The Morning Line

I've reinstated MSFT as our top market bellwether because other symbols that have served in that role look too punk to count on. The shares of Apple, which couldn't innovate its way out of a wet paper bag, will be extremely vulnerable when recession hits, while Bitcoin's canny handlers lack the guts to lead stocks higher. DaBoyz turns the cryptos loose to run wild whenever the broad averages climb sharply, but this is just go-along price action incapable of exciting traders' animal spirits. 'Doc' Copper doesn't work, either. Although it looks capable of reaching $6.18 a pound, a 20% climb from current levels, that scenario is not believable in the context of a global boom in manufacturing. More likely, it would be a blowoff for the copper-intensive EV story, which has become less compelling as electric-vehicle resale values have plummeted. For better or worse, we should focus on Microsoft to gauge the strength and staying power of this nascent bear rally. With a little more than $3 trillion capitalization, the software behemoth is the third-largest company in the world, just behind Apple and Nvidia. Unlike those companies, however, Microsoft is not especially vulnerable to an economic downturn, since such a large portion of the firm's nearly $200 billion in revenues is derived from recurring subscriptions to cloud computing facilities, personal and business software. Microsoft will remain a cash cow in the hardest imaginable times, even if the supply of dollars implodes in a deflationary bust. A 'Buy' Signal So what does MSFT's chart say?  Last week, a rally tripped a theoretical buy signal at 394.56 that implies the stock will reach a minimum 412.20. We should expect a tradable pullback from that number, but if a nasty relapse follows instead, taking out the March 11 low at 376.91, that would

The Trump wild card has made it especially difficult to bet on the stock market. Even cynics can't say for sure that his radical agenda will not eventually produce an economic golden era capable of pushing the Dow average to 100,000 or higher. In just two short months, the president has crushed wokeness and racial quotas, enabling most Americans to feel good about themselves for the first time since the 1950s. And although fraud and corruption in government will always be with us because that's where the money is, it's possible Trump has returned America to a path that will reinvigorate just leadership and honest institutions that we can be proud of.  As for the tariffs, they are arguably the only medicine strong enough to jolt the world into doing honest business.  The kicker is that they cannot but entice foreign manufacturers to expand their operations in the U.S.  (If you have read this far and TDS rage has begun to churn your stomach, here's some advice:  Blow it out your shorts.) The graph above is intended as a do-it-yourself tool for gauging the power of the bear rally that began on March 13.  The implication is that no short-squeeze will exceed the 5976.00 target (4) of the pattern shown. If it does, then permabears had better not get in the way of the thrust to new record highs that is likely to follow. I have drawn the chart according to the proprietary rules of the Hidden Pivot Method.  This picture exhibits a 'reverse ABCD pattern' that I have watched in action 100,000 times and studied for nearly 30 years. Trust me, it works. Pattern Is 'Confirmed' Its accuracy and reliability were confirmed last week when the booster stage of the presumptive bear rally stalled precisely at 5768 (2), a

Will there be one last melt-up before this doddering bull market seeks penance?  Some of my fellow gurus believe a final show of bravado is coming, especially those who base their predictions on Elliott Wave Theory. I think the party is over, but I'm forced to admit that if too many traders agree with me, new record highs fueled by short-covering are likely. My skepticism is based more on market psychology than on the charts displayed above.  We'll get to them in a moment, but first let's consider investors' state of mind, based on what people we know have been saying. Stocks came down hard in the last month -- hard enough for the usually thundering herd to wonder whether it might be time to bail out, or at least lighten up and move into cash. It was not quite a bloodfest, but the megastocks that made 2024 a year to brag about have been hit especially hard. When last week began, the broad averages had given up all of their Trump 2.0 gains and then some. But just when it seemed like stocks were about to go over the cliff, the S&Ps uncorked a 100-point rally on Friday, saving not only the day, but the week. Come Monday, fear will have turned into nervous hope. I expect Mr Market to encourage this self-deception with more upside. And if Friday's surge was the start of a bear rally worthy of the name, we should look for it to continue until nervous hope turns into greed. That would imply a run at the old highs. A Different Kind of Dip The similarities between the charts are too striking to dismiss, along with their implication that the Mother of All Tops is already in. As summer began in 2008, IBM came within

