New Record Highs Coming?

2 comments

Is the stock market on its way to new record highs? The thought would have seemed preposterous just a week ago, when the Dow’s still-presumptive bear rally had yet to exceed even a single peak on the daily chart. But it did so last Wednesday, with a gap-up opening that demonstrated how spectacular daily gains can be engineered by Wall Street’s wizards to require little bullish enthusiasm or even much cash. As detailed here last week, this has been especially true of AAPL, the Titanic of the securities world and a crucial bellwether for investor sentiment. One might have thought it would take hundreds of billions of dollars to float the stock back to the surface following its nearly 30% plunge from a record $183 in January to a Mindanao low of $129 in mid-June. So many investors lost so much money as AAPL plummeted that their eagerness to recoup at least some of it should have turned the stock leaden the entire way up.

Suckers Never Learn

Instead, DaBoyz last week succeeded with little effort in driving AAPL to within a hair of a $172 target I’d disseminated to subscribers more than a month ago. Along the way, no fewer than a dozen times, they employed a trick that has never failed to work, even though the same suckers have been played countless times. The pros simply pulled their bids overnight, letting Apple shares fall sharply enough to dry up sellers. When bears realized at the opening bell that there was little or no supply to cover their shorts, panic buying into ghost offers did the rest. Thus did the resulting price spikes in the early moments of numerous sessions accomplish what merely bullish buying never could – i.e., goosing the stock past imposing peaks and thick layers of supply created by losers on the way down. We note that at Friday’s close, AAPL sat just 7% shy of new record highs, not even breathing hard.

In the meantime, its poor cousins, the once-mighty FAANG stocks, continue to languish near their bear-market lows. Will AAPL’s carny-booth handlers be able to vamp in the ozone for a couple of months until all the other stocks catch up?  This seems unlikely, and it will be interesting to see how they keep their all-time-favorite cash cow chill, since AAPL has been trained to behave on cue like a rabid badger. But how will the other stocks shake off a bear market and levitate to new all-time highs when Americans are mired in the worst crisis of confidence since the early 1970s? The answer is that their mood will improve as shares continue to rise, even if initially for no reason save short-covering.

Sardine-Like Prescience

As we watch the insanity unfold, assuming it does, let me suggest putting aside the widely believed but ridiculous notion that the stock market is able to see six months ahead and predict an economic upswing; for in demonstrable fact, the supposed prescience that drives these moves is non-existent. The market is no more prescient than a tin of sardines, and the collective wisdom often ascribed to it is actually just fear and greed operating at the sub-animal level of the id. Stocks rally for unfathomable cyclical reasons that have nothing to do with earnings or events in the real world. Ultimately, this could revive the epic delusion that the economy is getting ‘healthy’ again, even though it is supported by debt grotesquely larger than we will ever be able to pay down. Thus do bear rallies with no apparent basis in reality eventually win over the masses. As for the supposed ‘wall of worry’ that stocks climb when the headlines are depressing, the idea was popularized by a news media that cannot comprehend the obvious — i.e., that the stock market is a stupid, crazy beast, and that Fed funny-money has made it more insane than ever. But prescient?  Yeah, sure.

The foregoing explains why this permabear’s mind is open to the possibility that a fake rally could ultimately turn into a real one, even as the news headlines wax grimmer than ever. If you need a reason for new all-time highs, consider the prospect of the November election reversing America’s appalling slide into woke darkness, the strangling dictatorship of LGBTQQIP2SAA, and societal divisiveness verging on civil war. Will we be temporarily spared from deflationary ruin by a Republican blowout and a rip-roaring bull market? Among the nations of the world, America has always been luckiest. That is why we shouldn’t dismiss the possibility of a final, truly insane running of the bulls on Wall Street.

