Rick Ackerman

Although oil prices and Treasury yields have been falling in anticipation of a widely advertised economic slowdown in Europe and China, U.S. stocks are rising as though boom times lie ahead. What is going on?? It would appear that bulls simply cannot control themselves when there is talk of Fed easing. The prospect of QE3 has been in the news lately, driving a short-covering rally that has pushed the Dow Industrials up by more than 700 points in the last two days. The move lost a little power on Wednesday, but it is unlikely to fade much more with the weekend approaching. If DaBoyz can sustain altitude on Thursday, odds are good they will be able to break a six-week losing streak in the broad averages. Sure, the rally stinks to high heaven and begs to be shorted. However, we need to keep reminding ourselves that its very purpose is to chasten bears who think that merely being right is an easy ticket to profits. Indeed, the more skeptical we grow of the rally, the more steeply it will rise. Can it possibly reach a purely technical S&P 500 target at 3095 given here earlier that lies nearly 10% above current levels? I remain skeptical, but that doesn’t mean I am willing to fight buyers every inch of the way. For now, we hold no position, having cashed out a profitable ‘counterintuitive’ long in the E-Mini S&Ps entered on Tuesday.

Every dog has its day, and Tuesday's vicious short squeeze was a pooch-lover's delight. DaBoyz even managed to goose Tesla for a 9% gain. Although that won't be nearly enough to reverse the death spiral in the automaker's shares, it will suffice to spook traders who have been shorting the stock with impunity for the last couple of months. Scandal-plagued Boeing was a relatively modest gainer among the institutionally rigged stocks, tacking on 1.67%. But Netflix, a global powerhouse in TV, was up nearly 6%, while would-be competitor AAPL rose 4.11% for its best one-day gain in more than a month. Lyft and Uber, two dead ducks, went their separate ways, with the former shedding 0.66%, the latter gaining 3.15%. Go figure! To borrow a line from the late Sen. Everett Dirksen, a few points here, a few points there, and pretty soon you're talking about a real rally. This is not one yet, not by a longshot, but if the vise grip on shorts' cahones gets any tighter, it could be one heckuva short squeeze by week's end.

The 'counterintuitive' trade recommended for Tuesday triggered at 2787 and was showing a theoretical gain of $900 per contract shortly after the close. Because of the way the rally blew past the green line, it is an excellent bet to achieve a minimum 2846, the midpoint Hidden Pivot of the pattern shown. If you did the trade, I would recommend taking a profit on half of your position at these levels and using a break-even stop for what remains. Exit an additional 25% at 2846, then keep 25% for a potential moon shot to as high as 2963. At that price, the gain on any contracts still held would be $8800. Subscribers who hold a position should let me know in the trading room. I will provide tracking guidance if I hear from at least two of you who followed my recommendation. (Note: I also advised using the micro contract as an alternative during an impromptu online session held Tuesday morning.) ________ UPDATE (Jun 5, 9:18 p.m.): In the chat room just now, I have advised exiting any remaining contracts at a current 2817. The additional theoretical gain would be about $1500 per contract. I am skeptical that this rally will get much further, or that desperate hints of easing from the fraudsters at the Fed will carry the day. ________ UPDATE (June 5, 5:33 p.m.): A weekly close above 2846 would bolster the bullish case, which I've pegged to a 3095 target for the S&P cash index.

Don't fight the Fed, as the saying goes. The implication is that the central bank is firmly in control of the money supply: loosen it and stocks have nowhere to go but up.  Betting on this outcome has been a big winner since the bull market took off in March 2009. However, all bull markets end, and so will this one. When it does -- and there are reasons to think this has already occurred - the crackpot notion that we can borrow our way to lasting prosperity will die with it. The good news is that when capital becomes scarce in the hard times that accompany bear markets, our savings are much more likely to finance the growth of economically productive companies rather than merely increase the wealth of Wall Street hucksters. This time around they have sold investors on the seductive idea that any company capable of exploiting a shift in the economic paradigm will make tons of money. What they have neglected to consider is that the new paradigm, as exemplified by Uber and Lyft, is so ruthlessly efficient that the hoped-for profits may never come. Instead, we get ride-hailing operators that are capable of deflating margins in a key economic sector to the vanishing point. Amazon is the biggest deflator of them all, with the potential to dominate in every area of retail, including groceries. They are hoping to vanquish #1 grocer Walmart, and I am predicting they will succeed. The reason is that Amazon's state-of-the-art warehouses are better designed than Walmart stores to facilitate storage and delivery of food.  However, the next phase of Amazon's grand plan -- jacking up prices -- could fail in a recession. Regardless, the company is genetically programmed to lay waste to competitors and will continue on that track until

The buy-the-dips bots and bozos were noticeably absent as last week ended, presumably because they expect more weakness ahead. If so, the selling is likely to pick up tempo unless the news environment brightens. It's hard to imagine what "good" news might look like, since the headlines have been relentlessly downbeat lately. Most disconcerting of all is a global economic slowdown that has yet to be discounted by Wall Street's best and brightest. They've all got 3.6%-unemployment-on-the-brain, a wasting disease that impairs one's ability to see a recession coming.

