Rick’s Picks

Bulls will have seasonality strongly on their side ahead of what will likely be a four-day Independence Day hiatus for most Americans. (Thursday is the best day of the week for the Fourth of July to occur, wouldn't you agree?) Buying interest on Wall Street has been slack lately, but there seem to be few sellers around to resist the stock market's lazy drift higher. Rick's Picks will resume regular coverage with fresh trading touts and commentary Sunday night, updating Friday's front page only if the markets do something really crazy. Have a great Fourth!

Stocks remained in the grip of a low-grade euphoria Monday, lightened by what is being referred to in the news as a 'thaw' in trade relations between the U.S. and China. No one expected much to happen on the trade front, and nothing much did -- other, perhaps, than a weekend during which there was no appreciable escalation in the tariff war. In this euphoric phase, stocks have generally wafted higher whenever the news was not as bad as it might have been. Tesla, for instance, appears to have sold around 93,000 cars in Q1, a number marginally sufficient to give bears pause about increasing the size of their short positions. They took a brutal beating in June, but it seems predictable the stock will finally turn down with a vengeance when the last Tesla naysayer has been drawn-and-quartered. His epitaph will read: "See, I was right!" And so he eventually will be, since the auto manufacturer's profit margins are tacking into a perfect storm that will feature competition for the first time from other high-end car makers; a phase-out by 2020 of a tax credit that as recently as Q4 2018 provided a $7500 subsidy to buyers; and a sales mix that will start skewing more and more toward less expensive Tesla models. Honor Among Thieves It is Boeing, however, that has shown itself to be inured to all manner of bad news, even sensationally bad new. In this respect, the aircraft manufacturer's shares are in a class by themselves. It's not merely that the company is too big to fail, or that when it sells passenger jets to foreign buyers, the transactions have more impact on America's trade deficit than ten thousand farmers. No, it is simply that Boeing shares are so firmly entrenched in exceedingly strong hands

We can use the bullish pattern shown, with a 2963.38 midpoint resistance and a 3012.25 target, to keep ourselves from getting swept out to sea if buyers decide one of these days to stop paddling. The lower number can serve as a minimum upside objective for the near term, but be aware that it could show enough stopping power to turn back the tide, at least for a spell. If the futures should push past it with ease, however, that would put the higher number in play. Keep in mind that the 3114.50 target of a much larger pattern aired here earlier is still our big-picture target for the longer term. If it is reached, the Dow would be trading at record highs above 28,000. These numbers seem preposterous to me with weakness developing in the global economy and yields falling, but in the end I will always put my personal bias aside and let the charts speaks for themselves. _______ UPDATE (Jul 1, 6:42 p.m. ET): Expect short-covering to drive this bottle rocket most immediately to the 2994.75 target shown here. This looks all but certain, given the way the futures gapped through the midpoint resistance at 2954.63 today. The much-bigger-picture targets at 3012.25 and 3114.50 given above also remain viable.

Trump may not get much of a trade deal from China, but you can count on Wall Street to milk a lousy deal for all it's worth. His concession to Huawei in order to get talks started again was a major comedown for the U.S. It will doubtless please the Wall Street Journal and their ilk that the blackball has been lifted against Huawei, a telecom biggie that buys many components from Silicon Valley companies. This is ironic, because the Journal itself has recently done some exposés describing in scary detail how Chinese tech companies like Huawei spy on customers with tiny, embedded microprocessors that collect sensitive data and transmit every salacious detail of it back to Beijing. Some of these devices evidently are so small and cleverly hidden that even cybersleuths poring over compromised motherboards with microscopes cannot detect them. Trump knows this but apparently is willing to overlook the threat in order to have good news to report from the G-20 meeting.  "Hey, we've gotta do business with these a**holes," is probably what he would tweet if he could let it all hang out, which in this instance, dealing with a humorless, implacable enemy, he unfortunately cannot. Expect 'Quite a Week' On Friday, U.S. stocks took a prescient leap in the final hour. The Supersmart Money may already have substantially discounted whatever positive news on trade is still to come. Expect the trade-desk-chimps' algorithms to react reflexively when U.S. markets open Sunday night. On the erroneous but convenient and universally agreed-upon conceit that the Trump/Xi deal will jump-start global trade, we should see strength in crude oil and gold, weakness in bond prices, and a short-squeeze on index futures. They seem to rise more on 'good' news than fall on bad news, so it will be a net

We have a sequence of rally targets at 205.51, 209.18 and 216.08 to keep us in stride with the bullish herd, but there's an alternative picture that deserves caution. Notice that AAPL has rallied back to the green line after falling beneath the midpoint Hidden Pivot support at 174.20, producing a valid signal to get short 'mechanically' at 194.75 (stop 215.31). The signal is weak, however, because the dip to around 170 did not quite get down to our sweet spot near 164, and that's why I am not recommending the trade. Regardless, the signal itself is reason not to get too comfortable with the idea that a push toward 2018's record high at 233 is inevitable. _______ UPDATE (Jul 8, 3:44 p.m. ET): Friday's 205.08 high came within a millimeter of the first of our three targets, 205.51, so consider it fulfilled. AAPL underscored the accuracy and importance of the target by plummeting $7 since. _______ UPDATE (Jul 22, 6:30 p.m.): A short-squeeze popped the stock above a tedious accumulation range, and it should now be presumed bound for at least 209.18, the second target in the sequence identified here more than three weeks ago. Keep in mind the each can be used to initiate a tightly stopped short. _______ UPDATE (Jul 30, 10:38 p.m.): DaBoyz have outdone themselves tonight, goosing the stock senseless with a short squeeze that has easily surpassed an otherwise impenetrable peak at 215.31 made on May 1. Give them lots of credit, since this is a task that mere bulls could never have accomplished, and it has cleared the path to eventual new-record highs.

