The Morning Line

[This essay originally appeared here in July 2022 and was written by a friend who spends a lot of time thinking outside the box. His provocative thesis is that that there is a physiological basis for our political differences; moreover, he notes, liberals cancel and ghost their conservative friends for reasons that are tied to their deepest fears about survival as a species. How else to explain why they become so outraged over seemingly little things that they would end a long friendship over them? It happened to me most recently when a Boulder woman I'd known for years visited Florida. We took some long walks on the beach, had a few great dinner conversations and generally enjoyed each other's company. After she returned to Colorado, I asked her in an email whether her news sources, including CNN and MSNBC, ever showed videos of Biden stumbling through a speech or falling off a podium. She insisted that such videos had been doctored by the Republicans; then, a few days later, this otherwise courtly woman admonished me in an email with some informational links to"Read this, you fucking moron!" So much for the strong mutual respect that had always obtained between us over the years. Yet another close friendship had bitten the dust. Please circulate this to anyone who might find it interesting, especially liberal friends who have stopped taking your calls . At the author’s request, I have not identified him. RA ] *** Many of us have noticed that our liberal friends are more likely to 'ghost' us than the other way around. Typically, they terminate our friendships in ways that are meant to be final. Their way of doing so ranges from slipping away to kissing us off with a righteous display of indignation and disgust. Here is

They don't ring a bell at the top, as the saying goes, but it's hard to see how Mr. Market can avoid it this time. The stock market's heedless, nutty short squeeze since October will end when Microsoft hits $430, probably early in the new year. It's that simple.  How do I know this? Just a gut feeling. I've been paying close attention to charts for more than 40 years, and the one above looks like it can't miss. It tells us two things with clarity and authority: MSFT will continue to rise until it reaches $430, a Hidden Pivot resistance; and, it will not surpass that number, at least not by much, without a major correction. Furthermore, because Microsoft shares, which are trading in record territory, have surpassed a laggard Apple's as the #1 favorite of portfolio managers, the former cannot but serve as a reliable proxy for institutional mindset. My high confidence that MSFT will reach 430 is rooted in the way buyers handled resistance at two crucial 'Hidden Pivot' levels: 1) at the red line, a 'midpoint resistance' at 322.01; and 2) at the pink line, a 'secondary resistance' at 376.29. Not only was the first level easily penetrated on first contact, it also became support thereafter, adding to the likelihood of a further move to 430.58. As for the secondary pivot, although it has yet to be decisively exceeded, the fact that it was exceeded at all strongly suggests the uptrend will continue.  Also, the ABCD pattern is sufficiently clear and compelling that we can infer D=430.58 will show precise stopping power. Ankles Grabbed Mr. Market undoubtedly would love to rebuke (i.e., sodomize)  me for being so confident. As the headline implies, though, I've willingly grabbed my ankles so that he can try. The pattern is

AI hubris has become America's chief source of good news. Over the past year, artificial intelligence surpassed bitcoin as mankind's most easily imaginable pathway to quick riches, shortened work weeks, ingenious solutions to every problem, and endless satisfactions. An AI-assisted world supposedly will revolutionize the way we do business, enabling high school graduates, even mediocre ones, to do the grunt work of Wharton MBAs. It will make government workers heroically efficient, fine print more readable and Shakespeare more accessible to the masses. AI will allow paralegals to leverage the law library as effectively as Ivy-educated Supreme Court clerks, homemakers to serve four-star dinners and to provision every lunch pail with perfect nutrition. It will end war, thwart alien invasions and allow pet owners to talk intelligently with their dogs, cats and tropical fish. Graduates of AI-specialized trade schools will reduce the heavy workload on diesel mechanics, actuaries, farriers, coders, electricians, pilots and brain surgeons, pitching in wherever they can. Every savings account will achieve the maximum possible return, and fake news, filtered into oblivion, will cease to exist. No umpire will ever again blow a close call, and no murder will go unsolved. Alexa will know what we want before we even finish a command, and your little Billy will be able to replicate 'The Night Watch' on the living room wall with a tricked-out, AI paint-box. His kid brother, a budding AI tunesmith and composer of nearly hum-able show-tunes, will owe his life to AI's success at cracking the mystery of crib deaths. A Flunky's Tale What a fabulous world it will be! For the time being, however, and most unfortunately, we'll have to content ourselves with AI's most visible achievement to date: AutoCorrect.  It was developed by the same millennial geniuses who have been toiling day and night

