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The Morning Line

Melt-Up Scenario Gaining Converts

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The melt-up story is getting increasing play — and who’s to deny it? Even bulls seem to find it a little scary, though, since, after the melt-up, what then? I don’t know which prognosticator in the guru fever swamp is hyping the highest target for the Dow Industrials, but I’m on record below with my own at 25680.  (I could stretch that to 26,940 in a pinch, incidentally, but I don’t want to play my hole card just yet.)  The 25680 target is a Hidden Pivot that lies exactly 2352  points above Friday’s close. Even though there must be much higher guesses than that, mine will at least keep me in the game for the next year or so. I’m hoping we’re all wrong, since it will be very difficult to suspend disbelief as the broad averages climb to insane heights while the real economy remains, paradoxically, all too sane.

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$GCZ17 – December Gold (Last:1283.10)

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$AMZN – Amazon (Last:966.30)

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AMZN is nearing escape velocity from what had begun to look like a bearish head-and-shoulders pattern going back to mid-April. The stock tripped a theoretical ‘buy’ signal last week when it touched the green line (click on inset) and is now no worse than an even-odds bet to reach the red one, a midpoint Hidden Pivot at 1057.80 that’s tied to a target at 1182.70 nearly a hundred points above the old record high. We’ll use 1057.80 as our minimum upside projection for now, implying the broad averages will be moving higher in sympathy with the shares of the world’s largest retailer. _________ UPDATE (Oct 22, 6:30 p.m.): The stock looked like hell last week, but DaBoyz didn’t need it as they drove just about everything else skyward in a take-no-prisoners short squeeze. AMZN ended the week with an about-to-fail ‘counterintuitive’ buy signal, suggesting it wants to roll over. If so, a print to the downside exceeding 980.10 would energize sellers._______ UPDATE (Oct 23, 5:18 p.m.): The stock dove as anticipated (see above), somewhat exceeding a 963.36 correction target on the hourly chart (a=1010.90 on 10/18). We’ll remain on the sidelines for now, until DaBoyz have manipulated the stock low enough to go bargain hunting again. The head-and-shoulders pattern that had attracted so much interest has been stretched way out-of-shape and must now be regarded as an intermediate-term consolidation.

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$DIA – Dow Industrials ETF (Last:233.13)

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NQZ17 – Dec E-Mini Naz (Last:6111.00)

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$ESZ17 – Dec E-Mini S&P (Last:2574.00)

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For eight-and-a-half years, all-but-insatiable buyers have munched through Hidden Pivot targets major and minor, trashing along the way every historically compelling theoretical obstacle that technical analysts could strew in their path. Most recently, NYSE stocks came within a hair last week of triggering Peter Eliades’ ‘Sign of the Bear,’ an  indicator with a perfect, seven-for-seven track record forecasting major tops. Instead, bulls rallied so strongly to end the week that, for all we know, the rarely flashed Sign of the Bear has been put in a coma for years to come. With the foregoing in mind, today’s E-Mini S&P chart posits a very major target 2868.50 that leaves plenty of room for the bull market to continue rampaging its way to a fitting and proper end. If the target is reached, the Dow Industrial, which settled on Friday at 23,328, would be trading more than 2300 points higher, at around 25,680.  Keep in mind that a nasty selloff to 2335.50 (the red line in the chart) would generate a ‘mechanical’ BUY signal, as would an even nastier fall to 2069.00 (shown in the chart as a green line).  Permabears be warned: If you are waiting for the stock market to fall apart, you may have a long wait.

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$IBM – IBM Corp. (Last:159.53)

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Big Blue’s impressive leap on Wednesday recalls the scene in The Natural where Roy Hobbs, putting a spectacular end to deep and prolonged batting slump, literally knocks the cover off the ball to give the Knights a walk-off victory. In IBM’s case, the stock jumped $15, to an intraday high at 161.23, on news that it had beaten estimates by a whopping two cents per share. More important was that the company foresees earnings growth following a five-year slog of declining sales. From a technical standpoint, the gap above the green line (click on inset) all but guarantees more upside to at least 172.08, the midpoint Hidden Pivot of a large, bullish pattern with the potential to get the stock to 205.02. First things first, though.  The stock should be traded with a bullish bias until such time as it hits 172.08. If it pulls back to the green line in a way that meets our criteria for a ‘mechanical’ trade, I’ll signal it in the chat room and via an intraday alert.  Be sure to check “Email Notifications” on your account page if you want to receive these timely guidances.

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$NFLX – Netflix (Last:202.68)

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+VXX – S&P VIX Short-Term (Last:34.65)

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Subscribers staked out call positions on Friday, playing for a bounce from an important-looking Hidden Pivot target at 35.48.  Although we’ve been waiting patiently for weeks for VXX to fall to that number, assiduously avoiding “averaging down” with our fingers crossed, the bounce we were expecting failed to materialize. Despite this, I suggested taking home some calls over the weekend, since, as I half-joked, the Yellowstone caldera could blow, launching VXX to the moon. My recommendation for Monday is to exit the calls on the opening unless index futures are trading significantly lower ahead of the bell, suggesting a market selloff in the offing.

The fact that so very clear and compelling a target as the one at 35.48 was exceeded at all, let alone by a whopping 0.45 points the first time it was touched, strongly implies that lower prices are coming, perhaps significantly lower. Specifically, and assuming the stock market has not crashed Sunday night, I am shifting my gaze to the 26.32 target shown.  That such hitherto unfathomable depths will be achieved is difficult for me to imagine, since it implies that the S&Ps are about to ratchet much higher, extending their hyperbullish parabola for yet another four to six weeks. Yes, there’s always the chance that the secondary pivot at 33.81 (see inset) will turn the tide. But the new pattern looks too pretty for us to avoid the conclusion that VXX will eventually fall to an all-but-unthinkable 26.32.  As is our custom, we will take no position in the interim, since doing so only at major Hidden Pivot supports has saved us a lot of stress — and money — as VXX has continued to carve out historical new lows routinely for months.______ UPDATE (Oct 16, 10:52 p.m. ED): Yes, I know, I said I would recommend bottom-fishing only at major targets. But this one looks so juicy that I’m going to suggest buying a couple of Oct 20 calls at the 35 strike if VXX gets within 0.04 of the 34.26 target.  Stop yourself out if it trades below 34.20, since this support is going to work precisely if at all. _______ UPDATE (Oct 17, 7:32 p.m.): Just one change: Buy Oct 20 options at the 34.50 strike. We’re not leaving ourselves much time, so don’t get in any deeper than you can afford to lose without pain. I am not suggesting going out to Oct 27 because the target that we’re bottom-fishing is not important enough to warrant the extra week._______ UPDATE (Oct 18, 9:27 p.m.): Cancel the order, since I don’t fancy having our patience tested any more than it has been tested already, especially for a trade that was no big deal to begin with.

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$+DJIA – Dow Industrial Average (Last:23163)

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$AAPL – Apple Computer (Last:155.97)

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$+TLT – Lehman Bond ETF (Last:124.50)

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Tuesday, November 7, 2017

The consistent accuracy of Rick Ackerman’s forecasts is well known in the trading world, where his Hidden Pivot Method has achieved cult status. Rick’s proprietary trading/forecasting system is easy to learn, probably because he majored in English, not rocket science. Just one simple but powerful trick -- managing the risk of an ongoing trade with stop-losses based on ‘impulse legs’ – can be grasped in three minutes and put to profitable use immediately. Quite a few of his students will tell you that using ‘impulsive stops’ has paid for the course many times over.

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