The Morning Line

Be skeptical if stocks start the new year on a positive note, since that would be the perfect way for Mr Market to set the hook to trap bulls and bears alike. It would probably take most of the opening session on Tuesday for an enticing rally to build up steam, since the bears who would be doing most of the buying via short-covering will need some painful prodding before they hit the panic button. Mr Market has had an especially hard time trying to stampede them lately, since he holds such lousy cards. Recession is upon us, tightening its grip as the shares of such former world-beaters as Apple, Tesla, Google, Facebook and Amazon have collapsed. This has caused the "wealth effect" to deflate precipitously, unnerving investors who understand that the carnage will end only when a tsunami of exhaustion selling lays waste to the most resilient bulls. Not Bottomless My best-case scenario comes from AAPL's chart, which looks ugly but not bottomless. In fact, the stock need only fall a further $8 or so, to around $121, to find good support at a trendline I've been drum-rolling for months. "Get Apple right and you get the stock market right" has been Rick's Picks' mantra for nearly two years, and it has served us well. Because the stock provided a decade-long free ride for portfolio managers and has hooked them like dope, it will always tell us exactly what's on their minds. Now, despite grim headlines and dark clouds of war and recession hanging over 2023, Apple's chart says the stock market's decline may have just a little further to go before either stabilizing or rebounding. Some of my guru colleagues appear to expect strongly otherwise and have been predicting a January disaster. But don't be surprised if stocks

In an economy that over decades has grown increasingly dependent on revved-up holiday sales, investors have responded by praying more fervently each year for a Santa rally. It's an odd metaphor, however, considering that Wall Street even at its seasonal cheeriest has a heart as cold and dark as volcanic glass. The Santa of investors' imaginations is assuredly not the fat, jolly one originally drawn by a Dutch artist Haddon Sundblom for the Coca-Cola company, but rather someone more like Fed Chairman Jerome Powell gone silly in a headdress of fluffy white dove feathers. Unfortunately, Powell has not left much room for silliness in this holiday season. Gone are the days when Neiman Marcus could get a rise by featuring his-and-hers Bentleys in their Christmas catalog. The typical American household is thinking about more practical presents in these recessionary times: PG&E gift certificates...bread machines and pasta makers...survivalist seed packets...battery chargers. More Turbulence The result for investors has been a balky stock-market shaped more by Scrooge than Santa. Even with bullish seasonality at maximum force last week, the Dow Industrials could muster only a 300-point gain. They closed on Friday at 33,203, down a thousand points since Thanksgiving. More turbulence seems likely in the final days of 2022. Perhaps the best we can hope for when the markets lurch into gear on January 3 is that stocks continue to drift through a circa 1914 minefield without triggering a nuclear war or the debt deflation we all know is coming. [What do the charts say? Click here for my latest interview with Howe Street's Jim Goddard. RA]

The modest bear market rally begun in October likely ended last week when stocks turned sharply lower after failing to achieve clear 'Hidden Pivot' rally targets. Now, if the selling should continue to exceed minor abcd targets as occurred last week, that would affirm that Papa Bear is back. AAPL in particular, the world's most valuable stock, took a dive that has another 10% to go before good support is likely to materialize near $120 (see chart, above). The smart money that manipulates AAPL was finding it increasingly difficulty to distribute stocks to widows, pensioners and rubes. Making the shares affordable to the masses was their intention when they split the stock 4:1 in August 2020. AAPL was trading for around $600 at the time, priced well beyond the reach of most individual investors. How the Game Works The split allowed AAPL's canny institutional sponsors to rig the stock's price action so that AAPL could forge steeply higher without requiring large infusions of cash. This simple trick was always performed in the dead of night, when volume typically dries up. The smart guys would pull their bids, letting AAPL fall for no apparent reason. With sellers exhausted ahead of the opening bell, it was easy for the thimble-riggers to trigger off a short squeeze, gapping the stock well above the level where overnight selling had begun. It was even easier to create bullish gaps when AAPL wafted higher overnight on thin volume, since the day began with shorts already spooked out of their wits and hemorrhaging losses. Covering their positions was costly because DaBoyz backed off their offers, causing the stock to soar on light volume. Very little stock changes hands in these gaps. AAPL could be trading for, say, 147 on the close, and then open the next morning