I generally shun playing for crumbs at reversal points instead of riding the trends, but because many subscribers seem to prefer option trades that can be initiated for relatively small change, here's a bottom-fishing play in DIA. Specifically, I'll recommend buying two 7 Jun 250 calls with the underlying trading within a dime of the 246.12 target shown in the chart. The calls would be a decent buy for around 0.80, but you will be much better able to estimate their fair price by monitoring the bid/asked for them diligently as DIA falls toward the target. Do not pay up for them, and stop yourself out  if they trade for 30% less than you paid.  Alternatively, if you can swing it, buying the ETF itself would be preferable. Use a 246.16 bid, stop 245.99 for 200 shares. Take a profit on half if DIA rallies to 246.50, then set a break-even stop-loss for the remaining round lot.  Please note that using an alternative 'A' at 265.25 would yield a target at 247.68. That's where the low could occur, but I am deliberately using the higher A to reduce risk. The tradeoff is that we could miss a good trade.

Gold's $30 run-up over the last two sessions is the sharpest we've seen in a while. Was it just a knee-jerk reaction to continuing weakness in U.S. stocks? Probably. But we'll keep a close eye on it nevertheless, since gold sentiment is so negative, sometimes verging on despair. Many investors who have followed bullion's bear market closely since prices peaked eight years ago just above $1900 seem to get their hopes up every time gold rallies moderately. Disappointment has invariably followed, and then something worse as prices receded back into a rut. And yet, quotes have been too stubbornly buoyant for bears to triumph. Gold has been in a holding pattern for six years, defying predictions of a plunge below $1000 to shake out weak hands once and for all. It is a consolidation to be endured -- but also closely watched, so that we do not mistake the start of a bull market for yet another tiresome and vexatious head fake. In practice, for now, that will mean focusing on the three 'external' peaks shown in the chart (inset). If this move exceeds all of them without much of a pullback on the intraday charts, that could be a sign that we are witnessing something more than just a tease.

I've revised my bearish target slightly, since using overnight price bars yields a pattern with two bounces precisely from the pattern's 340.48 Hidden Pivot midpoint. This has validated the new pattern and its target, making them both even more reliable for purposes of trading this vehicle. The new target lies at 315.95, and it will be in play as soon as the stock closes below the 340.48 midpoint support for two consecutive days. This seems very likely although it could take time, since Boeing's institutional sponsors will do everything they can to avoid marking the stock down further in order to distribute it. It has been quite resilient so far, even as a deepening scandal involving two fatal 737 Max crashes has grown more embarrassing. _______ UPDATE (Jun 3, 9:555 a.m. ET): Sellers have crushed the 340.48 pivot, all but guaranteeing a fall to at least p2=328.21. _______ UPLOAD  (Jun 4, 5:33 p.m.): If the short-squeeze pushes the stock to 352.74, that would trigger a 'mechanical' short, stop 365.01. Here's the chart. _______ UPDATE (Jun 5, 5:38 p.m.): A sharp rally triggered the short. I'll track it if I hear from at least two subscribers who did the trade. [Late note: I didn't.]

Friday's plunge came within six points of fulfilling the 2744.25 target we've been using to keep us confidently on the right side of the trend. This Hidden Pivot support seems all but certain to be achieved Sunday night or Monday morning, but the selloff could conceivably continue down to as low as 2732.50 if  the support doesn't hold.  At that level the futures would be in good position to set up a 'counterintuitive;' buy signal. I'd suggest tuning to the chat room at that time if you trade this vehicle. The extent of the bounce is unpredictable at the moment, but it would need to exceed 2842.00 before we start taking the rally seriously. _______ UPDATE (Jun 3, 12:30 p.m.): The futures have bounced eight points tonight from 2732.25, a single tick beneath the target given above. This is well short of the 2791.00 print needed to trigger a 'CI' trade, but if you simply bottom-fished with a tight stop-loss, you should have taken half the position off for a partial profit. In any case, you're on your own. _______UPDATE (Jun 3, 6:27 p.m.): Six hours of gratuitous swings lowered the CI trigger to 2787.50 but otherwise changed nothing.