Rick's Picks for Wednesday
$ = Actionable Advice + = Open Position
Search touts by symbol

$MBTU22 – Sep Micro BItcoin (Last:21.25)

0 comments


Rick’s Picks Member-only content.You must be logged in to view this post

$+AAPL – Apple Computer (Last:174.15)

0 comments

What a shocker. The no-decision monkeys who have lived off AAPL’s autopilot bull market have succeeded in levitating the stock to within a split hair of the 172.78 target I spotlighted here weeks ago. It was trading in the 140s then, and it seemed difficult to believe at the time that the stock could rise that much on punk earnings, a U.S. economy sinking into recession, and Apple Inc. unable to innovate its way out of a Glad bag. But just look at it! Another 6% and it’ll be in record territory. I’ve documented the short-squeeze tactics that were used to goose the world’s biggest-cap stock skyward with hardly any bullish buying or even cash outlays. It was a simple trick: Let the stock drop overnight until sellers are exhausted, then run it up shorts’ wazoos on the opening bell. The rally has been a fraud every inch of the way, but there’s no denying it worked. And now what? Can AAPL wait for the broad averages to catch up? Probably not, since the Nasdaq and even the FAANGs are trading closer to their bombed out lows than to their insane, all-time highs. It should be interesting to watch the DaBoyz try to vamp for a month or two while the U.S. economy continues to sink into the crapper. Stay tuned to this page and the chat room for the technical play-by-play. _____ UPDATE (Aug 15, 7:43 p.m. EDT): A feebler than usual short squeeze topped at 173.40, 0.3% above my target, so I recommended buying the expiring 165/160 put spread 16 times for 0.12. This is a 30-to-1 horse, so don’t get your hopes too high. Offer eight of them to close for 0.25, good through Wednesday and contingent on the stock trading 170.00 or higher. _______ UPDATE (Aug 17, 10:36 p.m.): Our horse is now a 90-to-1 shot, but I hope the $200 you blew on it saved you $$ thousands because you were less tempted to short the E-mini S&P futures instead. _______ UPDATE (Aug 18, 8:52 p.m.): DaBoyz were either inidiiferent or too lazy to try their usual short-squeeze shenanigans today, so the stock’s performance must be viewed as an honest reflection of underlying supply/demand. Since it performed poorly with an ‘inside day’ relative to the previous day’s elongated price bar, we should expect the stock to start roll down as the week ends, presumably setting a bearish tone for Sunday evening. We’ll book a $200 loss on the spread nonetheless.

$ESU22 – Sep E-Mini S&P (Last:4281.25)

0 comments


Rick’s Picks Member-only content.You must be logged in to view this post

$CLU22 – September Crude (Last:90.73)

0 comments

Crude would trigger a ‘mechanical’ short if it touches the green line x=96.15. However, because the impulse leg was such an agonizing slog, I can recommend this trade only to subscribers who know how to cut the implied theoretical entry risk of $23,000 on four contracts to perhaps a tenth of that. It would require close attention to ‘camouflage’ opportunities on the sub-15-minute charts, aka ‘camouflage. Merely spectating will have its rewards, since the next leg down should help snuff inflation at the pump as well as the unchecked greed of Big Oil. _______ UPDATE (Aug 15, 7:54 p.m.):  Use the 81.79 target shown here as a minimum downside projection for the near term. If this Hidden Pivot support fails, the next step down would be to 78.93, calculated using A=111.14 from June 29.  _______ UPDATE (Aug 18, 9:27): The failure of bears to reach p2=84.66 of the pattern shown in the thumbnail inset suggests it is on its way up to at least to the green line (x=96.11). It would trigger a ‘mechanical;’ short there, stop 101.85, but I am not recommending the trade because of the weakly erratic nature of the A-B impulse leg.

GCZ22 – December Gold (Last:1778.70)

0 comments

Gold has been huffing and puffing for two weeks without making much headway. That’s not saying it can’t still pop through p=1840.80 with brio, but we’ll need to see it happen before we get excited. Thereupon, p2=1913.10 would become out minimum upside objective, with a shot at 1985.40 for the bull cycle begun three weeks ago from 1696. As always, a decisive penetration of any of the three Hidden Pivot levels implies a continuation of the trend to the next. The pattern looks likely to produce winning ‘mechanical’ buys if gold hits an air pocket as it seems wont to do whenever bulls get too interested. _______ UPDATE (Aug 17, 11:06 p.m.): Maybe the D=1772.2 downside target shown in this chart will provide a respite for buils, however brief and unsatisfying? ______ UPDATE (Aug 18, 9:32 p.m.): It provide no respite whatsoever when the ‘hidden’ support gave way like wet tissue. But none of us could have been surprised, since gold, in its tedious bottoming process, seems to delight in disappointing bulls about 90% of the time. This may be an even more dismal spell than usual, given the dollar’s bullish breakout (see my DXY update elsewhere  on this page.  