Lacy Hunt, a gray eminence of the financial world and no doomsayer, was out with a Hoisington Report recently that should scare the pants off anyone concerned about the direction of the U.S. economy.  His meticulously detailed take on a commercial real estate debacle that has been metastasizing for more than a year should dispel any notion that Americans will be spared from deepest recession. And yet, judging from the stock market's nearly vertical rise since early October, one might infer that things are going gangbusters. Microsoft shares alone added about $587 billion to the so-called wealth effect. To put that in perspective, it would buy a Mercedes-Benz GLC for every man, woman and child in L.A., Chicago, Houston and Phoenix. If you were to spread the lucre more charitably, it would house every homeless person in America -- luxuriously and for a long time. With an estimated 582,000 street people on the receiving end, each would have a tad more than a million dollars to spend. And it's not as though MSFT is the only high-flier caught up in the market's ballistic rise. The shares of Amazon, Google, Meta, Apple and some others in the trillionaire club rose almost as steeply, adding enough play-dough to the wealth effect to make ALL of us rich -- or at least rich enough in theory that no self-respecting American should ever again have to fly on Spirit Air. Stuffed Camel Entrée So where are the customers' yachts? Unfortunately, precious little of the wealth-effect 'money' will ever trickle down to Levittown, much less to the nation's ramshackle tent cities. Even the rich will hoard most of it once they've covered their essentials -- i.e., chartering floating mansions for summer cruises on the Mediterranean, and throwing garden parties with stuffed camel as the main

U.S. shares continued to climb a wall of well-justified worry last week, propelled with sufficient vigor to suggest new all-time highs are likely.  Notice how Microsoft's push into record territory on Friday occurred after the stock had spent nearly six months consolidating at the red line. This is a 'midpoint Hidden Pivot', according to our proprietary method of analysis, and MSFT's decisive move above it has freed the stock from its gravitational pull. This is significant, because as long as Microsoft shares are moving higher, the broad average will follow in their vortex. This is no longer true of AAPL, which until recently was our most important global bellwether for stocks. Although it is still the most valuable company traded on any exchange, sales growth for the near-to-intermediate term is no longer assured. That's because iPhone sales have encountered strong headwinds in China and are certain to falter in the U.S. when -- not if -- the economy enters a recession. One has already begun for many Americans, most recently the 10% of Citicorp's workforce about to be laid off, as well as tens of thousands of workers scheduled for termination at 3M, Tyson Foods, Lyft and Whole Foods. Even Walmart is laying off 2,000 warehouse workers across several states. Rock-Solid Revenues Microsoft will not be inured to the effects of a slowdown, but selling Windows and Outlook software on a subscription basis that requires annual renewals will continue to help insulate the company from economic downturns, even if severe. For that reason, Microsoft should be regarded as the bluest of blue-chip companies, a profit engine even more powerful and reliable than Apple.  The chart shows a bull-market target for MSFT at 430.58 that implies a 16.5% leap from the current 369.97. In comparison, to achieve new record highs the

[A change of tone and tempo this week from our good friend Richard Charles, owner of Lake Tahoe-based Alpine Capital. His observations concerning gold's historical role during periods of intense global strife should remind us that bullion's sometimes crazy price swings should not be investors' focus right now.  RA ]  With plans to attend memorial service for a dear teacher friend of 92, as Rick asked for a modest commentary, thoughts turned to finite things. JFK’s poet laureate Robert Frost wrote: Nature's first green is gold, Her hardest hue to hold. Her early leaf's a flower; But only so an hour. Then leaf subsides to leaf. So Eden sank to grief, So dawn goes down to day. Nothing gold can stay. In 92 years, Vera survived the Great Depression, The Great Inflations and World Wars. She saw a few years of peace dividend in a country with more riots than years of her lifetime. At this time we face a market test in our lives and history. Wednesday, waiting for the latest Fed decision on interest rates, we saw a record low Put to Call Volume Ratio of 3%. We consulted several sources to make sure it was not an artifact. Our experience is when people give up buying or selling puts for income, protection or speculation, TTOBGH, -- that’s the old ball game, honey. What to do ? Always, the question of survival and thrival -- or at least less loss. When I was a young Merrill Lyncher, we had a customer gallery on our trading floor. I was always interested in what the well-dressed old guys had to say. In 1980 gold briefly breached $1000 as Hong Kong produced $1000 gold coins to commemorate the Year of Elizabeth II and Lunar Monkey Year. I asked the eldest market

