Rick Ackerman

Much as I struggle to tune out the real world in order to trade solely on the instruction of my charts and technical indicators, the global picture both economically and geopolitically seems far too grim right now to think the broad averages are in the process of getting short-squeezed to new all-time highs. And yet, the violent price action shown in the chart has generated a 'mechanical' buy signal that is as textbook-perfect as such signals get. I won't go into the proprietary details of how these Hidden Pivot trades set up, but suffice it to say, the bullish opportunity here seems almost too promising to pass up. I missed the turn myself because I was too busy chortling over how the chimps who get paid to throw other people's hard-earned money at a very small handful of stocks finally seem to be getting their comeuppance. A Rally You Can Bank On But will they? Based purely on the chart, I'd say the odds of the E-Mini S&Ps getting to at least p=2993.75 (shown as a red line) are around 80 percent. There may be a less risky spot to get aboard belatedly, and I will signal it in the Trading Room if warranted. But my hunch is that it will be a rough ride no matter how we play it. For the moment, however, like many of you, I will watch with amazement if the broad averages do indeed take flight in damn-the-torpedoes fashion. If so, they will be nitro-powered by short-covering, the only kind of buying sufficiently energized and irrational to surmount a mile-high wall of worry. One need only have been short for an hour or two today, as I was, to feel the mounting desperation and buying power of incredulous bears, many of whom ended the

The late John Scarne, one of the world great experts on gambling, once wrote a treatise explaining why you can’t win at three-card monte. That’s the game where a grifter lays three playing cards on a makeshift table, instructing you to follow the queen. He turns them face-down, flipping the queen over now and then to make it easier for you to keep track. Sure enough, you pick the lady correctly a few times and win $20, $50, or even $100. "Hey, you’re pretty good at this," the con-man says. "Want to raise your bet to $200?" And so you do, eagerly, after noticing something you hadn’t spotted earlier — i.e., that the queen has a slightly bent corner that makes it easy to know where she is at all times. The "broad-tosser" flips the cards around a few more times with some deft flourishes that are impossible to follow. But what do you care? There’s the bent card in the middle, and so you jump on his offer to double your bet yet again, to $400. You plunk down two more benjamins, tap the middle card as your choice, only to discover when he turns it face-up, bent corner and all, that it is NOT the queen. You would need to have read Scarne’s treatise to understand how the grifter, on his final toss, deftly unbent the corner of the queen and bent the corner of one of the other two cards in a nanosecond. These days, the three-card monte artiste is more likely to turn up as a put-and-call trader taking the other side of sucker bets such as the one shown in the chart. Why risk getting busted on the street by some beat cop when securities exchanges make rules and create products that make it possible

We might have preferred for the last run-up to have exceeded the 29.96 peak recorded in July 2018. However, the pattern shown contains a valid impulse leg nevertheless and looks well capable of getting SIL to the 30.16 target. This seems very likely, given the way buyers popped through the 28.34 midpoint resistance today.  If SIL achieves it, the move would equate to a 37% rally from June's low. If GLD were to achieve an equivalent target a 145.16, the move would amount to a 21% rally over the same period. _______ UPDATE (Aug 7, 7:52 p.m. ET): Today's gap-up rally reversed from a dangerous spot, midway between p2 and D. The 30.16 target remains viable nonetheless, but the yellow warning flag is out. _______ UPDATE (Aug 12, 5:11 p.m.): A bold leap higher last week rescued SIL from jeopardy, putting the 30.16 target back in play. ______ UPDATE (Aug 13, 8:36 p.m.): Recent peaks missed the target by 21 cents. Try a 'mechanical' buy at 27.42, the green line, stop 26.50. _______ UPDATE (Aug 15, 9:16 p.m.): Cancel the trade, since it is taking SIL too long to come down to our bid.

Today's 110-point drop can be a little intimidating, but an ABC pattern is an ABC pattern, and its magnitude should have no bearing on our ability to target the move. (Recall the scene in Hoosiers when Gene Hackman measured the distance from the basketball court floor to the rim and found it to be 10 feet, even though the court itself was in a 10,000 seat arena.) Anyway, we should look for the selloff to continue to at least p=2767.88, but a breach would portend more slippage to as low as 2733.50 over the near term.  'Mechanical' and countertrend trades will perforce be riskier than usual in dollar terms, but the rules for executing them are the same. _______ UPDATE (Aug 6, 10:06 p.m.): DaBoyz recouped a third of the futures' recent losses with the help of some urgent short-covering. Keep in mind that nothing has changed to mitigate the tariff war, only that China has finally placed a bid under the yuan, setting off a bear-squeeze panic in the dead of night. Shorts are the only buyers here, so we'll stand aside and let them shoot holes in their feet with semiautomatic weapons.

