The Morning Line

They don't ring a bell at the top of bull markets, as the saying goes, but perhaps this time it will be different.  Indeed, every sentient guru and talking head who is not shilling for Wall Street is properly bearish, and even the chimpanzees who make their living rotating Other People's Money into flavor-of-the-month investment themes were beginning to doubt the stock market's sanity. If a much-needed 10,000-point drop in the Dow is coming, consider it electroshock therapy.  Unfortunately, it'll probably take a lot more than that to purge the markets of mental illness as serious as we've seen in recent years. Speaking as a trader and a chartist, I'm looking forward to the violent price swings that likely lie ahead. The Hidden Pivot Method turns out to work best when things get really crazy, as occurred during the dot-com mania and the Great Financial Collapse of 2007-08.  It will be interesting to see whether the Reddit kids have scared off institutional heavies who might otherwise get short up the wazoo over the course of a bear market. My hunch is that they will still short like crazy but avoid doing so in individual stocks that could attract dangerous attention. Keeping Suckers in the Game Getting short will not be a piece of cake, since a bear market as long overdue as this one is going to attract many players who are all-too-eager to pick tops. We've tried it ourselves recently using Hidden Pivot targets that precisely nailed peaks in several indexes, although not in IWM, a small-cap vehicle that still has a major target outstanding 4% above, at 234.82. Like so many amateurs, we got spooked out of some DIA puts on Wednesday when the Dow rallied nearly 500 points. That's the way it's going to be the whole

[Dear readers, I am taking a desperately needed break from telling you why a stock market crash is long overdue, and why Biden & Friends are finally going to make it happen.  Full disclosure: I have not read a newspaper or watched the news since November. RA ] We’ve all grown so weary of spam callers pushing auto warranty coverage that voters would probably support the death penalty for the slimebags responsible for these calls. The recorded voice says “This is your final notice. The factory warranty on your vehicle is about to expire,” or some such. I get about ten of these calls a week, and although they used to spoof Colorado phone numbers because I lived there for 20 years, lately the calls have been coming from all over the U.S. How We All Pay Do we dare take encouragement from reports that Sen. Charles Schumer has been receiving these calls like the rest of us, and that he is so pissed off that he has vowed to do something about it?  "Not only are these calls a nuisance," he told the New York Times, "they also tie up land lines and can eat up a user’s cell phone minutes, possibly leading to a higher cell phone bill due to overage charges.” Schumer, arguably the most powerful member of the U.S. Senate, has called for a federal investigation into “robo-dialer harassment.” He’s even gotten headlines with a call to war: Schumer Urges Inquiry of Companies Behind Bogus Auto Warranty Calls announced the Times. Sounds promising, right? Wrong. The headline is actually from 2009 (!!), and you can judge for yourself how much progress the Senate majority leader and his colleagues have made ridding us of the auto warranty plague. Sadly, a Google search would seem to suggest that

Been vaccinated yet?  I haven't, although I'm trying not to give friends the impression that I'm making some sort of political statement. That means not emailing them links to every vaccine horror story that surfaces, or to growing evidence that the vaccine may not be all that it's cracked up to be.  That mRNA vaccines have not been well-tested and could conceivably cause bodily harm or death is beyond argument at this point.  That is why I am waiting until most Americans have gotten their shots and reported any side effects before I decide whether to get mine. The person I trust most about this is my personal physician, who also happens to be one of my oldest friends. He was quite confident back in April that the combination of hydroxycholoroquine, zinc and Zithromax was highly effective in treating Covid. This was an unpopular view at the time; indeed, half the country was rejecting it merely because it had Trump's endorsement. However, my friend had already treated two dozen Covid patients, and all but one recovered without getting very sick. The one patient who fared poorly, a mutual friend, had waited until ten days after he'd shown symptoms to start treatment. Two Brothers Part Ways My physician friend had no qualms about getting vaccinated himself, especially since he sees so many patients who are infected. He does a weekly radio show and undoubtedly has influenced many, including some who were as skeptical as I am, to get their shots. However, his brother, a surgeon, has so far chosen not to get vaccinated, mainly because of a bad reaction he once had to a flu vaccine. I'll be monitoring the health and progress of two close friends in particular, since they've been scared to death to leave their homes since lockdowns

