On the evidence shown, I'm unwilling to call this one, at least not yet. TLT tripped a theoretical 'buy' signal when it touched the green line (x= 91.88) two weeks ago, but the odds are not yet good that it can complete the implied trek to D=105.49. Long-term interest rates would be well below 4% if that were to happen, implying the U.S. would be in the throes of a recession deep enough to kill consumer inflation. That seems likely to occur at some point, but it would probably be sooner rather than later, since another powerful wave of inflation is already in the pipeline due to soaring shipping costs that are hitting now. Regardless, if TLT can push without a breather above the April 4 'external' peak at 92.76, that would shorten the odds that a big move is under way.
July Crude ended the week just above a low at the D=76.66 correction target shown in the chart. The pattern that produced the target is sufficiently delicate and precise to suggest that even a slight breach of D would be telegraphing further weakness. This would be a break for motorists and also help mitigate inflation, albeit probably not enough to quell some other powerful inflation inputs, including a dramatic rise in shipping costs. Slippage beneath D would likely send the July contract into the range 74-75 for yet more distribution.
Speaking of my fellow gurus, our switchboards have lit up to warn that something big is looming. Even the oddballs who think stocks are headed much higher seem to agree that a punitive correction is long overdue. And although each of us would like to believe that the arrival time of whatever dreadnought is coming will precisely match our individual forecasts, Friday's Kabuki drama on Wall Street drove home the reality that none of us stands a chance of being exactly right. What an extraordinary day it was -- far freakier, even, than we have come to expect on a Friday. As the Dow Industrials steamed higher, Nasdaq stocks were getting savaged. The high-fliers in particular suffered a memorable drubbing, unable to lure buyers for most of the day. These behemoths have been egregiously misnamed The Magnificent Seven, but there is nothing magnificent about them at all; they are just flying pigs, bloated with enough hydrogen to levitate a million Hindenburgs. A cynic would say the zeppelin fleet's smoking room is located in the Eccles Building. Jackpotters Numbed Call options went begging for bids on Friday as well, discouraging Rick's Picks subscribers from even thinking about the 'jackpot bets' we sometimes make when stocks look ripe for a suddden mood change. And then came the blitzkrieg! As the Dow rally went vertical, a thousand bogged-down stocks got caught in the vortex, rising like a spout to finish the day with miraculous, modest gains or little net change. The craziness was most intense in the final 30 minutes, demonstrating the remarkable agility of trade-desk lackeys who have mastered the tactic of rotating your hard-earned dollars from one flavor-of-the-day to the next. Repo Man Thwarted It was Microsoft, the world's most valuable company, that had led the way down. The software giant
The drubbing that gold received last week after having slightly exceeded the 2449 high from mid-April was a rude shock. It created a series of impulse legs on the hourly chart, even if it missed being impulsive on the daily chart by a mile. The most troubling aspect of May 20's false breakout is that the rally fell $34 shy of the 2588 target I'd identified earlier, a Hidden Pivot related to a chart of higher degree. This trend failure will have taken enough bulls by surprise to add the weight of their shock and disappointment to current selling. It points most immediately to a test of the 2285 low recorded on May 3, so let's make that our minimum downside objective for now. It would take a print all the way down at 2170.70 to generate a bearish impulse leg on this chart, but that is a prospect we needn't worry about at the moment.
Is the bull market about to come crashing down, or will we have to wait until autumn when such disasters traditionally occur? I'm a traditionalist myself and expect the bear that's looming to usher in America's umpteenth panic and sixth full-blown depression. The hard times ahead will see the collapse of private and public pension systems, the triaging of Medicare, relentless waves of bankruptcies, and the rewriting of most mortgages so that the current occupants can stay on as tenants or sharecroppers. The dollar will be very strong, but not in the good way, since debtors will have to make payments unto death in hard currency. All of this is unavoidable no matter what you read; it is only a question of when. There will always be optimists who think the bull market is never going to end, but they are obviously not paying attention. They have much in common with delusionists who still think the covid "vaccine" was a blessing even though it has killed millions and continues to stop athletes in particular dead in their tracks. Many still adore the pathological liar Fauci, and Facebook's Zuckerberg, who financed enough ballot harvesting in 2020 to subvert the election. The true believers are so crazy they probably believe that Nvidia, having achieved a $3 trillion valuation, is about to double again in the next 12 months. Wave Theorists 'Divided' So why do we think the bull market begun in 2009 still has a ways to go? For one, although Elliott Wave experts seem divided on whether the top is already in, some of the better ones (Walter Murphy, for one) have noted that market breadth -- the percentage of stocks participating in the rally -- has not gone sufficiently out-of-whack to set up the haymaker. Concerning seasonality, there was an
Although a swoon to the green line (x=5108) would set up an appealing opportunity to bottom-fish there 'mechanically', I now doubt that the implied bounce would reach D=5542. More likely is that it would fail at p=5253 or lower, creating a secondary top that would still be seductive enough to trap bulls and bears alike (the latter via a short squeeze). There is another visually appealing possibility that rates equal mention: a feint next week to p2=5397, as suggested here earlier. I will continue to monitor the lesser charts diligently for signs of one outcome or the other. If the swoon is coming soon, it will likely be signaled by the futures' failure to achieve 'D' rally targets of minor degree, and to overshoot minor 'd' corrective targets.
The gap opening above the green line last Wednesday triggered a theoretical 'buy' signal on the daily chart. It was the third such signal this year, but because it is coming from a lower corrective low, odds are better that the low, 87.34 (4/25), will endure. Adding to the incipiently bullish picture, the week's summit exceeded the highest 'd' target that could have been projected using an rABC pattern on this chart. It's a long way to p=96.06, where price action could help us handicap the odds of D=104.78 being reached, but that Hidden Pivot target can serve as our minimum upside objective for now
The move past p=5253.00 was accomplished with such ease that further upside to at least p2=5397.75 should not be doubted. There appears to be sufficient power, actually, to reach D=5542.50, but we'll be paying particularly close attention to signs of a downturn from the lower number, since getting there would represent the marginal breakout that has the unique power to trap all players badly at the top. Meanwhile, a pullback on the lesser charts could provide an opportunity to get aboard belatedly, or to augment an existing position, with relatively little risk.
The 430.58 target first broached here in 2023 has shown remarkable pluck, but it seems fated to give way, if perhaps only marginally, because of last week's poke above a challenging 421.63 Hidden Pivot resistance derived from a lesser pattern. There is no logical rationale for a strong burst higher right now, but we cannot rule it out because the stock market remains in the grip of mass psychosis. We'll remain on high alert nonetheless, ready to exploit a head-fake that could provide exceptional leverage for a precisely timed purchase of put options. On the weekly chart, using A=366.50 from 1/5 yields a 452.35 target that looks well suited to that purpose.
I've returned AAPL to the list temporarily because a rally to the 198.03 'reverse target' shown in the chart would set up a juicy shorting opportunity. It could take a couple of weeks for the stock to get there, and you can trade it from the long side until that happens, but it promises to be worth the wait. For now, the company's aggressive infusion of buyback helium has given AAPL an artificial boost. Considering the $110 billion sum involved, it might seem as though this is the last stock anyone should want to short, even if the company is an innovative has-been in the same dubious pantheon as Disney. Buyback aside, the chart says AAPL is going to repeat Garbo's ominous cough in the second reel of Camille when it gets to 198.03. Stay tuned to the chat room and/or your email notifications, especially if you're new to Rick's Picks or have never in your life experienced a winning option trade.
