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The Morning Line

Believing Our Lying Eyes

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Elsewhere on the home page, I’ve made much of the fact that the Dow Industrials mechanically tripped a ‘buy’ signal last week. This seems incredible, given the blowback U.S. stocks are getting from a weakening global economy and a domestic downturn that threatens to turn boom to bust in housing and autos. Putting all that aside and focusing simply on the visual picture shown in the chart — the most recent phase of the long bull market — what do you see?  Personally, I have little difficulty extending an imaginary rally to the 26,996 target. Harder to envision — and this is speaking from a purely instinctual point of view rather than a technical one — would be a serious slide down to 23,000 and beyond. I’ll remain open to any and all possibilities nonetheless, relying solely on impulse legs to instruct me concerning the mood of investors, and of America.

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Touts

$CLZ18 – December Crude (Last:57.03)

EST

Crude’s price fluctuations are a circus act that I’ve watched with diminishing interest over the years. It’s easy enough to predict short-term swings with sufficient accuracy to make money at it, as Rick’s Picks subscribers who traded NYMEX futures and energy ETFs yesterday would be happy to attest. But paying diligent attention to the constant barrage of supply-and-demand spin that drives the big moves could make a guru’s head spin. On some days, the Saudi princes seem out-of-sync with their own PR flacks, promising plenty of oil when their gallimaufry of useful idiots are spreading a ‘tightening’ story like some strain of flu.

The China Factor

I’ve added this oil tout to today’s list nonetheless because I was curious about where prices might actually be headed. Clearly, not to the 2.06 target shown in the chart. But it’s still a good number to use to get the trend right, suggesting as it does that prices will continue to be pulled sharply lower by global forces that are only now becoming recognized. Near the top of the list would be the threat of a global slowdown. It has gotten a good start from China, whose already-serious recession has become an important factor in crude’s dive since early October. Prices peaked around $77 a barrel, but they were at $55.40 when the regular session ended on Tuesday. This equates to a decline of 28%. We shouldn’t be surprised to see quotes go even lower in the weeks and months ahead, possibly to the $30.25 ‘secondary Hidden Pivot’ shown in the chart. If that were to occur we could conceivably witness that rarest of miracles — i.e., lower prices at the pump. But I wouldn’t hold my breath.  We should also allow for the remote possibility that forces unknown — war in the Middle East? — could reverse the current decline, pushing a barrel to as high as $90. That’s in the chart as well, albeit as an outlier tied to the upward correction from around $30 begun nearly two years ago._______ UPDATE (Nov 15): The January contract has an unfulfilled downside target at 56.35 that will remain viable as long as 57.18 is not exceeded to the upside first._______ UPDATE (Nov 18, 5:08 p.m.): The futures ratcheted tediously higher last week without exceeding any external peaks on the hourly chart. This left a bearish picture unchanged and an intraday low that came within 12 cents of the 56.35 target proffered above. Now, if the January contract falls anew, decisively exceeding the 55.91 midpoint Hidden Pivot support shown in this chart, it would put the pattern’s 53.66 target in play.

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$ESZ18 – DEC E-Mini S&P (Last:2742.25)

EST

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$HUI – Gold Bugs Index (Last:148.52)

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$AAPL – Apple Computer (Last:189.11)

EST

Get AAPL right and your big-picture forecast for the stock market will never go far wrong. Apple is the World’s Most Valuable Company, after all, and therefore a must-own for every portfolio manager who wants to keep his or her job. That’s why it’s the only stock we need follow in order to know exactly what’s on institutional investors’ tiny, fevered minds. So how have our AAPL predictions fared? On Wednesday the stock plummeted yet again, bottoming just six cents from the 185.87 target hung out here two nights earlier when the stock was $12 higher. It turns out that I made a slight error when I drew the target pattern, and that the correct coordinates would have nailed the actual 185.93 low to-the-penny.