Although my technical forecasts have generally been accurate, occasional guesses about when the sky would fall have consistently underimagined the height of bullish folly. Since yet another October looks likely to pass without a stock-market crash, perhaps it's a good time to look at the chart of Apple, an institutional proxy that is incapable of misleading us.  Nearly every portfolio manager on the planet owns the stock, and for good reason. It has been the easiest ticket to wealth since farmers in Quincy, FL,  acting on the advice of a local banker, started accumulating Coca-Cola shares in the 1920s. So what is AAPL's chart saying now, as the Fed continues to tighten a noose around the consumption-based U.S. economy?  Although investors have already discounted a slowdown in iPhone sales by cutting the value of Apple shares by 30%, they seem confident that no revenue disaster awaits. My own outlook calls for the stock to fall to at least 146.13, representing a 26% decline from July's record-high 198.23 and a 13% fall from here. That would be painful for shareholders to endure, but still just a routine bear market correction. And although there can be no guarantees that a lasting bottom will form at 146.13, bulls will at least have a chance to build a base there for another big leg up. Two More Reasons There are two other bullish signs in the chart. For one, the July top decisively exceeded a compelling Hidden Pivot resistance at 188.96 that we might have expected to contain the long-term uptrend. And for two, the steep rally begun from $124 in January exceeded two major 'external' peaks without taking a breather. This qualified the rally as strongly impulsive, implying that the so-far moderate selloff has been merely corrective. In order to turn the monthly

It took nearly two weeks for bears to recoup their mojo after getting sucker-punched by a suspiciously buoyant market following the October 7 Israel massacre. Although the attack could lead to a nuclear conflagration and world war, Wall Street kept its cool while trade desk sleazeballs deftly distributed shares to the rubes. But Fridays are often clarifying, since they force traders to guess how America's mood might change or intensify over the weekend. That would explain why stocks fell hard to finish the week. But this followed nearly two weeks of perverse strength, presumably because there is virtually nothing for anyone to be bullish about at the moment. Geopolitical news grew still grimmer last week, even as shares hovered until Wednesday as though they were gathering strength for one more psychotic upthrust. A 'Theoretical' Buy We should never discount this possibility, as the chart reminds us. What it says, in coldly disinterested technical terms, is that the Dow Industrials became a theoretically enticing buy when, with dubious prescience, they bottomed on the green line just hours before the Hamas attack. Under the simple rules of the Hidden Pivot System, this triggered a 'mechanical' signal to get long. Although this doesn't't necessarily mean we should expect the Indoos to rocket to new all-time highs, it does portend a rally to at least the red line (34,455) before DJIA relapses to beneath  C=31,428. This bullish set-up usually works, so don't be surprised if a preternaturally powerful rally develops amidst growing darkness in the real world.

Finally, a rally in gold that looks capable of leaving the $2000 barrier in the dust! This one is being pushed not only by the threat of escalated conflict in the Middle East, but by the dawning realization that a strong dollar and rising interest rates are about to trigger a crisis for the world's central banks. Europe will be even more vulnerable than the U.S., since it cannot loosen credit as long as the Fed is tightening or even just vamping. The ECB will also have to deal with trillions in euroloans it made at subzero rates to give Europe's dying economy the appearance of solvency. Pegging the currency to gold is a logical way to keep the euro from collapsing while Frankfurt's best and brightest cobble together a plan. But hardening their currency so that it can compete with the dollar in the meantime will be enormously costly -- and deflationary, since it will increase not only the cost of borrowing, but the cost of servicing loans already on the books. Factor in the prospect of soaring oil prices and you can see what a mess the world is in. A commentary here three weeks ago featured a chart projecting a rise to $117 a barrel. This was before war broke out in the Middle East, but a surge of that magnitude or worse now seems likely if Iran joins the conflict. The Old AAPL Trick Recall that after the war erupted on Saturday, October 7, with an assault on Israel by Hamas, the markets seemed relatively subdued when trading resumed Sunday night.  We can attribute this seemingly absurd behavior to the deft touch of the dirtballs who manipulate stocks, bonds and commodity prices for a living. They are very smart guys, especially in dire circumstances. And even