Buyers decisively exceeded a 25.58 target that has been seven months in coming, implying GDX will move significantly higher once it has had time to catch its breath. I  expect the correction to take 2-3 weeks, but any less would imply bulls are revved up and ready to shoot for a much more ambitious number, a 36.67 Hidden Pivot that looks compelling on the monthly chart (inset). Use its corresponding midpoint resistance at 26.98 as a minimum rally target for the near term (i.e., 4-7 days), and consider initiating a tightly stopped short if and when GDX hits 26.98. _______ UPDATE (Jul 10, 9:33 p.m.): GDX seems to have corrected June's big blast more quickly than I had expected. The 26.98 pivot is still my minimum upside target for the moment, and it could stop the rally temporarily, but I am no longer recommending that you try to intercept by shorting there. _______ UPDATE (Jul 17, 9:35 p.m.): Buyers bulldozed p=26.54 of a clear ABC pattern, all but guaranteeing the rally will continue to at least D=28.54 over the very near term. Here's the chart. _______ UPDATE (Jul 30, 10:47 p.m.):  GDX has stalled since topping a week ago at 28.31, seven cents below my target. We'll wait for the latest Fed "news" to happen before we make ready to buy calls. _______ UPDATE (Jul 31, 10:14 p.m.): If it continues just a little farther, this plunge would trigger a mechanical buy at 26.02, stop 24.52. As noted in the chat room, I'm bidding for out-of-the-money calls expiring Sep 6, predicated on the green line being reached.

It's days like Thursday that make the bull market feel invincible. Although even a super-sensitive lab instrument could not have detected a mote of buying enthusiasm, stocks nevertheless were able to tread water all day and close essentially unchanged. They seem capable of vamping indefinitely while waiting for some 'news' to trigger a short-covering panic. Factor out vaguely dovish cryptoblather from the Fed and minutely bullish emanations concerning the tariff war, and the Dow would be trading 5000 points lower. What most amazes is that when stocks drop because trade tensions are perceived as rising, they regain all of the lost ground and then some when tensions return to normal. This dynamic demonstrates the power of short-covering, a source of buying so urgent and desperate that it invariably outdoes whatever selling has preceded it.  The reverse will be true in a bear market -- i.e., the selling will tend to get overdone, while rallies, however violent, will be limited in scope. And just as violent swoons in a bull market serve to keep bulls from making money too easily, fleeting bear rallies will keep shorts from getting comfortable betting on what would otherwise seem like a sure thing.

They don't ring a bell at the top, as the old saying goes. Still, if you're looking for scary signs of excess in the stock market, you couldn't find better evidence of it than bitcoin's psychotic rally. I've projected a move to at least 21,032 (see tout below), a 66% gain from current levels, but I hesitate to assert that that would be the end of it. It is matched by rampant speculation in the housing sector, where corporations have been snapping up 25% of all homes on the market to rent them or flip them for quick profits. Unlike the wilding spree in bitcoin, which is just a silly, stupid game, the inevitable collapse of the housing bubble holds grave implications for the U.S. economy.

The lunatics are back, pushing bitcoin with the same psychotic zeal they showed blowing the 2017 bubble. I am updating with a new target at 21,032 that is based on a slightly revised rally pattern (inset). Judging from the way buyers impaled the pattern's 12083 midpoint resistance today, it seems extremely unlikely this surge will fall short of the target. I try to avoid the use of the word 'extremely', but in this case my confidence that 21,032 will be achieved is close to absolute. When I originally projected a move to 19,850, BRTI, a CME index that tracks bid/asked spreads in real time across many bitcoin markets, was trading for around 8,000. That was a little more than a week ago, and I could not have imagined at the time that we'd be halfway there so soon. I doubt that BRTI will cover the remaining distance as quickly, but if it does, it will describe a mania with a lifespan more meaningfully measured with a stopwatch than a calendar. If the Hidden Pivot resistance at 21,032 fails to stop the stampede -- and I do NOT expect this resistance to give way easily, if at all --  I'll be out of good targets to share with you._______ UPDATE (Jun 27, 5:23 p.m.): Finally, a correction painful enough to rebuke bulls, especially if it lasts for a few more days. They'll be back, for sure, but many are undoubtedly hanging on, or buying the dip, in expectation of the next explosive rally. They have little to fear if my 21,032 target is to be reached, a prospect that I regard as 90% likely. In the meantime, if the pullback continues to 7609 (shown as a green line in this chart), that would trigger a very enticing 'mechanical' buy, stop 3133,