Bloomberg News, buzzed on Fed Kool-Aid as always, thinks the banksters have engineered a soft landing for deflation. Although it's true that price bubbles in everything from used cars to styrofoam surfboard blanks have begun to detumesce, there is no reason to think the shrinkage will stop when inflation falls to some 'comfortable' level. That's not how deflation works, especially when it is correcting excesses of the biggest financial bubble ever. In residential real estate, the implosion has been mild enough so far that sellers actually seem to think they'll get their price if they wait long enough. Sitting pretty? Only in their dreams. With 30-year fixed mortgages currently averaging 7.5%, many first-time buyers might be starting to wonder whether they will ever own a home. They need little convincing in the meantime that we're in a recession, even if owners of unmortgaged homes priced above $2 million think the U.S. economy is hunky-dory. Muddling Toward a Crash If business merely muddles along in 2023 without slipping deeper into recession, the gap between buyers and sellers can only widen. To the extent this is already happening, we're in the beginning of a silent crash in residential property values. It is particularly deceptive because mortgage-based transactions have dried up, turning price discovery opaque. Incipient deflation is more visible in commercial real estate, with vacancy rates above 15% in Houston (18.9%), Dallas (17.6%), San Francisco (15.5%), Washington (15.2%) and Chicago (15.08%). These figures grossly understate the problem, since many urban centers are slipping into a self-perpetuating spiral of declining tax revenues, decaying public amenities and an exodus of workers to places that are more livable and affordable. Texas, Tennessee, Florida, Arizona and Nevada are among the biggest gainers, California the biggest loser. San Francisco, for all of its natural gifts, could be

Last week's commentary went full contrarian with the seemingly nutty idea that 2023 could be a dull year for investors despite the looming possibility of a global economic collapse. Inflation, deep recession, war, disease and political unrest are just a few of the factors that could bring a badly limping financial system down. But suppose the global picture were to brighten significantly? Consider the possibilities: a senile U.S. president is forced to step down; Putin negotiates an end to a war in Ukraine that has become unwinnable; the nascent rebellion in China is joined by sympathetic soldiers; anti-communism rises up around the world, even in the U.S.; free speech returns on a global swell of popularity; and the content of Hunter Biden's laptop gets fully exposed, rousing Americans to root out corruption at the FBI, State and Justice departments. Rebellion against the globalists and communists is stirring everywhere. All hell could break loose, but a positive outcome is hardly inconceivable. Farmers in Canada, Netherlands and elsewhere could prevail over climate-change zealots who would prefer that everyone eat tofu. Brazilians could stymie the fraudulently elected Lula da Silva from opening Latin America's back door to his Chinese comrades; Italy's new premier, Giorgia Meloni, could bring down the EU by demonstrating that supposedly 'far-right' leaders are actually just mainstream champions of a common-sense path back to economic health. There are also mounting protests against Iran's Islamist dictatorship that could strengthen and spread to the Muslim world. They surfaced last week when Iranian soccer players declined to sing the national anthem at their opening World Cup game against England. The Laptop That Keeps Giving Regarding the world's most infamous laptop, no longer can its incriminating contents be suppressed online or by the partisan hacks who run the New York Times, Washington Post, L.A.

Early in October, it lifted my spirits to be able to bloviate about how a too-widely-anticipated October crash seemed as likely as a Martian invasion. One lunar calendar-based prediction in particular had October 21 as the crash date, although the forecast went squishy at sundown that day when dark clouds failed to materialize over Wall Street. Even so, the trading world remained atwitter about the guru and his earth-shaking prediction until after the election. Now, five weeks later, who even remembers his name? At the time, I made the boldest prediction that a guru can make -- i.e., that nothing even remotely interesting would happen for the foreseeable future. This was going way out on a limb, since we gurus are always expected to predict that 'something' will happen, even if we sometimes wuss out with a 'sooner or later' qualifier. But more months of nothing? Zilch? Nada? When was the last time such a boring forecast was celebrated for its prescience? And which guru made the call? What makes this one so daring, however, is that even the village idiot knows that the global economy is poised to collapse at any time -- perhaps even before you have read this commentary. Bloomberg's A-Team  Instead, we have the usual eggheads and Bloomberg regulars debating whether the U.S. is even in a recession. Yes, the pundits nearly always embarrass themselves.  All of us can see that tens of millions of middle-class Americans are making the kind of economic tradeoffs that are usually associated with hard times. But perhaps the eggheads have a point, not necessarily on the top of their heads. Maybe things are not so bad after all, and the economy will continue to limp along until the next outbreak of buy-side psychosis strikes the proletarian mind. To assess the