SIZ22 – December Silver (Last:20.84)

0 comments

December Silver appears on track for  push to the 21.93 ‘D’ target of the pattern shown. The odds were somewhat enhanced when last week’s dip from just above the red line (p=20.78) failed to provide a ‘mechanical’ buying opportunity by reaching the green line as required. Don’t pass up a buying opportunity if it should swoon to x this week, but check the chat room for risk avoidance guidance before you leap. The rally target lies within a thicket of supply deposited on the daily chart last spring, and so a decisive push through D would be more impressive than usual. ______ UPDATE (Aug 17, 11:19 p.m.): My mild enthusiasm for Silver appears to have been  unwarranted, perhaps because I overqualified the impulse leg that seemed to be driving the rally. The last piece of it exceeded no ‘external’ peaks, even though the launch stage got past some small ones near the bottom of the move. Anyway, the December contract appear likely to abort the 21.95 rally target, and I’m not about to sugarcoat what could happen after that.  The disappointing picture is shown in this chart.

$+TLT – Lehman Bond ETF (Last:115.96)

0 comments

Last week’s steep fall to the green line from just shy of D will provide an interesting test of ‘mechanical’ set-ups, since they are designed to signal buying opportunities when one’s instincts shout ‘Flee for your life!’ Bulls must have been feeling like that on Thursday, when the downdraft reached a perhaps temporary bottom. It should be good enough to propel TLT to at least p=116.90, but I hadn’t recommended buying at x unless you are familiar with ‘camouflage’ set-ups that can pare entry risk by as much as 95%. Please let me know in the chat room if you took the trade and I’ll establish a tracking position if there are at least two of you. ______ UPDATE (Aug 15, 11:05 a.m. ET): The gap-up opening hit 116.75, so you should be out of half the position. I’ll use the current price of 116.17, well off the high, to establish a cost basis of 112.91 for the 200 shares that remain. Tie them to an impulsive stop-loss at 114.83 for now, o-c-o with an offer of 100 shares at 118.50 and another 100 at 119.30. _____ UPDATE (Aug 16, 5:27 p.m.): For those who actually did the trade, the stop would have taken you out today for a $384 gain. We got lucky, since this vehicle has been trading like garbage.

$DXY – NYBOT Dollar Index (Last:107.63)

0 comments

Groping for a bottom, the Dollar Index has already triggered one false ‘buy’ signal this month. A new signal would be generated by a 106.06 print, but we’ll need to monitor the lesser charts if and when it gets there to determine whether the rally is for real. If so, that would imply minimum upside thereafter to at least 107.46, the midpoint Hidden Pivot resistance of the pattern shown. If the trend pushes easily past it, we could be looking at new highs by mid- to late September. _______ UPDATE (Aug 15, 8:00 p.m.): The decisive pop through 106.06 implies the rally is bound for a minimum p2=107.46.  _______ UPDATE (Aug 18, 9:41 p.m.): And now today’s pop through p=107.46 strongly implies that p2=108.87 will be reached. That will of course set up a test of July 14’s importnnt peak at 109.29. Keep D=110.27 in mind if and when p2 gives way.

$GDXJ – Junior Gold Miner ETF (Last:33.67)

0 comments


Rick’s Picks Member-only content.You must be logged in to view this post

ESU22 – Sep E-Mini S&P (Last:4217.50)

Is everybody happy?  The reverse-pattern short sent out to subscribers Wednesday night could have produced a profit of as much as $8400 if you followed my simple guidance. The set-up utilized a ‘voodoo’ target at 4256 that I’ve been drum-rolling here for a while. It was slightly exceeded when the futures ran up to 4260.50 in the first hour, but I allowed a smidgen more room with a chat room update 30 minutes before the trade triggered. The subsequent reversal and 60-point plunge could have produced a quick, juicy gain, but if you covered two contracts at p=4227 and let the rest ride, you’d be showing a profit of at least $4500 at the moment. Numerous subscribers reported jumping on this one, but I’ve left risk management, well cushioned by profits, to you. Please let me know how you handle it in the chat room, so I can tailor the next more closely to you needs.

No Guesswork or Pain

https://vimeo.com/738356895/f3a8dd592b

The E-Mini S&Ps occupied our attention, since they were all fired up over a report that consumer inflation was running at ‘only’ at 8.5 percent last month. Was there a way to get ahead of the lunatic leap the futures took when the ‘news’ hit the tape an hour before the opening bell? As is so often the case, diligent attention to ‘mechanical’ levels on the lesser charts would have done the trick — with no guesswork and no pain.