This is a perfect time to catch up on the best of television, since so many of us are watching more of it these days, particularly on Saturday nights. I've been assiduously avoiding all news for the last month or so and am faintly aware of the impeachment proceedings and Biden's energy pipeline kill-shot only because they were mentioned by subscribers in the Rick's Picks chat room.  My self-imposed news blackout has been as tight as I, a lifelong news junkie and former newspaper editor, can make it. I canceled a subscription to the Wall Street Journal that had run for nearly 40 years, and I don't even watch Tucker anymore, let alone network or local news. Serious collateral damage from the red/blue color war still raging in America has so far amounted to the loss of two friendships, one of them stretching back 65 years.  When I was scheduled for chemo and radiation, my good buddy came down to Florida to see me through a horrific first week that was to have included massive infusions of metal-heavy chemicals and enough X-ray exposure to kill just about any living thing. At the last minute, I opted instead for a so-far successful surgical treatment at M.D. Anderson Center in Houston. This allowed my friend and I to spend the week taking epic walks on the beach, enjoying South Florida's great restaurants, and discovering the pleasures of Delray's Asian massage parlors, a shadowy niche he has spent his adult life exploring. He is from the theater world, a founder of one of the country's most successful non-profits. He is also a self-described anarchist, espousing political views that could not be further from mine. 'A Killer of 450,000 Americans' This was never a problem before Trump. In the end, though, with just a

The news media went all-in over the weekend trying to explain the significance of the Gamestop saga, but because few traders were asked about it, there was little in this torrent of analysis to enlighten. Most of the reporters, talking heads and pundits focused on the obvious, sensationalizing a story about how the little guys have drawn first blood and are about to stick it to giant hedge funds by targeting their short positions. This kind of claptrap makes for salacious reading, but there's a much bigger story that has so far gone untouched. Before I explain, here's some point-and-counterpoint to get you past the disingenuous swill being dished out in the blogosphere and by the mainstream media: Popular Narrative:  The Reddit/Robinhood mob (RRM) has declared war on hedge fund biggies, and so far the smart money has been getting its butt kicked. Reality: The damage so far is just a mosquito bite on the behind of hedge fund elephants like Steven A. Cohen, and the Reddit mob a five-year-old who has discovered where Daddy keep the matches. PopularNarrative: “We’re going after Citadel next!” Reality:  Nice try, kids, but this kind of hubris is going to boomerang  on you. As a rallying cry, it makes good headline fodder, since the name ‘Citadel’ conjures up the financial establishment’s most impregnable fortress. In the end, though, you can bet on Citadel & Friends to change the game so that the edge you pishers currently enjoy evaporates quickly, assuming it hasn’t already. Popular Narrative: "After Citadel, we're going to squeeze shorts in silver." Reality: We're actually rooting for you on this one, since precious-metals markets are manipulated by unmitigated scumbags. And, yes, your merely having announced last week that silver is in your cross hairs seems to have provided a little added boost

A little more than two decades ago, amidst the wild excesses of the dot-com boom, I wrote what turned out to be an epitaph for those heady times in the The San Francisco Examiner. It bore the headline Monsters from the Id Threaten the System, a metaphorical nightmare that I’ll explain shortly. Then as now, vast quantities of money driving stocks to absurd heights seemed practically limitless. ‘Easy Al’ Greenspan was in charge of the Fed, and the loose monetary policies he pursued reflected some of the crackpot ideas he evidently brought with him from Columbia University’s PhD program. A fat lot of good they did him; for on numerous occasions, Greenspan would laughably refer to inflated home prices as "wealth." He would also tout a supposed investment boom at a time when household savings growth was negative. As every freshman economics student knows, investment cannot exceed savings, and we cannot increase investment unless we cut back on current consumption. And yet, here we were, consuming and borrowing like crazy but still somehow "investing" in the future in defiance of immutable economic law. Bread and Circuses It would seem that most economists these days continue to believe fervently in Greenspan’s monetary Rube Goldberg contraption. Still worse, the charlatans at the central bank who keep it lubricated and running somehow command nearly universal respect. This should probably come as no surprise, given all the bread and circuses that money-from-trees has begotten us. Few seem concerned in any event that as stock market valuations have climbed to insane heights, global debt in its many shapes and forms is approaching two quadrillion dollars. Let me type that out for you: $2,000,000,000,000,000! Most of it is swirling around in derivatives markets that are notionally ten times the size of global trade in real goods

