains, conceivably 'magnetizing' October's all-time high at 26,951. ______ UPDATE (Feb 13, 4:56 p.m.):  Today's action, which featured a pop to 25626, followed the script above. Please note that a pullback today to the green line at 25161 would trip a mechanical buy, stop 24,883. _______ UPDATE (Feb 14, 5:20): No change.

Trump and his political enemies are close to a deal on a border wall, but if either side has the chutzpah to take a victory lap (see inset), it's going to be one celebration too many for millions of Americans. We can leave it to news commentators on the left and right to sort out who got what. If it makes the country's southern border less porous, it'll at least be a small victory for taxpayers. The border war has had little if any impact on the stock market. The tariff war with China, on the other hand, has subjected stocks to a roller coaster ride since spring. The effect has become more muted recently, probably because the expected outcome -- i.e., the "deal" Trump is liable to get from Xi Jinping -- is unlikely to be any more constructive or meaningful than the budget about to be passed on Capitol Hill. Under the circumstances, a tariff agreement has the potential to end the presumptive bear rally on Wall Street. Buy the rumor, sell the news, as the saying goes.

The rally that powered stocks to record gains in January went flat last week, but for a bullish reason: sustainability. DaBoyz are in no great hurry to pretty up the illusion that new all-time highs are possible. With no time constraints, they've adopted a go-slow approach that investors and pundits can buy into. Keep in mind that if the Masters of the Universe are very successful at keeping this deception alive -- by no means a given at the moment -- a stock market with plenty of good reasons to fall could instead keep climbing. This will always be possible, since it is not the health of the economy that drives the markets, but the other way around. Purely cyclical forces cause stocks to rise and fall, often mysteriously. When shares are rising -- manifestly for no good reason -- this energizes and lubricates the gears that make the economy hum. The effect is mainly psychological: a change in attitude and perceptions caused by rising stocks that eventually brings a moribund economy back to life.

Buyers shut down to save energy as the week ended, but not before they'd muscled past a supply zone created in mid-December on the way down (see inset). Expect them to return in force once the news environment turns favorable again toward a wafting rally.  AAPL is being deftly manipulated higher on short-covering, but the news cycle is crucial to the effort. Under the circumstances, we might expect AAPL and the broad averages to go nowhere on Monday, usually a non-news day; then to start rising again when some pseudo-'real' news begins to dribble out on Tuesday. AAPL has the potential to hit 178.00 on the next burst, but  it will need to push above the 184.94 peak recorded on December 3 to fool the herd into thinking new all-time highs are actually possible. _______ UPDATE (Feb 13, 5:13 p.m.): AAPL feels leaden, the moreso because the dirtballs who manipulate it for a living opened it on the high of the day, making fools of buyers. They will remember this, at least for a short while, adding an extra layer of supply the next time DaBoyz attempt to goose the stock._______ UPDATE (Feb 14, 5:34): Zzzzzzz. AAPL went nowhere -- including down, which I read as slightly bullish. _______ UPDATE (Feb 25, 6.09 p.m.): The stock's canny handlers gapped it past the 173.24 midpoint pivot of the pattern projecting to 178.06, making a run-up to that number practically a sure thing.

AMZN has stopped out a 'mechanical' long as we'd expected after failing to find traction last week for three consecutive days. The new chart shows a fanciful target at 1842.24, but it will shift lower if the stock falls even moderately on Monday. Otherwise, a print at 1635.63 would put the target theoretically in play while tilting our short-term bias ever-so-slightly bullish. DaBoyz appear to be biding their time, waiting for the next short-squeeze opportunity. The stock is expensive to heft, and that's why we'll see it move higher only when sellers are confident they'll do best by simply stepping out of the path of panic-stricken bears. At the moment, there's no hint that such an animal even exists._______ UPDATE (Feb 12, 7:48 p.m. ET): Today's rally put the 1842.24 target in play. More immediately, we'll use p=1704.50 as a minimum upside objective for the near term.________ UPDATE (Feb 21, 6:21 p.m.): Zzzzzzz. AMZN feels leaden, but nothing has changed. It would take a drop below 1566.76 to invalidate the 1704.50 target. ______ UPDATE (Mar 4, 11:47 a.m.): DaBoyz trapped bulls with a gap-up opening that peaked a visual millimeter above p=1704.50. That could be it for a while, but if the stock surprises with a second-wind burst, closing above p, it would signal an impending run-up to at least p2=1773.37.

Although we usually come to our trading desks Friday morning intent on fading the opening bar with the purchase of put or call options, there was little to inspire this as the dust settled on Thursday. Was the weakness signaling a reversal of a rally that has been relentless since Christmas Eve? If so, we're not likely to see put options on sale at the bell. It also means that the Dow's 220-point plunge could provide a running start for even more serious damage as the week ends. Brace for an interesting day in any event.

Like many of you, I've been eagerly awaiting the day when this powerful bear rally drops dead. Instead, AAPL has rallied with a vengeance, drawing a thousand doomed stocks into its vortex. Yes, the rally is a hoax. And yes, the Masters of the Universe have used it to distribute as much stock as possible into the hands of rubes, pensioners and widows. Under the circumstances, I've been a reluctant bull all the way up, duty bound to follow the mechanical logic of my charts. However, the effort has worn me out, and that's why I've selected the thumbnail chart today that I did (click on inset). It gives me the wherewithal to say that maybe, just maybe, the insidious promoters of the Big Bounce have breathed their last. That Ominous Cough? This is a logical inference, given that the E-Mini S&Ps have begun to roll down from a midpoint Hidden Pivot at 2732 where buyers were likely to cough ominously, if cough they have. The pattern itself is unfortunately not of the highest quality, and so I am prepared to see stocks come roaring back next week -- led, of course, by AAPL, whose iPhone troubles have suspiciously melted away in recent weeks. If that is what happens, I hope you will pardon this digression. Think of it as a fleeting moment of sanity in a crazy world.

Wednesday's asphyxiating tedium was a reminder that DaBoyz are in no rush to take stocks higher, especially if the short-covering needed to do so is absent. Usually, bear buying-binges are driven by "good" news. On this particular day, however, the headlines concerned a State of the Union speech that held little interest for Wall Street. Toss in the usual bilge concerning political bickering, Mueller's supposed investigation and such, and you begin to see why ginning up a rally would have been so difficult. Nevertheless, the chart of AAPL (see inset), which has regained its leadership status as the bear rally has progressed, looks constructive. One could argue that the stock, as well as a few others controlled by institutions, are in a bullish holding pattern pending "news" capable of goading bears into doing some heavy lifting. It's hard to imagine what the news will be, although rehashing the Fed's policy shift toward "not tightening" has gotten fabulous mileage so far.