ESU22 – Sep E-Mini S&P (Last:4212.75)

A shelf of resistance created back in June looks primed for a challenge. Short-covering bears have been the sole driver of this presumably doomed rally, now entering its ninth week. Much of it has occurred into airless gaps, with economic ‘news’ as the catalyst, and thin, off-hours markets offering almost no resistance. A push past early June’s thicket of supply looks all but certain, since the approach path has been a methodical, ratcheting process of stair-building that has consumed nearly two weeks. Once above the resistance, it’s anyone guess how far DaBoyz will be able to take this hoax. I’m going to drop a ‘c’ anchor for a reverse-pattern short near 4256, not because it’s a Hidden Pivot, but because it is in the middle of the ocean, so to speak, where bulls, bears and even chartists will be at their queasiest. ______ UPDATE (Aug 8, 11:21 p.m. ET): Dave Isham posted this pattern in the chat room today, with a bear-rally target that pessimists should keep well in mind. The D target at 4418.00 is 26.25 points higher than his, since I used a slightly different point ‘A’ low. In either case. the midpoint resistance got shredded so badly that ‘D’ should be regarded as an odds-on bet if the futures get past the middle-of-the-ocean number at 4256 noted above. _______ UPDATE (Aug 10, 7:54 p.m.):  To get short, use this rABC pattern, anchoring the ‘C’ high in the range 4254.90 – 4257.70, with an implied trigger 15.73 points off a high falling within those numbers. If you get a chance to cover half 15.73 points below the price where the trade was initiated, you’ll be on your own. Please note that theoretical entry risk is about $800 per contract and that it is sufficiently cutting-edge to be labeled experimental. Spectate if you wish.

TNX.X – Ten-Year Note Rate (Last:28.40)

It was odd to see this vehicle gratuitously stop out deflationist bets on Friday, trading as though it were a malign, nutty natural gas contract. Such nasty price action in this interest-rate proxy can only be ascribed to the shaky inventiveness of the fraudsters who run the central bank. The old adage ‘Fake it till you make it’ doesn’t apply in their situation, since it is more a case of ‘Fake it till you trigger a global depression’. In the meantime, the idiotic will-they-or-won’t they game that has been driving the markets for more than a decade may have run its course with the recent 75-basis-point rate hike.  With the country officially in recession and a third consecutive quarter of GDP shrinkage likely to settle the political argument over semantics, more tightening seems almost as unlikely as easing. Does that mean market forces will come to bear more forcefully on rates? That sounds pretty scary, but even scarier is the possibility rates will continue to fall, as they’ve been doing since mid-June, because the economy is imploding.

DXY – NYBOT Dollar Index (Last:106.57)

After a scorching rally that lasted 14 months, the dollar needed a rest. It could pull back to 97.63, and that would be a mere ten percenter and presumably healthy, as I mentioned here earlier. But the long-term chart (see inset) suggests that even if the selloff were much worse — say, to below 95 — that would generate an appealing ‘mechanical’ buy at the green line. No doubt the talking heads would be proclaiming the greenback’s demise. But in purely technical terms it would provide a Hidden Pivot springboard for a shot at the 113.16 target. I doubt we’ll see a correction that nasty, and we’ll be looking in any case for a ‘mechanical’ buying opportunity if and when the red line (p=100.71) is hit. In the meantime, let’s focus on the lesser charts for signs of an upturn well shy of the worst-case levels identified above. That would imply minor abcd downtrends that do not reach their targets but instead reverse from p.

GCZ22 – December Gold (Last:1791.20)

At the current pace, this anemic uptrend will reach the D target at 1985.40 by next June. Something’s got to give, obviously, since no bull market can survive such torpor. We may be spared waiting, however, if the futures pop to p=1840.80 sooner rather than later. A decisive move past that Hidden Pivot would imply the December contract is no worse than an even-odds bet to continue to at least p2=1913.10, if not necessarily to D.  In the meantime, Friday’s downdraft tripped a so-so ‘mechanical’ buy at x- 1789.50, stop 1769.90 (daily, A= 1727.00 on 7/27). I didn’t recommend the trade because getting long ahead of a weekend is almost always unappealing.