I’ve written here before about how the broad averages have struggled to go lower during what could turn out to be the initial phase of a bear market. Many traders, particularly greenhorns too young to have never experienced a bear market, appear to be buying each step of the way down. They could do so only if they were confident a rally lies just ahead. You can hardly blame them, since this has been more or less true for the last 16 years. The chart shows February's selloff in graphic form. Notice the series of elongated bars over the last three weeks. Their steep, smooth fall resembles that of a parachute-drop rather than a crash landing. There is no trace of panic or even urgency in the decline, just hard selling that is being met minute-by-minute with serene buying, most of it occurring in the latter half of the day. A Doge-y Economy So far, the S&Ps have fallen 8% from the record highs they achieved near 6200 in December. That's not even a stiff correction, let alone a bear market. But tariff talk and Doge layoffs have begun to unsettle the markets in ways that make a recession thinkable. A few retail analysts have even conceded there is a "small possibility" of a recession in 2025.  In Wall Street-speak that's practically a siren alert telling investors to prepare for Armageddon.  But there is barely a hint of a downturn as yet, only two consecutive months of punk consumer spending. It is possible nonetheless to extrapolate a bearish scenario from the chart above. For starters, the S&P 500 will fall to the 5555 target shown. Then, they will rally with sufficient vigor to make tariff worries and the threat of a land war in Europe melt away, at least for

You’ve heard from ‘Formula382’ before. A longtime Rick’ Picks subscriber, he manages wealth in the Ozarks, using puts and calls aggressively, with a dollop of good timing, to keep clients happy. He has also shown uncanny skill at rotating out of sectors just before they peak. In a recent chat room discussion, Formula wondered whether the recent sharp break in the price of Walmart shares might be a harbinger of trouble – and not just minor trouble, either. He is concerned that when the bull market ends, possibly as soon as spring, it will usher in an economic depression worse than the 1930s. I not only share his pessimism, but also believe that a bust of such magnitude is unavoidable. Here’s the discussion thread from the Trading Room, lightly edited: Formula382: We’ve all been wondering which stock would lead the market higher now that MSFT has fallen out of bed. Is price action in Walmart perhaps the canary in the coal mine? Is the stock not the largest indicator of overall consumer health? WMT’s dive following the recent earnings report was pretty severe — and fascinating. The company’s CFO expects suppliers to “take price” — i.e., suck up costs associated with inflation and/or tariffs. It turns out WMT doesn’t even factor in the effects of potential tariffs on revenue and earnings. Sounds bonkers to me. The company’s shares have been trading at a 40 multiple, and Costco’s at a nose-bleed 60! These names historically have traded with multiples in and around the mid- to high-teens, much like the S&P. In short, WMT is commanding the multiple of many tech names with just 4-6% same-store sales growth. And not in a hundred Sundays do I believe that the upper crust of the U.S. is now shopping at Walmart. I live in

You’ve heard from ‘Formula382’ before. A longtime Rick’ Picks subscriber, he manages wealth in the Ozarks, using puts and calls aggressively, with a dollop of good timing, to keep clients happy. He has also shown uncanny skill at rotating out of sectors just before they peak. In a recent chat room discussion, Formula wondered whether the recent sharp break in the price of Walmart shares might be a harbinger of trouble – and not just minor trouble, either. He is concerned that when the bull market ends, possibly as soon as spring, it will usher in an economic depression worse than the 1930s. I not only share his pessimism, but also believe that a bust of such magnitude is unavoidable. Here’s the discussion thread from the Trading Room, lightly edited: Formula 432: We’ve all been wondering which stock would lead the market higher now that MSFT has fallen out of bed. Is price action in Walmart perhaps the canary in the coal mine? Is the stock not the largest indicator of overall consumer health? WMT’s dive following the recent earnings report was pretty severe — and fascinating. The company’s CFO expects suppliers to “take price” — i.e., suck up costs associated with inflation and/or tariffs. It turns out WMT doesn’t even factor in the effects of potential tariffs on revenue and earnings. Sounds bonkers to me. The company’s shares have been trading at a 40 multiple, and Costco’s at a nose-bleed 60! These names historically have traded with multiples in and around the mid- to high-teens, much like the S&P. In short, WMT is commanding the multiple of many tech names with just 4-6% same-store sales growth. And not in a hundred Sundays do I believe that the upper crust of the U.S. is now shopping at Walmart. I live