Twitter and bitcoin share a key similarity in that their success while it lasted was just hubris. Realize that both were birthed by a virtual medium capable of monetizing turds if there is any discoverable demand for them. Cardi B's megahit single Wet Ass Pussy was proof of this. Twitter proffered turds in the form of members-only censorship that took delight in defecating on the Bill of Rights, particularly the First Amendment. But it took Elon Musk, with unlimited quantities of f**k-you money, to put a number on Twitter: $44 billion. Unfortunately for him, nearly all of it was for 'good will' that appears to have vanished. Nor is he likely to be consoled when it is discovered that the dark secret of Twitter's overwrought ex-employees is that they can start a Twitter of their own with just a few mill, a rackful of servers and a dozen high school dropouts working from home, paid $20/hour to code. Cute Little Bird So what are the notoriously spoiled workers so disgruntled about? Leave it to an apparent millennial sympathizer reporting for The Wall Street Journal to excuse them with a high-minded quote uttered by no one in particular: "Employees said Mr. Musk pushed people to work well over 40 hours a week, but said they didn’t feel there was a compelling vision to justify it." A compelling vision? Yeah, sure.  And exactly what lofty end did they see themselves serving under Jack Dorsey, Orwell's darkest nightmare masquerading as a little blue birdie? Stay tuned to the blogosphere for more dithering on this and other topics of scant interest to folks who live in the real world. What should please the company's make-believe workforce in any event is that Musk set an intergalactic record for overpayment.  If Twitter had changed hands for,

[The following guest editorial was written by David Isham, a real estate investors from Northern California and long-time Rick's Picks subscriber.  RA] Gold Loses Status as Haven, declared a headline in the Wall Street Journal on September 22.  Two days later gold fell to $1629, the lowest daily close in more than two years; then it began an ascent that has continued to this day. A case of yet one more cover-story curse signaling a major trend change?  Quite possibly. The backdrop for gold's rise is a commodity bear market that dragged along for 48 years but which appears to have bottomed in 2020 with a false breakout in the CRB Index. False breakouts often signal trend reversals, and so far this indicator seems to be working. The commodity bull has unfolded with enough vigor, seemingly, to last for a decade or longer. As for gold, it recently began to show signs of life following a steep selloff begun last March. The GDX:GLD ratio that tracks the relationship between mining stocks and the price of gold looks like it is breaking out, with miners outperforming bullion. This is usually an early sign that the precious metals market is about to shift into high gear. Still Plenty of Time Because gold and silver can be expected to make their biggest percentage gains near the end of their respective bull markets, there is still time to board the train and start accumulating. Before this bull market has run its course, I expect gold to hit $10,000 per ounce, and silver $350. A barrel of oil will be quoted at $250, and the HUI Gold Bugs Index, currently trading for around $275, will be trading north of $1,200. Furthermore, the implosion of crypto is very bullish for junior miners, since speculative money will

Economics, the “dismal science,” has taken quite a beating in the current election cycle. Last week, Joy Reid, MSNBC’s rising-star bimbo, tried to convince viewers that the word “inflation” has no meaning outside the academy and the newsroom. “Most people who would never use that word in their lives are using it now because they’ve been taught it [by the Republicans.]" Oh, really? Perhaps she has a more accurate word to describe the cause of soaring prices for nearly everything since Biden ostensibly took charge? A network headline the same day evinced further confusion on the subject: White House Disputes Recession Fears. Although it’s Biden’s prerogative to try to control the narrative, he risks alienating even Democrats with such outrageous spin when the plain truth is staring us in the face. For the first time in more than a decade, middle-class Americans have been tightening their belts and cutting back on essentials, and 81% of them say they are either somewhat dissatisfied or very dissatisfied with the economy. Despite this, the recession debate, such as it is, has been going on for quite some time and continues to this day. You could even argue that Biden appears to be winning on points. Eggheads, pundits and other credentialed dissemblers recruited by the mainstream news media to take a bullet for the team have been dependable recession deniers. And even Chase president Jamie Dimon, who should know better, speaks of recession as a “possibility” in 2023. All of them should harken to the observations of Matt Barnes, a Rick’s Picks subscriber who noticed the U.S. economy slipping into recession early in the second quarter. He would know, since he’s in the shipping-pallet business, as good a mine canary as you could have for discerning a drop-off in economic activity. A Silent Crash