The Morning Line

[The markets will be closed on Monday for President's Day, but I am putting out fresh touts and commentary because DaBoyz are required to briefly let the beast out of its cage on Sunday evening. Up-to-the-minute updates from Rick's Picks will resume on the home page and in the trading rooms on Tuesday.  RA ] Technicians use charts to get a precise handle on trends and price reversals. However, even the unschooled eye can sometimes form a tradeable opinion by merely glancing at a chart. Does the one displayed above tell you anything that might be actionable? To my eye, and without resorting to any of the proprietary tricks that are possible with the Hidden Pivot Method, I see the Dow Industrials rolling over due to the presumptive weight of heavy supply. There are many reasons we could adduce for this; however, pondering 'reasons' would negate the value and usefulness of technical analysis, which shuns 'reasons' as mere noise in order to focus on how an infinitely complex conflation of 'reasons' are actually perceived and acted on by traders and investors. The chart above does not make it possible to infer with confidence that a full-blown bear market is about to unfold. But there is still the visually intuitive sense that: 1) a major rally from these levels is unlikely; and, 2) a large drop is needed to form a base before spectacular new highs could conceivably be achieved.  Again, using only the eyes rather than the brain, how far do you think the decline would have to go in order for a base to form?  There is no correct answer, but my subjective eye 'needs' a selloff into the void between the pink and red lines. Respectively, the levels are a 'secondary' Hidden Pivot at 31,036 and a Hidden

Thinking back over the last 30 years, it's hard to recall a single instance when traders ultimately lost money diving into stocks on 'bad' news. There was a hot mess of it on Friday, when shares plummeted to presumptive bargain levels on reports that Putin is about to invade Ukraine.  That's bad news indeed, although the talking heads seem as clueless as the rest of us about what it will ultimately mean.  The end of NATO? Possibly. But even then we are left to wonder how  NATO's demise would change the global balance of power. And is Biden's further mishandling of this crisis likely to doom his presidency?  There's no denying that he has ever looked stupider or more incompetent, and that's saying something. His first disastrous gaffe was to announce to the world that America's reaction to an invasion would depend on the scale of it. In other words, if Putin invades only a little bit, the U.S. would stand down militarily. Biden's handlers had already drummed up some very harsh economic sanctions a couple of weeks ago, but the jury is still out on whether the measures are so extreme that they will cause the collapse of the global banking system. We should have an answer in the fullness of time, but for now it couldn't hurt to get a vegetable garden started in your back yard as spring approaches. Realize that the myriad shortages we are experiencing these days could seem relatively mild if shock waves from Ukraine prove unexpectedly destructive to worldwide trade. Where Red and Blue Agree Biden could have placed the blame for whatever happens in Germany's lap by simply pointing out that the U.S. has no compelling reason to risk blood and treasure in Ukraine if Germany's leaders can't summon the gumption or

Although headlines can move the markets, more often the opposite is true -- i.e., the cyclically-ordained ups and downs of stocks tend to color our perceptions of the news. We are watching this dynamic unfold in real time as Russia prepares to trample Ukraine. Headline writers have done their best to gin up a seemly amount of dread, even if few understand Ukraine's crucial significance to the balance of power in Europe. But if and when Russian tanks make their move, leave it to Wall Street bulls to shrug off a mere land war on foreign soil and then celebrate it with an exuberant surge. Even the pundits would be baffled into thinking investors somehow got it right -- that Ukraine really doesn't matter. Unfortunately for us all, Kiev's collapse could turn out to be just a warm-up for China's impending invasion of Taiwan. Look for the stock market to grow more and more agitated in the months leading up to this increasingly  likely event. Although it has been anticipated for years, it may have become inevitable with President Biden's extraordinary lack of leadership. The only thing that could be preventing it from happening now is China's expectation that the U.S. economy and political system are about to topple. Why put Chinese troops at risk, they may be asking themselves, when Mao's dream of triumphing over America is so close to becoming a reality? Energizing a Dying Bull In the meantime, the stock market's fright-mask feints, dives and swoons will be viewed by the herd as opportunities to scoop up 'bargains'. If any event has the ability to revive a dying bull market, it is the brutal subjugation of Taiwan by our most powerful and threatening enemy. Again, a bull rally in the wake of such a disaster would confuse

