October 30th, 2014
Published Daily

Fires of Hell Rage Quietly on a Sunday Night

by Rick Ackerman on January 28, 2013 8:10 am GMT · 18 comments

The markets were suspiciously subdued Sunday night — developing thrust, perhaps, for the next maniacal surge. In retrospect, it seems remarkable that the broad averages were able to sustain an upward trajectory in recent weeks even as the most valuable stock in the world, Apple, was getting savaged. (Breaking news: Apple has fallen to second place, its cap value now exceeded by that of Exxon-Mobil.) The stock has plummeted 37% since September, from an all time high of $705 to Friday’s shell-shocked low of 435.  It must be conceded that even at $705, AAPL was not egregiously overpriced relative to earnings.  Presumably, Wall Street’s renowned shakedown artists have been intent on driving AAPL down to bargain-basement prices because they’re so confident they’ll be able to goose the stock back into the ionosphere before their 2013 bonuses are calculated.  Well, it’s optimists that make the world go ‘round, so perhaps we shouldn’t be so churlish as to deny them the spoils of such deftly executed opportunism.

For our part, we’ve hated the stock market each and every step of the way up since, oh, 2009.  But it’s not as though we’re sore losers.  In fact, much of the time, we not only had the rallies nailed, we were able to profit from them on the way up — and even to short them when they reached swing highs nicely foreseen by Hidden Pivot analysis. We recently attempted this gambit once again as the E-Mini S&Ps approached an important rally target at 1494.50. We came especially eagerly to this task, since we’d just come off a bullish ride from, effectively, 1433.  But discretion prevailed over valor, and we backed away with the futures glowering menacingly near 1500 as last week ended. Unapologetic permabear that we are, a thrust above 1500 would only increase our determination to short the top of this nearly four-year-old bullish stampede.  Be assured that this reflex is not be based on some vague hunch, or even on the suspicion that a rally launched from 1500 would be the perfect way for Mr. Market to set the Mother of All Bull Traps.  No, we have a very specific target in mind, and it is based on a chart pattern that looks extremely likely to produce a short-able top, if not necessarily The Top.  Want to find out what our “magic number” is?  Click here for a free trial subscription that will give you access not only to detailed trading “touts” offered each day, but to a 24/7 chat room that draws veteran traders from around the world.

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{ 18 comments }

Mava January 28, 2013 at 8:18 am

All the disagreement of matters political and theoretically economic aside, why am I keep coming back and back again at this place?

It is because of something that RA clearly understands. I am amazed again and again at the accuracy of a technical forecast by RA. I don’t know what to think. I can not believe that there is any reason for a technical analysis to be ever correct. And yet, the reality smiles me right in the face with yet another RA’s HP being right on the money.

I must conclude that RA has an uncle or somebody at the exchange and he is being told what is the fix. What else could explain this ridiculous accuracy? He adds an insult to injury by going down to specifying mere cents. Seriously? This is when most anybody could not reliably predict even the direction?

In the past, I have noted that although everyone has his failings, RA clearly stands out for first being the man and eating his hat when he had to. Then he did another outrageous thing and acknowledged he was wrong on Inflation-Deflation debate, as not many will have cahones to do. And now, he keeps insulting me by constantly being right on his technical forecast, while I think it should not be possible. Surely, either he has an Uncle or I am very wrong.

You’re the man, RA!

&&&&&

Thanks, Mava. I used to think my “Uncle” Bill was the guy who fixed sulky races at Yonkers. But that was before I bet a bundle on Happy Yankee A on Bill’s say-so and the Yankster lost by a neck.
RA

Mustafa January 28, 2013 at 9:07 am

All the disagreement of matters political and theoretically economic aside, why am I keep coming back and back again at this place?
Mava

Accuracy, ridiculous down to the penny accuracy. That’s why I come back here multiple times a day to check out what’s going on in the chat room or check the daily touts to see if they have been updated.

crusty January 28, 2013 at 2:50 pm

a fly in the ointment is always better than a slug in the frosting, however arent we still awaiting a long issued “Hula dance in Manhattan” promise if GS didnt reach 29 ? I may have missed the swaying of the palms, correct me if I’m amiss :)

Rick Ackerman January 28, 2013 at 4:25 pm

Yeah, still waiting, “Crusty”. Do you doubt GS will eventually trade down there?

