Rick Ackerman

Fed Chief Powell supposedly has strong support inside Congress to fend off Trump's calls for lower interest rates. How do we know this? Well, there was this headline atop the lead story in Wednesday's Wall Street Journal: 'Powell's Support Inside Congress Is Deep'. And here was the sub-hed, in case you missed the point: 'Lawmakers on both sides say they would oppose any bid to oust the Fed chairman'. Perhaps it was just bad timing, but the financial world's newspaper of record has rarely looked more stupid. Oust Powell??  Give us a break!  Less than a year into the job, the guy is looking like a potential hero in the promiscuous borrower/lender Hall of Fame, a worthy successor to 'Easy Al' Greenspan.  For at the moment readers were savoring the WSJ story with their morning coffee, Powell was on Capitol Hill, telling Trump and the loose-credit rabble exactly what they wanted to hear -- i.e., that money can be made to grow on trees, and that he will be more than happy to make this happen later in the month, when the FOMC next meets. On this news, U.S. stocks and gold shot higher, yields fell, and on Wall Street, at least, all seemed right with the world. If there is any surprise in this, it is Powell's obligingly donning the Fed chairman's traditional knee pads without making any of the usual face-saving obfuscations. You'd think he would at least feign token resistance, since he knows how badly he is being played by Trump and Wall Street. For make no mistake, by putting the U.S. on a likely course toward negative interest rates, he has one-upped even his philosophical mentor, Easy Al. Sucking up to monetary doves and giving them a whiff of cocaine as the broad stock averages flirt

Well, maybe not always, but it does work most of the time. I’m referring to the rABC, or reverse ABC, trade. We’ve been looking at these set-ups in various time frames, discovering that they produce win so consistently that we needn’t pay obsessive attention to the 1-to-3 risk:reward relationship that has been a mainstay of the Hidden Pivot Method. In this lesson, we focused on scalping rather than swing trading. If your execution skills are up to snuff, you can grind out $150 winners all day long with the rABC. Incidentally, the Boeing short initiated toward the end of the hour went on to hit its ‘D’ target, producing a theoretical profit of as much as $400 when covered 54 minutes later.

The chart shows the New York Composite Index going back to the start of the bull market in 2009. It is from our friend Peter Eliades, editor of Stockmarket Cycles, who notes that the high achieved on July 5 precisely reached a trendline that has held important implications for the aging bull throughout its history. The two red circles represent the trendline's anchor points which, in Peter's word, 'mystically' define the line's slope. They occurred, respectively, at the intraday lows of August 18, 2017, and June 28, 2018. Targets Well Above Unlike the Dow Industrials, the Nasdaq 100 and the S&P 500, the NY Composite Index has yet to hit a new record high. However, a decisive move past the trendline would greatly increase the odds of this happening. Like Rick's Picks, Peter has unfulfilled targets well above these levels in the S&Ps. His lie in the range 3200-3400, ours at 3095. The S&P cash is currently trading for around 2979. As long as these targets remain viable, and regardless of whether stocks weaken over the near term, there is little reason to think they will not eventually be achieved.

Investors are showing acute symptoms of Mad Sheep’s Disease, so obsessed are they with Fed monetary policy. To judge from the stock market’s weakness on Monday, Wall Street is now 100% dependent on stimulus from the Fed, or at least regular hints of it, to keep the ten-year-old bull market going. Consider Friday’s report that the U.S. economy added 224,000 jobs in June. Although that is well below peak levels, it suggests that hiring is continuing at a healthy pace even as the economy cools. Ordinarily that sort of news might be expected to hold stocks buoyant. In this case, however, it produced only a knee-jerk selloff because it ostensibly reduced the odds of Fed easing before August. Kowtowing to Wall Street’s Greed Recently, even the most dovish banksters have struggled to concoct a plausible reason for loosening, given that the stock market is trading near record highs. But the easy-money mob has grown so shrill and persistent lately that Powell was ready to gun the supply of funny money for no good reason. Now with hiring strong and steady, the Fed must feel positively embarrassed about having to kowtow to Wall Street’s naked greed. (Don't worry, all you sheeples, that won't stop them from doing the wrong thing.) In the meantime, we should expect the stock market to act out the terminally afflicted logic of chronic Fed-itis. To borrow Ricardo Montalban’s famous phrase, as far as investors are concerned, it is better to look bad than feel good.