Last week's pointless gyrations did little to dispel the notion that the bull market is over. The vicious short-squeeze in the final minutes of Friday's session only added to the impression that rallies are being stage-managed to suck in rubes. The hallmark of a bear market is un-shortable upthrusts, usually occurring at times of the day or week that make them too menacing to intercept. In this instance, even the most aggressive traders would have moved to the sidelines as index futures turned on the afterburners just ahead of the weekend. Guessing whether the buying will spill over into Sunday evening's opening would seem to be a coin-toss bet, but for the fact that few traders, including experts, can guess correctly even 50% of the time.  We typically ascribe the stock market's diabolical evasions and cunning to a mythical 'They' who are all-seeing, all-knowing and able to cause stocks to move in ways that make it nearly impossible for anyone but 'They' to profit effortlessly. In fact, there is no 'They', only a mirror that reflects every oily pore, mole and sweaty follicle of fear and greed that animate the markets. 'Supply' Story Stinks Apple, a $3 trillion King Kong in a roomful of puny 800-pound gorillas, was the ostensible cause of Friday's brash juicing of the indexes. The company reported that material shortages were not impacting the bottom line as much as investors evidently had feared. This story stinks to high heaven, but the odor was barely noticeable after the Wall Street Journal certified and ballyhooed the report by leading with it in Friday's editions. It would not be an exaggeration to say that the economic world has grown critically dependent on short-squeeze rallies in a single stock, AAPL, like the one that goosed it on Friday. Let it

With the bull market in an apparent topping process, it will always be insightful to ponder Apple's chart. It offers a window into the minds of money managers, many of whom have staked their careers on the uptrend of just one stock. Some of these guys would be sorely challenged to analyze a game of Chutes and Ladders.  Staying long in AAPL for the last 13 years, however, and robotically adding to positions the entire way up, has required no analytical skills whatsoever, only the hubris to believe the lucrative ride will last forever. But how much more growth can a company already valued at $3 trillion deliver?  This question was bound to trouble portfolio managers eventually, and it would appear that time is now. The first thing to notice in the chart is that the stock recently failed to reach a compelling Hidden Pivot rally target at 187.93 that was flagged here more than a year ago.  It could still be achieved, although the weight of the topping pattern just beneath the target suggests the easy opportunity may be past. Under the best circumstances, chewing through the supply overhang would first require a consolidation at lower levels, then a confidence-building trek up a familiar slope that would take perhaps 4-6 months. This is by no means too much to hope for, but as my friend 'Trader Mike' Schurr always likes to remind me, hope is not a strategy. Bitcoin, AAPL's Cousin I've included a chart of bitcoin that stretches back two years. Bitcoin is AAPL's speculative cousin, the exuberantly irrational side of the bull market. It, too, appears to be in a topping pattern, which I've sketched speculatively as head-and-shoulders formation.  This is fanciful although not farfetched. AAPL arguably was forming a head-and-shoulders itself until last week's plunge destroyed

The chart above suggests that interest rates on 30-year T-bonds could be on their way up to 3.02%, a more than 40% increase over the current 2.11%.  That is not necessarily bad news for investors, since a market adjustment of that magnitude would make it unnecessary for the Fed to tighten.  It would also make it easier for the central bank to sell some of the $8Tr in U.S. debt currently sitting on its books. As the Covid asset bubble has grown to gargantuan size, it has become increasingly clear that the Fed, for all its talk about tapering, has dreaded doing so. It would surely pop the bubble, triggering a bear market in stocks and, quite possibly, a deep economic depression. A Market Adjustment That's why Powell has only talked about tightening credit. However, given the market adjustment this has helped cause, his do-nothing tactic appears to be working. If and when rates achieve 3%, it will give him room to ease. Also, a widening spread between short- and long-term rates will fatten bank profits by tens of billion of dollars. A very small handful of contrarians have been saying the Fed's next move will be to loosen, not tighten. This graph explain why they will be right. From a technical standpoint, the 3.02% target is not a done deal, however. Rates would need to blow past the 'midpoint pivot' at 2.35%, shown in the chart as a red line, to clinch a follow-through to 3.02%.  But by merely surpassing the green line as they have done this month, they have put the 3.02% target in play. From a technical standpoint, it would be a huge blunder for Powell & Co. to tighten now. You can bet they won't.