Okay, so you’re probably wondering what’s coming next. A fair question. First of all, there is still room for a major bounce from slightly lower — from 185.12, to be exact. This Hidden Pivot support differs from the one at 185.93 because it is based on highs and lows that occurred during the night session. If the support fails, it would increase the odds that the bull market begun in 2009 is over. What would constitute a failure? Considering the delicate precision of the pattern used to calculate the target, an overshoot of more than $1.00 (or so), or a two-day close beneath 185.12, would probably prove fatal.  That’s why we’ll be watching closely to see whether the so-far feeble rally from the initial target gets legs. If it exceeds 197.18 without going significantly lower first, bulls could breathe a mild sigh of relief._______ UPDATE (Nov 19, 9:31 a.m. ET): AAPL is getting whacked ahead of the opening bell because of a reported slowdown in iPhone sales. As the stock continues to fall, keep in mind what I wrote here earlier: The company makes nearly all of its money selling very pricey hardware. As such, Apple shares are particularly vulnerable to an economic downturn.

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$AMZN – Amazon (Last:1593.59)

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$GCZ18 – December Gold (Last:1222.00)

EST

Gold fell a further $13 on Friday, pausing just a few ticks above the 1206.70 target I’d sent out the night before. I say that the futures have merely paused because the void beneath that low looks like it wants to be filled. That would imply renewed weakness in the days or perhaps weeks ahead to at least 1190.50, the midpoint Hidden Pivot support shown in the chart. Notice that the worst case over the next several weeks would be 1134.90, a crystal-clear target that lies 6% below. A decline of that magnitude would be discouraging, but it would still be a far cry from the sub-$1000 prices that some bullion bears have long predicted. A half-hearted sell-off would reflect the reality that weakness since 2011, when gold’s price hit a record high $1911, has been merely corrective of a long-term bull market begun in 2008 from $680.

Sellers Unable to Deliver a Coup de Grace

As persistent and vexatious as sellers have been since 2011, they have lacked the power to deliver a coup de grace. While it’s conceivable that gold could eventually fall below $1000, there are no strong indications on the long-term chart that this is likely.  Indeed, price action since early 2016 has been bullish and could support a push to as high as 1452.60. This would be in the context of a decade-long bull market that could ultimately reach 2278.20. Click here to see the picture. _______ UPDATE (Nov 14, 9:34 p.m.): A sharp push past 1225.40 would re-energize bulls for a possible shot at 1254.10. Here’s the chart_______UPDATE (Nov 15, 7:30 p.m.): This pattern looks extremely likely to work, meaning that a decisive stab past p=1216.30 will put December Gold on course for a run-up to exactly 1225.50. If so, that would set up a correction and then a further push past 1225.40.________ UPDATE (Nov 16): Subscribers reported making hay Friday when December Gold surged to within 50 cents of the 1225.50 target given in my last update. The pullback so far has been shallow, suggesting buyers are consolidating for another push. If it gets past the 1228.50 ‘external’ peak shown in this chart, that would re-energize bulls for yet more marauding.

This is a free forecast (Tout) by Rick. Get a free trial of Rick’s Picks to see full member content.

$TYX.X – 30-Year T-Bond Rate (Last:3.45%)

EST

Anyone hoping Treasury rates will ease, cutting stock-market bulls some slack, must first reckon with the chart shown (see inset). It implies that a significant rise in yields on the 30-Year Bond is coming, and that they will hit 3.59% before borrowers get any relief. If this occurs as appears likely, 30-year mortgages will be pushing above 5%, causing an already shaky housing sector to implode, along with the auto-leasing business. A key resistance to watch sits at 3.44%. That’s a Hidden Pivot rally target of lesser degree than the one noted above, and if it gives way easily there should be little doubt that the long bond is on its way to at least 3.59%. Some may point out that the U.S. economy has survived much higher rates; however, that should come as scant comfort, since rates have never risen so sharply after having been artificially held so low for so long. As to Fed hubris that would have us believe the economy is strong enough to weather higher interest rates, the banksters will discover otherwise — discover that most of the supposed ‘strength’ has come from stock-market and real-estate valuations pumped to the sky by easy-credit policies._______ UPDATE (Nov 3): TYX blew past 3.44% on Friday, further shortening the odds that the 3.59% target given above will be reached.