I'm tracking Nvidia shares closely because they can tell us whether China's DeepSeek threatens America's lead in AI development.  The Nasdaq-listed stock got pummeled a month ago when the Chinese revealed they were developing an open-source chatbot that can easily compete on performance and price with the most advanced models offered by OpenAI and other U.S. developers, including Elon Musk. Investors who have bet trillions of dollars on relatively costly solutions were so spooked by the news that they batted NVDA down to $113 not long after it had traded as high as $153. At the time, I said the stock would be an opportune short sale if it bounced from $113 to $140. It did so last week, hitting a recovery high of $143, but I'm no longer so enthusiastic about betting against the stock. It is the chart that has changed my mind, not the aggressive attack on DeepSeek by investors, analysts, pundits and scientists.    They said China had spent considerably more developing the technology than they were acknowledging and that its smarts were extracted from Nivida chips the Chinese had purchased despite a U.S. embargo prohibiting them from getting their thieving hands on certain high-tech hardware. Eating America's Lunch So, who's lying? I doubt we'll get a straight answer from the news media since they are rarely up to the challenge of reporting on developments that seem to upset the status quo. The question remains crucially important nonetheless, since there are literally trillions of dollars of bets and side-bets on the relatively capital-intensive, proprietary approach that American-based companies have taken toward AI development. NVDA's stock chart is probably as good an answer as we'll get, since a graph cannot lie. In that regard, a move to new all-time highs above $153 would imply that America's edge

Trump promised everything but a cure for cancer during last Thursday's press conference, and there was no doubting his sincerity or his commitment to helping to shape a better world. Can he do it? One thinks of Teddy Roosevelt, who possessed seemingly limitless energy and zeal for taking on big projects, including building a national park system and the Panama Canal. Trump has big ideas too, and by all evidence the diligence to see them through. It was therefore disappointing that the stock market failed to show much feel-good energy on Friday. Chalk it up to Wall Street's cynicism toward politicians with big ideas other than large tax cuts. Investors, of course, will always be more concerned about Fed monetary policy. This suggests that Trump's successes, if they are going to have a major impact on the economy, will need to align themselves with the central bank's purposely beige and often murky agenda. For the present, however, any wonk, talking head or left-tilting economist is unlikely to 'get' Trump. Will the mainstream media, the political left, the academy, and a popular culture shaped by babbling ideologues like George Clooney, Jimmy Fallon, and Whoopi Goldberg eventually come around? it is encouraging that Meta's Zuckerberg was the first celebrity from the business world to kiss Trump's ring/ass. Although Zuck's $440 million gift to local election boards indisputably stuffed enough ballot boxes to swing the 2020 election to Biden, it was just business. He has demonstrated that he will sleep with anybody, including Trump, if the payoff is big enough. Facebook shares went vertical after Zuckerberg's White House visit shortly after the election, presumably because Wall Street sensed the company's karma was coming into alignment with Trump's America. The same could be said of Tesla's shares, as trust and friendship between Musk and

Get the forecast for Microsoft right and you cannot go far wrong guessing where the stock market is headed next. This has been an article of faith at Rick's Picks for years, and it has served us well. The chart shows MSFT either moving in lock-step with the Dow Industrials, or sometimes leading the Indoos with pullbacks and upthrusts that were relatively more pronounced and energetic. In July, however, after notching a record high at 468, Microsoft shares began a gentle decline that so far has gone unmatched by the Indoos. The latter corrected moderately for a couple of months, then pushed back up to the highs, where prices have hovered stubbornly since the beginning of the year. Based on the chart comparison above, I assumed until recently that MSFT was about to lead stocks lower. Now I'm not so sure. Suppose Microsoft shares are simply taking a breather while the broad averages continue higher. This possibility was suggested to me in the Rick's Picks chat room the other day by a subscriber who goes by the handle Formula432. An Ozarks-based financial advisor who specializes in high-net-worth clients, he manages their portfolios aggressively for yield, often with covered writes that have been astutely timed. "Where should our focus be now?" he asked. "I don't think MSFT has the relevance it once did. The rotation is real, growth is breaking, and value is going to be in leadership IMO, if only on a relative basis." Hemlock Cocktail, Anyone? I had to agree. Why should the stock market require Microsoft's leadership if there are other companies with greater growth potential? As long as the software giant can continue to pile up mountainous revenues without spectacular growth, it will remain a safe "hold" for portfolio managers. As much could be said of some