  What could possibly go right in 2022?  Merely posing this question is courting ridicule from some quarters, since we have grown an asset bubble with the disaster potential of 1929's. Still worse is that it sits on a geopolitical powder keg as big and dangerous as the one that detonated a decade later. Under the circumstances, the best outcome imaginable would be for the Dow Industrials to be trading at or near current levels come December, for that would imply economic Armageddon had been postponed for yet another year and that Covid bloviators had taken our minds off much bigger problems.  But at what cost? The Fed already has $8 trillion of manifestly unpayable Treasury debt on its books, and piling up more of it in order to keep stocks and real estate from crashing will only deepen the inevitable damage when the bubble pops.  That's why the very idea of a 'taper' seems so ridiculous, even if the mainstream media take this logistical absurdity seriously. Why would Powell & Co. tighten credit when merely hinting about it causes the stock market to dive unnervingly?  Worsen the effect with actual tightening and you risk throttling an asset mania that has indefinitely postponed the collapse of the U.S. economy and the onset of a deep depression. ...or Wrong Two assumptions that could go very wrong in 2022 illustrate the treacherousness of the mine field in front of us.  First is the notion that a semblance of political leadership will be restored when the Republicans regain control of Congress in November. There are good reasons to think voters will turn out in droves to neutralize the already senescent Biden and repudiate the destructive political agenda of the hard left. But what if a bear market comes first, pitching the U.S. into

Happy New Year and welcome back!  Things are beginning to return to normal at Rick's Picks following the disastrous rollout of a new web site earlier this month by a company that had been working on this project for ten months.  I've restored the old Rick's Picks pages and replaced the firm with the highly capable Brian 'Catman' Catalucci, who previously worked as my system administrator. I will keep my comments brief, since there is still some troubleshooting to do this evening to make certain this essay displays properly on the home page and reaches you via email. Mainly, I want to mention two no-brainers that should help you start 2022 with zero confusion about the global economic picture.  The first is the dollar, whose chart is displayed above. You don't have to be a technician to see that this picture is bullish. And even if the greenback is about to work its way lower in order to build a base for the next big rally, there is nothing to suggest that a collapse is even remotely possible, let alone imminent. With that in mind, you can safely tune out all the yo-yos who have been screaming for your attention with predictions of a horrendous inflation. It's not going to happen, and the real challenge for us all, including the charlatans who run the central bank, will be dealing with the catastrophic deflation that is coming with the next bear market. There's Still Time The good news is that the Papa Bear has not yet arrived, and there is still time to shift your money into Treasury paper and bullion assets. Both remain unpopular, which quite often is sufficient reason to invest in a particular asset. You can raise cash for this by dumping bull-market effluvia, including FAANG stocks, private

Mr. Market blew a great opportunity on Friday to scare the hell out of everyone, concluding the session with a mild short-squeeze rather than the devastating rout that Wall Street's years-long wilding spree so urgently needs. The continuing ascent of Apple shares as always remains key to the global illusion of prosperity and the surreal expectations of portfolio managers; and that is why, as last week’s commentary pointed out, the stock is not about to go quietly into the night.  It struggled nonetheless last week to make headway toward a 187.93 target after peaking on Wednesday at a record-high 170.20. AAPL subsequently sold off hard for all of about ten hours, then limped to the finish line to end the week in a way that could have satisfied neither bulls nor bears. The rally target, a very major one, remains viable, but we’ll need to monitor AAPL's progress toward it closely, since fears of Omicron, the latest supposed Covid variant, are threatening to strangle the global consumer economy yet again. When the week ended, Fauci and his benighted lackeys in the news media seemed eager, if not to say desperate, for someone to die, or at least be hospitalized for a few days, lest an opportunity be missed to roll out another booster shot and to stoke the public's antipathy toward the unvaccinated to new extremes. Alas, press releases from health officials in South Africa, Omicron’s apparent ground zero, only served to mitigate concerns that the variant might be the devastating killer that so many politicians and bureaucrats must be hoping for. Stocks Are Topping Meanwhile, with Western Civilization in mid-stage collapse, the stock market continues to feel like it’s in a sympathetic topping process. However, it takes a little imagination to concoct a scenario in which the practically unlimited