Europe took competition to a new level last week in the global currency-devaluation olympiad. Nominating the politically-minded IMF chief Christine Lagarde rather than a blue-blooded financier to run the ECB is akin to making Trump chairman of the Federal Reserve. No longer can we pretend that the staid protocols of old-school banking still obtain in the financial realm. Instead, there is a strong whiff of desperation as Europe readies a last-ditch attempt to stimulate itself out of a liquidity trap with the ECB's deposit rate already at minus 0.4%. No one could possibly believe that bringing rates down even deeper into negative territory will have a lasting impact on the intractable unemployment, anemic economic growth and coming deflation that threaten to snuff prosperity in the eurozone. The alternative is to turn the region into a fiscal-spending free-for-all by lending promiscuously to the likes of Italy, Greece and Spain. Presumably, this would come with Germany's reluctant assent and the feckless instruction, "Go to town, guys!" Powell's Dilemma This is unfortunate for Fed Chairman Powell and his nascent plan to propagate yet another QE blowout. He's practically had his arm twisted off by easy-money advocates and, having donned the knee pads that came with the job, is ready to do their bidding. But now, try as he might, it will be difficult to force the dollar lower. He'll have to settle for mere asset inflation in the U.S., as though there weren't enough of that already, and scant hope of shrinking the trade deficit. Not that anyone will much care.  Higher share prices will continue to obfuscate a multitude of sins, allowing Wall Street to revel for yet more weeks/months/years until the deepening economic woes of our trading partners, including China, eventually hit home.

August Gold pulled a Pearl Harbor on bears and skeptics Tuesday, reversing early morning weakness with a surprisingly sharp rally. I'd expected another two weeks of corrective action myself after bullion's impressive run-up in June. However, the chart (inset) shows the futures to be bound most immediately for at least 1446.90. If so, that would be a new recovery high and an encouraging sign that even bigger things lie ahead. Specifically, a 1504.00 target would be in play if the August contract closes for two consecutive days above 1444.40 or trades more than $12 above that price intraday. Please note as well that a $150 plunge from around 1460 would not be the disaster it might seem at the time; rather, it would set up a textbook buying opportunity according to the proprietary rules Rick's Picks subscribers follow for 'mechanical' trades. ______ UPDATE (Jul 7, 5:05 p.m. ET): Last week's surge peaked just shy of the 1444.40 midpoint resistance, implying that bulls have run out of steam for the moment. Here's a chart that shows it. The futures will still need to close above 1440,.00 for two straight days, or trade more than $12 above this Hidden Pivot intraday, in order to clinch a follow-through to 1504.00. In the meantime, there is no 'mechanical buy' set-up to use on the daily chart, since the rally topped well below our sweet spot before the pullback.

Bulls will have seasonality strongly on their side ahead of what will likely be a four-day Independence Day hiatus for most Americans. (Thursday is the best day of the week for the Fourth of July to occur, wouldn't you agree?) Buying interest on Wall Street has been slack lately, but there seem to be few sellers around to resist the stock market's lazy drift higher. Rick's Picks will resume regular coverage with fresh trading touts and commentary Sunday night, updating Friday's front page only if the markets do something really crazy. Have a great Fourth!

Stocks remained in the grip of a low-grade euphoria Monday, lightened by what is being referred to in the news as a 'thaw' in trade relations between the U.S. and China. No one expected much to happen on the trade front, and nothing much did -- other, perhaps, than a weekend during which there was no appreciable escalation in the tariff war. In this euphoric phase, stocks have generally wafted higher whenever the news was not as bad as it might have been. Tesla, for instance, appears to have sold around 93,000 cars in Q1, a number marginally sufficient to give bears pause about increasing the size of their short positions. They took a brutal beating in June, but it seems predictable the stock will finally turn down with a vengeance when the last Tesla naysayer has been drawn-and-quartered. His epitaph will read: "See, I was right!" And so he eventually will be, since the auto manufacturer's profit margins are tacking into a perfect storm that will feature competition for the first time from other high-end car makers; a phase-out by 2020 of a tax credit that as recently as Q4 2018 provided a $7500 subsidy to buyers; and a sales mix that will start skewing more and more toward less expensive Tesla models. Honor Among Thieves It is Boeing, however, that has shown itself to be inured to all manner of bad news, even sensationally bad new. In this respect, the aircraft manufacturer's shares are in a class by themselves. It's not merely that the company is too big to fail, or that when it sells passenger jets to foreign buyers, the transactions have more impact on America's trade deficit than ten thousand farmers. No, it is simply that Boeing shares are so firmly entrenched in exceedingly strong hands

We can use the bullish pattern shown, with a 2963.38 midpoint resistance and a 3012.25 target, to keep ourselves from getting swept out to sea if buyers decide one of these days to stop paddling. The lower number can serve as a minimum upside objective for the near term, but be aware that it could show enough stopping power to turn back the tide, at least for a spell. If the futures should push past it with ease, however, that would put the higher number in play. Keep in mind that the 3114.50 target of a much larger pattern aired here earlier is still our big-picture target for the longer term. If it is reached, the Dow would be trading at record highs above 28,000. These numbers seem preposterous to me with weakness developing in the global economy and yields falling, but in the end I will always put my personal bias aside and let the charts speaks for themselves. _______ UPDATE (Jul 1, 6:42 p.m. ET): Expect short-covering to drive this bottle rocket most immediately to the 2994.75 target shown here. This looks all but certain, given the way the futures gapped through the midpoint resistance at 2954.63 today. The much-bigger-picture targets at 3012.25 and 3114.50 given above also remain viable.