SIU22 – Sep Silver (Last:20.26)

Silver has performed somewhat better than gold recently, but that’s not saying much.  Since the September contract didn’t quite reach the red line last week, I cannot recommend a ‘mechanical’ buy if it touches the green line on Monday.  My gut feeling is that the trade would make money, but there’s no compelling reason to cast discipline aside. There’s a potential gain of around $6400 per contract on a one-level move to p=20.60. however, so don’t feel constrained from trying if you know how to keep theoretical risk down to $400 or less by applying ‘camouflage’ on the five-minute chart. ______ UPDATE (Aug 8, 11:35 p.m.) With an easy pop through p=20.54 today, and then a relaxed consolidation above it, September Silver looked terrific. If it closes higher on Tuesday, that would strongly imply the rally is destined for a minimum 21.62, the D target shown here. _______ UPDATE (Aug 11, 5:10 p.m.): A drop to x=20.00 would trigger an attractive ‘mechanical’ buy, stop 19.46. With about $2600 of initial risk per contract, the trade is recommended only to those familiar with ‘camo’ set-ups who can pare the theoretical risk down to $200 or so,

GDXJ – Junior Gold Miner ETF (Last:33.74)

GDXJ has traversed the ‘reverse’ pattern shown with such caution that many bulls must be wondering when the obligatory air-pocket-from-hell is coming. It’s been a while since a rally in any gold vehicle achieved a ‘D’ target, even a relatively modest one like the 35.99 Hidden Pivot resistance shown in the chart (inset).  Rest assured, the target will be achieved, even if Mr. Market seems to delight in busting the chops of gold bulls whenever they wax — here’s that fatal word again — hopeful. In this case, although the pop through ‘p’ took two tries, the latter was sufficiently decisive to imply that bulls were in charge, even if a little shaky. Our concern in any event is not whether D will be reached, but whether this proxy for exploration companies can fist-pump its way past it, especially on the first attempt.

TLT – Lehman Bond ETF (Last:114.39)

The rally from mid-June’s 108 low would appear to have sputtered out in a bad place, just shy of the 121.68 ‘D’ target shown in the chart. The target remains viable nonetheless, and there are reasons why we should give it the benefit of the doubt. The most important is that the last portion of the upthrust exceeded an ‘external’ peak at 119.74 recorded in May, generating a robust impulse leg of daily-chart degree. Also, when TLT popped through the midpoint support at 116.87 after a week of trying, it built a base for a presumptive thrust to D. Last week’s close beneath the ‘launching pad’ was not exactly a sign of robust health, but I see it as exhaustion selling related to the way in which the charlatans who run the central bank mismanaged our expectations’ last week. The official story that the economy is doing okay and reality have moved widely apart, but the recession is real and will continue to exert downward pressure on yields. They are already high enough to snuff the economy worse than in 1973-74. Falling energy prices will help to somewhat mitigate the effect, but they will not reverse it. TLT in any event would trigger a ‘mechanical’ buy if the pullback hits x=114.46. _______ UPDATE (Aug 11, 5:15 p.m.): The savage intensity of the selling has diminished my enthusiasm for a ‘mechanical’ buy that triggered today at x=114.49. Another factor that put me off is the weak, meandering impulse leg. Let’s spectate for now.

BRTI – CME Bitcoin Index (Last:23,171)

It’s been a particularly tough slog for Bertie these last couple of months. Those who have been praying for a big short squeeze to lighten their losses are many. Quite a few were trapped at much higher prices, including some of the biggest crypto bettors in the world. Prayerful losers constitute heavy layers of supply that didn’t exist in bitcoin’s early days. Supply is particularly daunting along the final few, crushing bars of bitcoin’s collapse last spring. Two months of heavy lifting since then have succeeded in hoisting this vehicle only to the midpoint of the last bar (see inset), which saw BRTI free-fall from $32k to below $19k. If and when it rises to the 25,634 low from the swift and devastating down-leg ended in mid-May, buyers may begin to feel like Sisyphus as they shoulder into it for an indefinite period. Why bitcoin should have any value at all was always a fair question. But $69,000 per copy? I asked this question of many experts, some who’d made fortunes on the way up, but I never got a good answer. It came out of nowhere and is not money by any stretch of the imagination, just a secure means of recording transactions.