Rick Ackerman

Today's chart (inset) shows ponderous supply sitting on the Nasdaq 100. The two smaller peaks to the left were made significant by the size of the decline that followed them. They harbor many investors who undoubtedly are eager to exit now that the broad averages have returned to those record levels. There is a further impediment in the form of the head-and-shoulderish formation at the righthand edge of the chart. Taken together, it's possible the three peaks could turn back a stampede of short-covering. We just don't know. What we do know is that for the foreseeable future, physical supply, whatever its size, will weigh less than the unnerving perception that three high-profile IPOs are about to flunk their entrance exams. Two of them, Uber and Lyft, have already done swan dives after their insulting accounting practices became headline fodder. WeWork's impending IPO will make Lyft's and Uber's look like a swing-dance party.  The office-rental giant is the juiciest piece of red meat thrown to bears in a long while, a stock that cries out to be shorted when it starts trading, presumably sometime in 2019. And so does the Nasdaq, for that matter; for there is no way it can achieve new record highs with Wall Street sweating the debut of WeWork and numerous other unicorns. Usually fantasy stocks get marked to market only after actual profits impose a PE ratio on them. In this case, however, there's already enough skepticism toward WeWork's louche definition of success to suggest that the IPO when it finally happens will be, not a swing-dance party, but a jazz funeral.

Buyers have tripped a 'counterintuitive' entry at the green line, x=1852.08. The trade was and still is a very good bet to reach the midpoint pivot at at 1888.41. However, anything above that if you are long could be pushing your luck. This implies that getting short with put options at 'p' will yield decent odds, provided you use a tight stop-loss. Check in the chat room if the trade gets close, since I may be able to provide real-time guidance.  The reason we shouldn't be too optimistic about the rally is that it is occurring after a failure on the last run-up to reach a well-advertised, perfectly clear target at 1982. We shouldn't presume that the top is in for the ten-year-old bull market, but if it were it would be signaled by a trend failure such as the one I've noted. If this trend also fails to reach D=1961.06, it would raise the odds that significant weakness is creeping in. A failure would be signaled by a pullback below C=1815.75 without AMZN having reached 1961.06.______ UPDATE (May 16, 10:35 a.m.): Today's take-no-prisoners short squeeze has reminded me that the 1982.86 target is still valid even though it was nearly achieved on the run-up two weeks ago. _______ UPDATE (May 19, 10:09 p.m.): If we stop believing the 1982.86 target will be reached, that's the same as believing the 10-year-old bull market is over, finito. Perhaps. But let's adjust our bias one small step at a time, first by monitoring price action at p=1857.70 in this chart.  An easy breach of this Hidden Pivot support would put the 1797.89 target in play. _______ UPDATE (May 20, 8:32 a.m.): Just for good measure, let me mention that 1774.26 would be become the minimum downside target if 1797.89 gets shredded. It

The on-again, off-again trade deal with China has put some life into the stock market, all of it vicious (click on inset). It has also invigorated an otherwise moribund discussion concerning whether tariffs are good or bad. Popular wisdom has it that the mere talk of Smoot-Hawley tariff legislation caused the stock market to gyrate wildly in 1929 and eventually to crash. Pat Buchanan does a good job debunking this myth in a think-piece published on his web site entitled Tariffs: The Taxes That Made America Great. Maybe. But it's hard to get around the logic of classical economics, which holds that it is always economically beneficial for a nation to buy from the lowest-cost producer, since the savings can be invested to produce things at which the nation excels. Rewarding a Deflator In practice, however, much of our savings gets invested in digital smoke-and-mirrors. Uber, for instance. How else could a company that in purely economic terms is a deflation catalyst command an $80 billion valuation? (That amount was precipitously reduced, incidentally, by a 10% plunge in the stock since Monday's IPO). If we invested wisely, Adam Smith's Law of Comparative Advantage would work beautifully, increasing productivity and thereupon wealth. We don't invest wisely, however, simply because most of our money comes not from hard-earned savings, but from infinitely available credit created out of thin air by the banksters. So Pat Buchanan winds up being right: Tariffs can't hurt America -- not unless the Fed chooses not to make America's farmers and others on whom the tax falls most heavily whole by monetizing their losses. China will lose a lot of sales in the U.S. as exporters in other countries ramp up to fill the void. As for the stock market, bears had better step out of the way,

The rally would need to continue for at least a couple more days before it becomes mildly persuasive.  I'd suggest setting an alert at 2899.50, since that would generate a robustly bullish impulse leg on the hourly chart. Although I recommended a mechanical buy on Monday at 2821.25, only a couple of subscribers reported doing the trade, one of them by substituting SPY options. I'm not going to establish tracking guidance for this position, although I will continue to provide informal updates here and in the Trading Room. There was $4750 per contract at risk initially, and that's why I suggested paper trading this one. To the extent it works, it should increase your confidence in 'mechanical' trades while diminishing your reluctance to pull the trigger on one.  In the meantime, I've advised subscribers who were in the trade to take half of the position off near 2838, for a theoretical gain of about $850 per contract.  The swing-for-the-fences target is 2910, or possibly even 2995. At the higher number, a two-contract position would show a theoretical profit of about $18,000. _____ UPDATE (May 16, 4:06 p.m.): Buyers narrowly missed our bullish benchmark at 2899.50, but they are likely to try again as the week draws to a close. The 'mechanical' long position is still live, and I'll now recommend exiting one of the two contracts that remain at 2917.75. ______ UPDATE (May 19, 10:16 p.m.): Exit another contract at current levels, around  2868.50, for an additional theoretical gain of around $1500. The futures feel leaden, so we should stick with 2899.50 as a bullish benchmark. _______ UPDATE (May 21, 9:03 p.m.): Zzzzzzzz. _______ UPDATE (May 23, 8:32 a.m.): Index futures have gotten pummeled overnight. This one should continue falling to at least 2815.75 before reversing. Here's the chart. _______