Those who write about such things have attributed virtually every stock-market rally since March 23 to 'vaccine hopes'.  They have overworked and over-hyped this phrase with no sense of irony or awareness; for it is not so much 'hope' that has powered stocks to insane levels, but monetary stimulus pumped liked steroids into a beast that was rabid to begin with.  This is the kind of 'hope' that T-Rex must have felt when it cornered a chubby dinosaur half its size, or that a drug addict might feel after springing the lock on a cartel storage locker filled with white powder.  'Hopeful' is far too modest and gentle an adjective to explain the mass psychosis that has gripped Wall Street over the last ten months. When Bad News Is Bad News Now that a vaccine has finally arrived, however, it is fair to ask what will keep speculators' hopes inflated to infinity.  Under the best imaginable circumstances, it will probably be at least two years before we can look back on the pandemic and marvel at how we finally beat it.  We'll know this has happened when salad bars re-open, subway cars are packed with commuters, and nursing homes welcome visitors with open arms. Does anyone on Wall Street actually believe this is how things are about to play out? More realistically, the stories we will be hearing -- about vaccines that have never been tested on animals or even on significant numbers of humans -- will be scary ones: injection-related deaths, bizarre symptoms, transmission of Covid by the inoculated and the asymptomatic, sterility, vaccine-resistant mutations, inscrutable infection spikes in places locked down like fortresses.  At that point, such hopes as remain will be vested in the central bank and its perceived willingness to step up interventions on bad news.

Stocks have turned timid, although it remains to be seen whether the moderate selling that ended the week will gain momentum as Biden's inauguration approaches.  Regardless, the smell of distribution is in the air, and it is not subtle.  As the tempo of it picks up, expect DaBoyz to work overtime trying to convince us that Wall Street is down with the Democrats. Big Business owns Biden, right? Well, yes and no. It's true that the Silicon Valley muckety-mucks have less to fear from him than from Trump. But there's no getting around the scary fact that this will mark the most radical political change in U.S. history. Most of Biden's appointees are familiar faces from the Obama years, and that has reassured those who hope to benefit from the Democrats' electoral sweep.  But the political checks and balances that existed when Obama was president no longer obtain, and one-party rule could conceivably run amok in ways that Biden's corporate cheerleaders have failed to anticipate. A Fragile Economy For the time being, though, the vaccine program will get most of the attention.  Biden and the Democrats will own it in just a few days, but its success is hardly assured. His procedures and protocols for dealing with the pandemic are unlikely to differ much from Trump's, since there is not enough hard science to justify changing things radically. The danger is that even a small tightening of the lockdown could undo an economy whose fragility has been masked by the powerful bull market in stocks. Do the Democrats understand this?  We may be about to find out. But there should be no illusions in the meantime that the Democrats, cozy as they are with Silicon Valley and social media's opinion-shapers, will be great for stocks.

With gold's gratuitous, 4% plunge on Friday, bullion has once again affirmed its reputation as one of the nastiest, most frustrating assets an investor can own. Its chief enemy is a global network of shamans, thimble-riggers and feather merchants who make their living borrowing bullion from the central banks for practically nothing, then lending it to everyone else for slightly more. They are always looking for excuses to pound quotes so that they can replace what they've borrowed at a lower price. Helpful to this goal is a story that, however ridiculous, spooks gold bugs into dumping their holdings. The current story is that the Democrats will somehow be bad for bullion, although no one can say exactly why. To believe such claptrap is to implicitly believe that when Kamala Harris takes over for the mentally failing Biden, she will impose rigorous constraints on spending that will strengthen the dollar. Yeah, sure. But that's not the point. The balance of power is about to change so radically in Washington that no one really knows what will happen next. For all we know, the Republic might not survive until mid-term elections in 2022.  If such a grave crisis is in fact bearish for gold and silver, then Harris, Schumer and Pelosi are bullish for America and the dollar; Greenspan, Bernanke and Powell were skinflints; John Wayne was a homo, and beer causes cancer. Biden's Replacement The bottom line is that we should tune out bullion's rigged swoons until the crooks and shysters are ready to let it run. Sometimes it takes courage and conviction to stay the course, and this is one of those times. The chart shows that gold's correction since August has been moderate and that when it ends, there is potential for further appreciation to at least $2290/oz.