Monday's refreshing 767-point plunge in the Dow has put the Fed on the spot sooner rather than later. Investors, the spoiled little brats, lost no time pricing in a 100% chance of a rate cut next month, but they may be trapping themselves in a lose-lose situation. A lot could happen between now and the Open Market Committee's August meeting. Suppose stocks rally, recovering half or more of what they've lost over the last four days? That might generate a feel-good mood on the surface, but also the deeper worry that a rate cut would be less likely. Since stock-market bulls have become more dependent on rate cuts, or at least the promise of them, than on actual good economic news, the bounce in stocks from these levels or perhaps lower could become self-limiting. Alternatively, if stocks continue to fall and the Dow is trading 2,000 points lower when the FOMC next meets, the mood on Wall Street might be too glum to make hay with a dovish announcement. Selloff  Was Kinda Lame For the moment, however, stocks are getting the crap pounded out of them in after-hours trading Monday night. Perhaps bears are embarrassed about their failure earlier in the day to deliver the haymaker to the Dow with a satisfying 1000-point kayo. But 767 points? How lame is that? Anyway, with tonight's promising selloff, they appear to be making amends. Dow Mini-futures have been down as much as 518 points, which if added to the losses they racked up during the regular session comes to a fairly impressive 1,285 points. Apple shares are saying the bottom is still a ways off, however. For an explanation as to why, click here for a Facebook presentation I put out Monday afternoon. You can watch it on Facebook without joining, but

The weak bounce into Friday's closed triggered an unappetizing 'counterintuitive' buy signal at 2942.25. We might have taken the trade if it had occurred earlier in the day, but given the stock market's persistent weakness of late, it seemed like a poor time to act boldly. As  a practical matter, moving the point 'A' low to the 2958.00 bottom of last Wednesday's plunge would have generated a less risky entry signal at 2927.75, and a trade that would have been exited before the bell for a theoretical profit of $700 per contract. In any event, that rally may have depleted buyers for the time being, implying we'll be better off starting the new week as spectators.

Shifting to the December contract yields a 1515.60 target equivalent to one at 1504.00 we'd been using for the June. The rally has been labored, implying there can be no guarantees the target will be reached. Regardless, the 'mechanical' buy signal from two weeks ago, and then again last Wednesday, was valid, even if only a handful of Rick's Picks subscribers reported getting aboard. Yet another pullback to the green line would offer a third opportunity to profit, but I won't recommend the trade because it is taking the futures too long to complete the big pattern's C-D leg. Prospects for a successful belated entry would improve, however, if the futures were to pull back from the secondary pivot (shown in the chart as a pink line at 1486.00). Stay tuned to the chat room if you care. _______ UPDATE (Aug 5, 8:59 p.m.): Bulls have got the futures up nearly $10 tonight. This usually sets up gold for a smackdown before the regular-session opening. But if something has indeed changed, don't be surprised if the good guys hold onto tonight's gains and even add a little. _______ UPDATE (Aug 6, 10:15 p.m.): The smackdown did happen -- around 1:00 a.m. -- but bulls recouped the loss intraday and are bludgeoning the bad guys Tuesday night with a so-far 18-point gain. The rally targets a minimum 1506.00, or 1511.80 if any higher. Let's hope the bad guys get bloodied badly enough that they'll stop disrespecting gold at hours of the day when they imagine it defenseless. 

Stocks plunged Friday for a third straight day, supposedly because of some Trump tweets calculated to goad China into a face-saving trade deal. There was good news on the jobs front, but it apparently wasn't good enough to counteract investors' nascent zeal for dumping shares. Gurus who routinely tune out the headlines in order to pay closer attention to technical indicators know better. For it is not "the news" that drives the markets, but the opposite -- i.e., the cyclically ordained ups and downs of stocks color our interpretation of the news. Indeed, no one would have cared much about Trump's latest trade-war salvo on Twitter if stocks had been moving higher last week. But they weren't. The broad averages were falling hard after cresting an inch from some technically derived targets that had been well disseminated in the trading world. Cycles master Peter Eliades' target, for one. We published a chart from him weeks ago, and again last week, that has been magically calling important tops and bottoms in the New York Composite Index since the bull market began in 2009. Here's a year's worth if you're skeptical. We put out a corresponding target of our own on July 23 that came within three ticks of nailing the recent 3029.50 top of the E-Mini S&Ps' 115-point dive last week. Although no guru can claim to understand the mysterious forces that make these targets work, work they do, often with amazing accuracy. Babson's Break Now watch what happens in the weeks and months ahead as stocks continue to fall. This will not merely color the news, but impel it. Specifically, it will force the hand of the Open Market Committee, which has tried to mask its spinelessness with faint protests of reluctance. This clumsy kabuki -- a literal enactment of

The Indoos have come down hard after rallying to within an inch of an important Hidden Pivot rally target at 28,463 three weeks ago.  There were two targets above it, but they should be put aside for now, until the correction -- assuming that's what it is -- has run its course. Elsewhere on the page, in The Morning Line, I've implied that the selloff could be the beginning of the end for the ten-year-old bull market. That is my gut feeling, but I will continue as always to let the charts speak for themselves.  For now, we'll need to see a rally and then a second leg down before we can draw useful conclusions about the health of the bull market.  A 0.618 correction of the massive rally leg begun in early June would bring the Dow down to 25,719. _______ UPDATE (Aug 5, 9:08 p.m.): Don't look now, but today's nasty plunge triggered a nice-looking 'mechanical' buy at 25,694, stop 24,680. You can spectate if you'd like, and that is what I am recommending. But if you interpolate the trade with real money using, say, DIA calls, be aware that the nominal theoretical risk for the cash index is a whopping 1038 points. A 'camouflage' set-up could provide a much cheaper way to get aboard, but you're on your own if that is the path you choose. _______ UPDATE (Aug 6, 9:52 p.m.): The mechanical trade worked exactly as it is supposed to work, getting us long at a time and price when most traders would have been frozen with fear. The position showed a theoretical profit of $1885 per contract at the intraday high and a current gain  of around $1500. No subscribers reported doing the trade, nor did I explicitly recommend it, so I am not