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200-Point Dow Rebound Looked Gutless

Rick Ackerman — Fri, 24 May 2013 05:06:22 +0000

Yesterday’s rally recouped a 200-point overnight selloff in the Dow, but because it was unpersuasive from a technical standpoint, we expect the week to end on a whimper at best. At worst, the selling could carry into next week, and if it persist so that shares fall on a Tuesday – something that has not occurred in more than four months – then we would view that as further evidence that Wednesday’s high was an important one. Regarding “weak technicals,” notice in the chart below how buyers of DJIA index futures failed to surpass even a single important peak on the hourly chart after devoting an entire night and day to the task. From our perspective this is telling, since, according to our Hidden Pivot Method of analysis, rallies destined for greatness, or even just goodness, must exceed a new peak on the hourly chart with each new thrust. Not this time, though, and that’s why we would classify yesterday’s rebound – all 200 points of it – as a bust. (...)
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© Rick Ackerman and www.rickackerman.com, 2013. | 11 comments |

Shorting the Top of Yesterday’s Wilding Spree

Rick Ackerman — Thu, 23 May 2013 02:52:39 +0000

Today’s list of trading “touts” includes tracking guidance for three new positions initiated yesterday. First was a short in the Diamonds (DIA) based on a 155.30 rally target that had been posted on May 8, when the DJIA itself was trading 600 points lower. Our ‘Hidden Pivot’ caught yesterday’s high within 16 cents, just in time to enjoy a subsequent 2% plunge to 152.40. The equivalent reversal in the Dow Industrials, which had risen sharply while Bernanke blathered away on Capitol Hill, amounted to 242 points, or 1.4%. In Johnson & Johnson, although we’d backed away from a short recommendation a while back, giving wide berth to the institutional lunatics who have binged on the stock since December, an 89.46 target was good enough to position subscribers within 53 cents of the 89.99 top. JNJ subsequently reversed down to 88.20, finishing the day at 88.43 on a weak bounce. Finally, subscribers reported buying GLD August 160 calls for 0.21, a penny off the intraday low, based on a 131.83 correction target. The target had been aired intraday in the chat room in response to a timely query.(...)
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Why Even Talk of Tightening Could Be Fatal

Rick Ackerman — Wed, 22 May 2013 01:39:51 +0000

Repeat after us: There is zero chance the Fed is going to tighten…zero chance…zero chance…zero chance. We’ve made this point so often here that it is has practically become a mantra at Rick’s Picks. It has also been amplified, refracted and explicated – though not hotly debated – in our forum, where there are apparently few who expect any change in Fed policy. As how could there be? For even the slightest hint that easing is about to taper off, let alone end, would bring on the Second Great Depression faster than you can say “Hooverville!” The prospect of hard times might have superficial appeal, since the legacy of the 1930s with respect to art, architecture, cinema, public works, automobiles and other monuments to creativity and human endeavor is quite impressive. But the downside is that the illusion of prosperity would be gone, and with it much false wealth that could never withstand the discipline of unrigged markets. Also gone – overnight – would be the global banking system, buttressed as it is by a nearly quadrillion dollar edifice of hyper-leveraged derivatives. Subject that sum to even a few more basis points of vig and you’re talking about trillions of dollars that would have to be coughed up in real money. Fat chance.(...)
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Obama Is No Richard Nixon

Rick Ackerman — Mon, 20 May 2013 03:55:43 +0000

[Breaking news: I knew we would be richly entertained by Obamagate, but who could have imagined the slapstick would start so soon? In fact, we now know that the IRS and certain unnamed "White House aides" sat on the scandal for several weeks while they mulled ways to spin it. In the meantime -- and this is where the Liar-in-Chief has really kicked off the show -- Obama maintains that he only found out about the IRS witch-hunt against Conservative groups when he read about it in the papers. And this just in: The IRS-official-in-charge says she will plead the Fifth rather than testify before Congress. Is this spectacle going to be fun, or what! RA]

With new revelations of scandal surfacing almost daily, there are apt comparisons to Watergate, of course. But say this for Richard Nixon: at his worst, the man’s political ambitions never went much beyond stealing an election and settling an old score with the press. The political career of Barack Obama, on the other hand, has been animated by an overweening vision that seeks nothing less than the further enlargement of Big Government so that even the most ardent disciples of the New Deal might someday stand in awe of His achievement. But would they? FDR at least had a Keynesian excuse for ramping up fiscal stimulus and expanding Washington’s reach, since the U.S. had been wallowing in depression for more than a decade. We’ll concede that Obama was dealt a(...)
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1600-Point Dow Surge Looking Increasingly Likely

Rick Ackerman — Fri, 17 May 2013 08:16:02 +0000

Based on the S&P 500’s brash behavior lately, effortlessly blowing past Hidden Pivot resistance points major and minor, we wrote here recently that the fuse could be lit for a 130-point explosion. That would be equivalent to a Dow move of about 1000 points – a spectacular surge, especially if it were to occur over a period of not months but weeks. However, a coldly dispassionate look at the Dow’s monthly chart bolsters the case for an even bigger rally – a 1600-point moon shot. That would bring the Dow to exactly 16810, and although the target promises to be a great place to fade buyers, we’re not going to risk the farm on it. Nor do we plan on wasting our breath cursing bulls every inch of the way up. If they’re intent on pushing the blue chip average to nearly 17000, there’s no reason to fight the tape, especially since a pile of money could be made betting the pass line. (...)
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Bull Market Getting a Little Freakish