Carol January 28, 2013 at 3:03 pm

The best reason to avoid Apple for the foreseeable future is that Steve Jobs is gone – clearly Apple’s most valuable man. Hope Apple’s insured for his loss because the best qualities he brought to the corporation were his taste and his domineering demand for simplicity, elegance and design. I know Wall Street and multinational corporate America like to think that all high level execs are superstars but the fact is that they’re not. In fact, they are few and far between. As evidence, think of how difficult it will be for investment purposes (not trading) to replace Buffett.

Stanley J G Crouch January 31, 2013 at 2:03 pm

Agreed. The market seemed to celebrate his passing, which remains astounding to me.

Remember the rumors of the treasure trove of ‘detailed new product plans’ he secretly left behind?

A ‘cult’ knows no bounds in the rooted belief system that is it’s mantra.

Perhaps a price below $100 will shake them out of their stupor?

John Jay January 28, 2013 at 4:19 pm

I am interested to see how far Ben lets ZB and ZN fall before he launches a massive intervention.
Of all the government WMDs restraining economic reality, ZIRP is the one he has the most control over.
Rising interest rates spell doom for the Matrix, so I am sure he has support targets in place. To keep interest rates falling when the deficits and total debt go parabolic is requiring a Manhattan Project level of groundbreaking financial innovations.
Interest payments would consume the Federal budget.
Think of the devastation to the FIRE Matrix if a thirty year T Bond pays 15%.
It would mean Rick’s 70% drop in RE prices from the top would come to pass.
It would mean the property tax protection money gusher would end, and the bond market from Treasuries to junk bonds would vaporize.
Pension Funds, Insurance companies, Fannie/Freddie/FHA paper, and the stock market would hit the canvas hard.
In the long run all that may collapse anyway, but Ben is going to fight to the last ditch to prevent it.
Let’s see where he launches his next counter attack against reality!

fallingman January 28, 2013 at 5:47 pm

Hey, where’d you get the picture of Jamie Dimon?

redwilldanaher January 28, 2013 at 7:00 pm

That’s not Jamie, it’s a composite of the average AmeriKan when he learns that his TV is out, his monsanto blessed food delivery will be late and that the world’s slave laborers went missing and that it will take several days to round up replacements to fill the reeducation centers…

gary leibowitz January 28, 2013 at 7:58 pm

Without inside information I would expect 1550 to be the top that Rick expects. This number is on many technicians mind. In fact way too many. I suspect if it does hit that number the reaction will be a self fulfilling one, initially. Great reason to play the (hopefully) initial fall, followed by an equally shocking rebound.

This market is just getting investors back in the game. I suspect the monthy inflow into stocks have to spike before we see that “gottcha” crash.

bigtom January 28, 2013 at 9:33 pm

Bought an apple back in the mid 90’s. It was after Jobs was booted out and this computer then was really an ‘authorized clone’ out of Texas…..well, as aapl began unraveling, the board crawled back and begged Jobs to return and take it all over again. He did, purchased back all the authorized clone replicators, unbrellared all the dislocations since he was gone and the rest is history. aapl is now too big and administration am sure is again filling with bureaucratic types now that Jobs is no longer there to keep a tight reign/rein. The bureaucratic mindset are those that do well in government and places like that. aapl will unravel again. All it takes is time. Actually, not a bad analogy here of what has happened to our country, only without the taking it back part. Like HarleyDavidson motorcycles or anything else really, hang on to your older ones, they work! There will be openings for upstarts always if they are allowed anylonger…..

Hey – for a fun look at 21st century bureaucratic thought processes check out: http://www.youtube.com/watch?v=G8DNGh126oM&feature=player_embedded You may think this is a stretch, but it is more embedded than you think!

gary leibowitz January 28, 2013 at 10:56 pm

An even funnier article concerns Gov.Jindal of Louisiana asking the Republican Party to be more clear on its intent to help the middle class. He just proposed eliminating the state income tax while increasing the sales tax. Can anyone with half a brain figure out which group of people it would help and which hurt? Times up!

So lets not let real glaring facts get in the way of these types of rhetoric. The sad part is this country is buying this type of argument. Krugman calls it reverse robin hoodism.

