Rick’s Picks

Today's chart shows a rally target at 263.39 that looks like a strong bet to be achieved, probably within 3-4 days. It is somewhat higher than the corresponding target at 25,998 that I've flagged for the Industrial Average. Although you should monitor the latter for a possible stall, this Hidden Pivot looks more likely to nail the top -- or at least "a" top, since we should be open to the possibility that the stock market will flout a darkening economic picture and continue to rise for no good reason.______ UPDATE (Feb 26, 11:42 p.m.): This is taking too long, but yes, the rally target given above is still valid. _______ UPDATE (Feb 28, 9:54 p.m. EST): It is mildly bearish that DIA has turned down after peaking a point shy of the 263.39 target given above. This vehicle will fall most immediately to 257.69 if sellers crack the 259.06 midpoint support. (Click here for chart.) The target will work for tightly stopped bottom-fishing, but we shouldn't go full-bore because the hidden pivot coincides with a structural low at 257.50 recorded a week ago. If the pivot is hit in the first two hours of the session, use expiring 258 calls to play for an immediate bounce. Notice that a breach of the 257.50 low could set up a 'counterintuitive' buy as well, but its usefulness would depend on when in the session this occurs.

Although the stock appeared to be setting up a juicy 'counterintuitive' short a couple of weeks ago, it has yet to trigger. Instead, FB has worked its way lower in fits and starts, diminishing the 'surprise factor' that makes CI trades so appealing. I doubt that sellers are spent, given the stock's punk performance on Friday when many stocks soared. However, I am no longer recommending the short trade, even as FB falls deeper into the gap created on January 31, when it was goosed mightily on strong earnings news. Since my long-term outlook for Facebook remains bearish, we will continue to look for opportunities to profit from its decline. We might even do some bottom-fishing if the trade sets up well. In any case, stay tuned._______ UPDATE (Feb 21, 6:14 p.m.): Today's sinkage triggered the 'counterintuitive' short at 160.31, putting p=148.15 in play as a minimum downside objective. We'll remain spectators for now, since the stock is very oversold and could pop at any time.______ UPDATE (Feb 25, 6:16 p.m.): Perhaps inspired by the successful distribution of AAPL shares, DaBoyz are working Facebook hard, moving it against a tide of negative news that eventually will send the stock below $100. They goosed it today strongly enough to leave shorts on the hook at the close. Let's see how much higher the smart guys can waft this brick. _______ UPDATE (Feb 28, 10:08 p.m.): The smart guys have been unable to elevate the stock, which now looks bound for at least 158.28 (60-min, A=165.69 on 2/26). _______ UPDATE (Mar 4, 9:43 p.m.): Give them their due, the smart guys got Facebook to swim against the tide today, tripping a theoretical 'buy' signal in the process. This means we should use p=174.11 as a minimum upside objective for now._______ UPDATE (Mar

Although it's fun to bad-mouth the rally, the yo-yos who have stoked it could win in the end. From the moment stocks took off on December 26, we've been 'certain' it was just a bear rally designed to fool everyone into thinking new highs were actually possible. It would need to be powerful enough not only to convince the rubes that this was so, but to switch off the warning circuits in the brains of hardcore permabears such as your editor.  We remain skeptical that new highs are coming, even as we put our rational thoughts aside to consider solely the evidence on the charts. No matter what happens, let's not forget that Mr. Market's primary mission is to fool as many investors as possible, and to wreak havoc on the best-laid plans of bulls and bears alike.

We're at the end of an era, says my colleague Bob Hoye of Institutional Advisors. Political craziness in the U.S. has peaked with a wacky socialist scheme to soak the rich for money to pay scientists and bureaucrats to control the weather. No less idiotic is the entrenched notion that the Fed can prevent the financial bubble it created from bursting. This delusion will end when the inevitable bear market arrives. As for the Green New Deal, says Hoye, it will collapse when enough voters come to understand that "climate scares have been rigged for grant money and to impose a new world order." For most Americans, the end of these two manias cannot come soon enough. Click here for Hoye's superb essay, which sees parallels in the collapse of Rome and in popular uprisings going back to ancient Egypt.

