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Bull Market at a Key Choke Point

By Rick Ackerman Posted on January 18, 2013, 9:10 am EST Last Updated January 18, 2013, 6:17 pm EST

Fasten your seat belts, since yesterday’s rally may have been the last gasp of the bull cycle begun last spring.  In the E-Mini S&P, using our proprietary technical method, we’ve been expecting a stall or perhaps something worse at exactly 1482.00. Yesterday the futures got as high as 1480.50, and although that fell an inch shy of getting us short on our offer, it was close enough to satisfy the target.  Rick’s Picks subscribers had been instructed not only to get short at these levels with a tight stop-loss, but to exit a long position they’d held from, effectively, 1433.50 after partial-profit taking. (Could you have done this trade and managed it yourself based on our detailed instructions?  Click here and judge for yourself.)

So what happens now if the futures simply blow past our target?  That’s always a possibility, and it would have undeniably bullish implications going forward.  But even then, we wouldn’t expect the E-Mini S&P to much exceed 1548.25, a longer-term “Hidden Pivot” 5% above these levels that looks well capable of cold-cocking the bull market begun in March of 2009. We’d short even more aggressively there than at current levels, albeit with the usual tight stop-loss.

In the meantime, there is one more number that seems likely to show very precise stopping power.  It lies between 1482.00 and 1500.00, and we’ve told subscribers to re-short there with a micro-tight stop-loss or via a “camouflage” trading technique designed to hold risk to a bare minimum.  If you’re interested in the details, click here for a no-risk trial subscription to Rick’s Picks. You’ll get access not only to our detailed daily trading “touts” and archives, but to a 24/7 chat room that draws experienced traders from around the world.

  • Dan February 1, 2013, 6:06 pm

    As I said in my Jan 21st comment above, the current political environment affects technical analysis. You cannot rely on it as you did before the “new normal” with all the manipulation.

  • Chris T. January 23, 2013, 9:33 am

    RWD:

    a good link, will read fully later.

    “Empirics notwithstanding, the belief is maintained. The misjudgments of practitioners, not the theory, are responsible.”

    It is always thus, and why Marxists STILL believe communism has value.

    Not just economics, too:
    “gun-control”
    Because state-sponsored bans, for the PROFERRED reasons, work:
    murder, rape, kidnapping, theft, drugs are all illegal, and of course none of these problems exist here cause we’ve banned them!

    If EVER, the empirical can’t be fully denied, the answer is:
    yes, but we didn’t/haven’t done it right, lets do more.

    Einstein’s insanity…

  • Redwilldanaher January 22, 2013, 5:22 am

    Rick,

    http://www.zerohedge.com/news/2013-01-21/guest-post-keynesians-and-ponzians

    6 simple paragraphs that all but Gary will appreciate:

    There has likely never been a boom so great (and so fictitious) as the one that this country experienced for the last several decades. Its origins began with the hubris of government economists in the decade of the 1960s who believed that the economy could be managed like a piece of machinery. They believed that they had the tools (and wisdom) to eliminate business cycles by judiciously stepping on and letting off the gas at the correct times.

    This incorrect belief is still fundamental to Keynesian economists, despite the impressive string of failures it has produced. Empirics notwithstanding, the belief is maintained. The misjudgments of practitioners, not the theory, are responsible.

    The movement toward a social welfare state provided additional incentives for Keynesians. With its “costless” provision of increasing benefits to increasing numbers of people, the welfare state required that a boom be maintained lest the Ponzi scheme collapse prematurely. The Ponzians and Keynesians became natural comrades and allies.

    Keynesianism promoted activist government. The welfare state was activist government taken to an extreme and required increasing amounts of money to survive. A symbiotic relationship was evident. The growth of one promoted the other and vice versa. The complementarity is apparent when one realizes that members of one of these cults generally belong to the other.

    Whether this boom was the greatest in history might be debated. What cannot be debated is the fact that no other boom has been more dependent on government for its formation and maintenance. No boom in history has been created by easier money and bigger government interventions. Nor has any other been so desperately maintained by government.

    As a result, this boom has been more artificial and damaging to the economy than any other. For decades the Fed and government interventions distorted interest rates and product prices. These incorrect price signals encouraged entrepreneurs to engage in behavior that should never have been undertaken. Massive mis-allocations of capital and labor are the result and they have built up over fifty years.

  • Anthony F January 21, 2013, 4:47 pm

    Camouflage ?

    Learn from Owls !
    Enjoy the Holiday..
    http://spiritdaily.com/Godswonders.htm

  • Dan January 21, 2013, 12:36 am

    Have you considered the effect of the massive liquidity being added around the world? In fact, Japan is on a printing spree and is looking to buy US equities. IMHO, technical analysis is not such a useful tool in the current political environment.

    • Rick Ackerman January 21, 2013, 9:43 pm

      Tehcnical analysis not useful? Actually, what you refer to as the “current political environment” is wholly determined by mysterious forces that only technical analysis can discern, Dan. If you’re skeptical that we can routinely predict swing highs and lows within a decimal place, please click here for a trial subscription.

  • gary leibowitz January 20, 2013, 6:55 pm

    The Republicans just announced their plan to “kick the can” down the road by 3 months, regarding the fiscal cliff. This news sets the stage for a big move up in that time span. Granted the current move is stretched thin, but I wouldn’t expect any breakdown of the up trend just yet.

    My guess is 1650, not 1550 will be the top on the SPX. No one on this board believed we would be this high, and this far along, from the original crisis point.

    • Rick Ackerman January 21, 2013, 9:35 pm

      I disseminated a 1548 target to paid subscribers, Gary, and will entertain the possibility of still higher prices if that Hidden Pivot gets skewered. First, though, a lesser Hidden Pivot target at 1482 must be eclipsed. We missed getting short there by hair after riding a long, effectively, from 1433.


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