In the last 3 decades while this government ramped up spending programs and give-aways, the proportion of total American wealth went to an extreme towards the top tier, while still finding the middle class and poor sinking. Here is a simple question that even that pretty little blonde should be able to answer. If we cut the social programs and increase the tax breaks for the rich what do you suppose would happen in the future?

I don’t get it. You all talk about retribution for this governments disregard for fiscal responsibility, yet you ignore the ever increased disparity on the 3 decade policy that clearly have favored the well off. It once again reminds me of the New York riots against the blacks when conscription was announced during the Civil War. Land owners and the wealthy were allowed to buy their way out of serving. The riots, while not rational, does show how visceral emotional responses won out. Is this era of fiscal responsibility an echo of the past?

Jill January 29, 2013 at 2:04 am

Many extreme Libertarians want the social safety net shredded so that they won’t have to pay either the employer, or the employee, costs of Social Security & Medicare.

Maybe they would prefer not to have bank bailouts or corporate welfare either. But there seems to be little chance of ending those, since huge corporate donors control our government 100%. The mega-corporations, in their propaganda in the media that depends on them for advertising, are also very happy to keep people focused on individual welfare, food stamps etc. So they pretend that those are the big expenses– rather than bank bailouts, subsidies to oil companies, corporate tax breaks, sweet deals for pharmaceutical companies, military industrial complex subsidies given out by having unnecessary military bases, unnecessary wars, unnecessary weapons etc.

Chris T. January 29, 2013 at 12:24 am

@ Gary:

“You all … yet you ignore the ever increased disparity on the 3 decade policy that clearly have favored the well off.”

Well I don’t know about “you ALL”, but this “YOU all” hardly does anything of the sort, ie. “ignore”.

However, unlike you I ascribe it to the correct villains, and see who the real victims are.

3 decades: to repeat an earlier post: wise-up!
10 decades this year on the nose, 12-23-1913, to be exact.
Some Christmas present that was, the gift that keeps on giving, and taking, taking, taking

And despite the faux-debunking by the faux economist, this comment by Gary North is appropriate:
http://teapartyeconomist.com/2013/01/25/why-is-apples-stick-in-free-fall-simple-rttm/

Chris T. January 29, 2013 at 2:22 am

Jill,
the litany agains corp. welfare, including the unnecessary things you list are all correct.

But:
“Many extreme Libertarians want …
So they pretend that those are the big expenses–”

Well, I don’t know WHAT are the biggest expenses, but the “welfare” programs you mention have NPV of the full stream of obligations of many TENS of TRILLIONS of dollars.
Estimates vary from 50 – well beyond 100T, depending on methodology.

Of course that money is not there and never will be, no matter how much EXTRA revenue gov’s can extract.

Only way to “pay” without nomnal default is inflate, inflate.

By the way:
Medicare “D” and “Obamacare”:
Both written BY the pharmaceutical and insurance industries, and passed with their full consent, and money of course.

As if these two worst corporate sectors of all NEVER have the common man;’s best interest at heart, there is NO way these programs will benefit anyone other than those corporate entities.

Where do you think that their $$ will be coming from?
And $$$ it will be.

So, the extreme libertarians MIGHT actually want what you state, but ONLY in the context of total reform, nay abolition, of this corrupt corporatocracy.

How about a livable SAVINGS rate?
One unimpeded by either inflation or income tax on savings’ proceeds?

Pipedream? Hardly!
We had just that up to about 1910.
Someone who saved 10% p.a., and had that compounded with REAL (including tax take) 5%, could retire very well after a 40 year working life.

Do the math:
the YIELD (still at 5%) on that saved and compounded
40-year nest egg is greater than a single year’s earnings.

Now:
0.29% if you’re lucky.
Real terms = neg. return, ON whose ficticous gain you still have to pay income tax.
Only loophole:
The <$10 no 1099-Int form thing.
Most people probably accrue so little interest on the typical savings account, that the interest doesn't get taxes.
LOL

Chris T. January 29, 2013 at 2:25 am

correct: NEVER should be EVER
5% p.a. was the long term yield on indeed secure bonds over the time frame I mention

Redwilldanaher January 29, 2013 at 3:08 am

Good luck with the dynamic bruo Chris, non sequitirs, talking points and evasion…

crusty January 29, 2013 at 3:22 pm

re GS Rick, i’d back up my truck at 37.62 monthly target, assuming Hugo Ch’Obama doesnt nationalize the whole financial shebang before then :)

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