Stocks had trouble staying aloft Tuesday after rocketing higher a day earlier. Although the Dow finished with a 117-point gain, it had been up by more than 200 in the early going and probably would have finished in the red if sellers had been less timid. There were other signs of heavy distribution. For one, AAPL's sly handlers opened the stock on the high of the day, trapping bulls before pulling the plug.  Facebook couldn't even muster a decent head-fake at the bell, opening on a 46-cent rally that fooled almost no one. TSLA, the most heavily manipulated stock of them all, died on the come out roll, finishing the day at 307.16 with a $4.63 loss.  And NFLX, the biggest percentage loser, fell 7.93 to 352.04. Under the circumstances, DaBoyz are likely to have trouble goading shorts into covering as the week draws to a close. Look therefore for weakness over the next two days as they manipulate stocks lower in order to exhaust sellers in preparation for the next fake rally.

I've set aside strongly negative feelings about the U.S. economy and the stock market to focus solely on the charts, which never lie. Trends are trends, and as long as the one in progress continues to exceed prior peaks with each new thrust, the bull must be given the benefit of the doubt. This is quite a stretch for me, since the U.S. housing and auto sectors are imploding, Q1 corporate earnings will go up against unbeatable year-ago numbers, and the next most-powerful economies in the world, China's and Germany's, are slipping into recession. Under the circumstances, it's hard to imagine the stock market making any headway at all, much less achieving new record highs. (See my DJIA tout below.) That is why I have eliminated 'imagination' from my brain when pondering the markets.  That's the next best thing to eliminating the brain itself from the process. Trust me when I say that forecasting stocks is simply not a thinking man's game. Thinking will only get you into trouble. And if you are very smart, it will get you into a position so far ahead of the crowd that you will doubt yourself, bailing out with big losses at the worst possible time.

The Indoos stalled Monday almost precisely at the 25,440 midpoint Hidden Pivot shown. Buyers subsequently gave up almost no ground, setting up a likely move past the resistance on Wednesday. If it's decisively exceeded, that would all but clinch more upside to the 25,998 target.  This was already no worse than an even-odds bet because the initial thrust, labeled A-B in the chart, exceeded two prior peaks without taking a breather. That created a powerful impulse leg; however, an even more powerful one would occur if the target is hit, since it lies slightly above a key 'external' peak at 25,980 recorded just before the stock market began to fall apart in early December. Technical analysis aside, you can use your eyeballs to answer this question: If the Dow reaches the 25,998 target, will it be close enough to new all-time highs to make them likely? Whatever your answer, the very possibility will be foremost on traders' fevered brains, conceivably 'magnetizing' October's all-time high at 26,951. ______ UPDATE (Feb 13, 4:56 p.m.):  Today's action, which featured a pop to 25626, followed the script above. Please note that a pullback today to the green line at 25161 would trip a mechanical buy, stop 24,883. _______ UPDATE (Feb 14, 5:20): No change.

Trump and his political enemies are close to a deal on a border wall, but if either side has the chutzpah to take a victory lap (see inset), it's going to be one celebration too many for millions of Americans. We can leave it to news commentators on the left and right to sort out who got what. If it makes the country's southern border less porous, it'll at least be a small victory for taxpayers. The border war has had little if any impact on the stock market. The tariff war with China, on the other hand, has subjected stocks to a roller coaster ride since spring. The effect has become more muted recently, probably because the expected outcome -- i.e., the "deal" Trump is liable to get from Xi Jinping -- is unlikely to be any more constructive or meaningful than the budget about to be passed on Capitol Hill. Under the circumstances, a tariff agreement has the potential to end the presumptive bear rally on Wall Street. Buy the rumor, sell the news, as the saying goes.

The rally that powered stocks to record gains in January went flat last week, but for a bullish reason: sustainability. DaBoyz are in no great hurry to pretty up the illusion that new all-time highs are possible. With no time constraints, they've adopted a go-slow approach that investors and pundits can buy into. Keep in mind that if the Masters of the Universe are very successful at keeping this deception alive -- by no means a given at the moment -- a stock market with plenty of good reasons to fall could instead keep climbing. This will always be possible, since it is not the health of the economy that drives the markets, but the other way around. Purely cyclical forces cause stocks to rise and fall, often mysteriously. When shares are rising -- manifestly for no good reason -- this energizes and lubricates the gears that make the economy hum. The effect is mainly psychological: a change in attitude and perceptions caused by rising stocks that eventually brings a moribund economy back to life.