Rick Ackerman — Wed, 15 May 2013 22:01:31 +0000

[Buyers on Wednesday made short work of the 1647 target noted below, pushing the futures as high as 1660. This implies that a further rally of 130 points -- equivalent to more than 1000 Dow points -- is likely gestating. RA]

The 1647.50 rally target shown in the chart below looked until recently like a good bet to contain the bullish stampede, at least for a while. As of early Wednesday morning, however, it seemed to be giving way. Even though it has been exceeded so far by just 2.50 points, that’s enough to imply that the resistance has been fatally compromised, given the clarity of the technical pattern that produced it. If this “Hidden Pivot” is in fact easily brushed aside, it would be yet one more casualty of a bull market that in its fifth year is growing more relentless by the day. (...)
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Microsoft’s Slow Death

Rick Ackerman — Mon, 13 May 2013 22:01:34 +0000

I spent three hours online Friday with the Geek Squad’s best and brightest, attempting without success to fix two seemingly minor problems in Microsoft Outlook. The first is that Outlook has been forgetting the password every time it checks my e-mail server. This problem has been intermittent over the more than ten years I’ve used Outlook, a nettlesome glitch that has survived all versions, updates and security patches. Although there are thousands of web pages that purport to deal with the issue, and presumably tens of millions of PC users who have sought to resolve it, I’ve yet to find a fix. Although Outlook on a bad day duns users with endless “Remember this password?” prompts, it would be easier to teach an Irish Setter to remember the date of your wedding anniversary. Particularly maddening is that the prompts continue to pop up every three seconds, even when one keeps instructing Outlook to “Remember this password”. My other Outlook problem is that a feature designed to test the e-mail account settings has stopped working. Activate a test and it simply locks up Outlook so that the program becomes unusable. The only way to get past this bug – until the next time — is to reboot the computer.(...)
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Free Money for the Masses

Rick Ackerman — Thu, 09 May 2013 22:01:23 +0000

We wrote here recently that Wall Street seems to be revving up for The Mother of All Blowoffs. The banks are evidently trying to stoke a mania of their own, judging from the mail we get each day. A typical batch now includes no fewer than three or four teaser offers to borrow money for practically nothing. Just today we heard from Wells Fargo (“Enjoy 0% APR on balance transfers for 15 months…”); Discovery (“Get a fresh start on your home loan. Refinance and lock into a rate as low as 3.09% APR today!”); AT&T Universal Card (“0% Promotional APR on transferred balances until 6/01/2014”); and Chase Freedom (two fabulous offers: “0% promotional APR through your billing cycle that ends in 08/2014’; or, “1.74% promotional APR through your billing cycle that ends in 01/2015”). And that’s just a single day’s worth. Add up all of the offers we’ve received in the last month and they tally more than a half-a-million dollars’ worth of instant borrowing power – all at interest rates ranging from zero to 3.09%.(...)
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‘Full Speed Ahead!’ on Wall Street

Rick Ackerman — Wed, 08 May 2013 22:01:53 +0000

Permabears who have waited patiently for The Mother of All Corrections should take encouragement from the blithe demeanor of yesterday’s 87-point rally in the Dow. It left the Indoos sitting above 15,000 for the first time and the network anchors oohing and aahing as though they understood what it means. Our take is that the little guy has not only returned, but that he is ready to party. And what better signal could there be that the end is nigh? With yields on fixed-incomes at historical lows, there was nowhere else to go for the mullet-topped investor with a small wad of cash. Nor can you blame him for taking the plunge so belatedly, even if out of frustration. After all, the blue chip average had gained nearly 130% percent since March 2009 without a single correction worthy of the name. (...)
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Thoughts on Bubbles and the Slippery Slope

Rick Ackerman — Mon, 06 May 2013 22:01:37 +0000

[Our friend Doug Behnfield, the savviest financial advisor we know, says stocks are extremely vulnerable now but that long-term bonds, far from being in a bubble, are about to explode and send yields below two percent. He explains why in the letter below. It went out to clients in mid-April, and although the S&Ps have since continued their surreal rise into record territory, little else has changed. RA]

In many ways, 2013 has started off like 2012. Long term Treasury bond rates started 2012 at 2.9% and spiked to 3.5% by April 19. That was the peak and they finished the year practically unchanged. We began this year with the yield at 2.95% and by April 11 they hit 3.28%. Rates have already tumbled to 2.84%. The S&P500 rose 12% in Q1 2012, peaking on April 2 and making practically no progress for the rest of the year. This year the S&P 500 rose 10% in Q1 and peaked (so far) on April 11. At this time last year my most important question from an investment standpoint was: Is the back up in rates a mere correction or a slippery slope? Is the almost unanimous opinion that the Great Bull Market in Bonds is over correct? A secondary (and closely related) question was: What is the outlook for the economy and the stock market? Apparently, no matter how much things change, the questions remain the same.(...)
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