This is a free forecast (Tout) by Rick. Get a free trial of Rick’s Picks to see full member content.

$DXY – NYBOT Dollar Index (Last:96.64)

EST

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$BRTI – CME Bitcoin Index (Last:5442.75)

EST

Bloomberg news is out with a breathless dispatch tonight that suggests digital currencies have bottomed. If so, I can find no compelling evidence of it in the charts. Their expert is a guy named Michael Novogratz, a former Goldman Sachs partner who likes the current look of Bloomberg’s Galaxy Crypto Index. It measures the performance of the largest cryptocurrencies versus the dollar and was compiled jointly in May by Bloomberg and Novogratz’s investment fund, Galaxy Investment Partners. I use the CME’s Bitcoin Index (Symbol: BRTI) myself, and it looks brain-dead to me. I would turn quite bullish if BRTI were to thrust above the 8594.57 peak labeled in the chart (see inset), but until such time as that happens, I’m inclined to think it will dip first to the 4396.32 target shown in the chart before warranting our serious attention. ________ UPDATE (Nov 16): My dour outlook is about to give way to a new reality. For my reasoning, check out the commentary at the top of this page,  “Why a Hard-Core Bitcoin Bear Is About to Turn Bullish.”

This is a free forecast (Tout) by Rick. Get a free trial of Rick’s Picks to see full member content.

TNX.X – 10-Year Note Rate (Last:3.225%)

EST

J.P. Morgan Chase CEO Jamie Dimon recently raised his forecast for rates on the Ten-Year Note, currently trading just below 3%, to 5%. He’d predicted a rally to 4% back in May but now thinks the bull market in stocks could run for another two or three years, putting additional upward pressure on long-term yields. For its part, Rick’s Picks has told subscribers to expect a push soon above the 3.11% peak recorded back in May — a peak we had foreseen five months earlier when the Ten-Year Note was paying around 2.35%. We offered no specific target at the time but will now: 3.32%, as shown in today’s chart (see inset).

It’s hard to square Dimon’s interest-rate forecast with the notion that the bull market in stocks has a few more years to run. Our gut feeling is that anything above 3.25% will asphyxiate the U.S. economy and send it into recession. The housing sector is already in a sharp downturn as reported here last week., and even a small turn of the interest-rate screw could asphyxiate it, along with auto leases. This would be a double whammy for the stock market, since mortgage rates have been held for a long time at levels that allow Americans to buy more home than they can afford.  Similarly, car leases are structured so that we can drive more car than we can afford. The silver lining here turns out to be an unappealing scenario:  rates go no higher than 3.50-4.00, but only because the U.S. economy has nosedived. _______ UPDATE (August 19, 5:07 p.m.): The uptrend stalled at 3.106% and in the three weeks since has receded to the middle of the 2.72% – 3.11% range in which rates have fluctuated for the last six months. My bias is neutral for now. Here’s an updated chart. ______ UPDATE (Sep 24, 10:46 p.m.): Rates on the Ten-Year Note are breaking out following a four-month consolidation. My minimum upside projection, shown in this chart, is 3.157%, but an easy move past that Hidden Pivot would imply yields are headed still higher._______ UPDATE (Oct 3, 8:28 p.m.): The uptrend impaled our 3.157% target, opening a path to the 3.319% Hidden Pivot resistance of an even bigger pattern. When it gets there — and it will — the February 2011 peak at 3.744% will beckon a test. Were the rally to fail at that level, the financial system would still be under considerable stress at that point to pay the going rate on debt._______ UPDATE (October 7, 5:53 p.m.): Two big thrusts last week have shortened the path to the 3.319% target. If it’s decisively exceeded, look for more upside to at least 3.469%, the Hidden Pivot resistance shown in this chart.

This is a free forecast (Tout) by Rick. Get a free trial of Rick’s Picks to see full member content.


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Tuesday, November 13, 2018

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.

Another secret Rick will share with you, “camouflage trading,” takes more time to master, but once you get the hang of it trading will never be the same. The technique entails identifying ultra-low-risk trade set-ups on, say, the one-minute bar chart, and then initiating trades in places where competition tends to be thin.

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