Was it President Trump’s intention all along that trade talks with China fail? That’s the contention of ‘Farmer,’ a long-time subscriber who lives in Nairobi. He posted on Monday as follows in the Coffee House, a chat room adjunct to the Rick’s Picks Trading Room: “Just for perspective, the average dollar volume of imports being bought from Russia is only $18 billion during the past five years. That’s just 4% of the goods imported from China. Why? Because after decades as a nuclear cold war adversary, it was seen as ill advised to be running massive deficits with a country we were threatened by.  It is not that Russia could not supply goods cheaply that American consumers needed. They have always been technologically advanced. But if they had been favored over China with billions of dollars of orders in hand, they would be the most powerful nation in Eurasia today. “The trade-deal narrative may be little more that feathers and sawdust. We should be considering that the Administration has no intention of ever writing a deal with China and that it is no longer acceptable in the strategy room to keep flooding China with dollars. There are a lot of alternatives out there. Since Mr. Xi has been so generous spreading dollars around the globe and buying new friends, then maybe it is indeed time to turn off the spigots. Half a trillion goes a long way. From Whom Would You Buy? “So if you are faced with being a generous trade-supporter, who would you buy from? Would it be the country that seeks to dethrone you, or would it be with a hundred other nations champing at the bit to get a piece of America’s business? Maybe it’s time to buy back some of those friends. “The Chinese have

My minimum upside target for the S&P 500 is still 3095, about 7.4% above these levels, and I am sticking with it. A corresponding rally in the Dow Industrials would leave them just shy of 28,000. Let me also mention that last week's nasty selloff would have tripped a 'mechanical' buy signal (click on inset) if the S&Ps had fallen just a little farther. The rally targets are purely technical and go directly against my gut feeling that stocks are overdue for a major correction. As a rule, I trust my charts above all to give me an accurate read on the markets, especially since my instincts have occasionally been wrong at important turning points. In any event, I will be monitoring the charts especially closely in the weeks ahead because I believe the potential for a summer cascade is high. Why? For one, extremely rich valuations are being awarded to companies with mounting problems. Facebook, for instance,  has become a pariah for the arrogance and condescension it has shown in dealing with privacy issues. Just last week, Chris Hughes, the co-founder of the company, called for breaking it up in a New York Times op-ed piece. Then there is Apple, which has been experiencing a sharp slowdown in iPhone sales but evidently believes it can offset this by jumping into a very crowded field of streaming-content providers. Boeing is enmeshed in a deepening scandal relating to the fatal collision of two 737 Max passenger jets.  And Uber, a company that is unlikely to turn a profit any time soon, went public last week with with a valuation of around $80 billion. If the courts rule that Uber (and Lyft) drivers are employees rather than independent contractors, investors can kiss their money goodbye, because shares in those companies will be

A 10% fall over the last seven  days has generated some bearish impulse legs on the lesser charts without doing much damage to the much larger uptrend begun on January 3. Even so, because Apple has nothing new in the pipeline as profitable as iPhone sales, which have been weakening, we'll want to make sure that bulls prove their case each step of the way before we buy into it. For now, that would mean a thrust exceeding the green line (click in inset). It would trip a theoretical buy signal for a shot at 233.50, but more immediately to the 208.14 midpoint pivot of the pattern. Keep in mind that neither of these Hidden Pivots nor their targets will even exist until AAPL reaches 200.45. _______ UPDATE (May 13, 11:16 a.m. ET): AAPL's plunge today has put a 179.48 target in play. Judging from the way sellers crushed the midpoint Hidden Pivot at 189.02, I'd rate the target an 80% bet to be reached._______ UPDATE (May 14, 4:11 p.m.): A small rally has changed nothing. Set an alert at 198.56, since that's where it would become technically meaningful. ______ UPDATE (May 19, 10:29 p.m.): DaBoyz are having trouble propping up the stock. If it slips below 185.54, use D=178.61 as a minimum downside target. Here's the chart. _______ UPDATE (May 23, 11:41 p.m.): AAPL fell to our 178.31 target as expected, then struggled for the rest of the session to hold above it. Next stop on the way down: 175.48. (30-min, A= 201.68 on 5/9).

If last week's tortuous, ratcheting downtrend is the best that sellers can do with a collapse in trade talks to help them, then we should take Friday's bullish finishing stroke as a valid 'buy' signal. I'd written here earlier that a failure to produce an agreement between the U.S. and China would not be bearish for stocks, but instead prove to be a case of sell the rumor, buy the news. If this is so, and barring the always-possible Sunday night surprise, we should see the futures push above p=2910.75 (click on inset) on Monday or Tuesday. A subsequent pullback to the green line from our sweet spot between p=2901 and p2=2953 would trip a 'mechanical' buy signal. _______ UPDATE (May 13, 6:35 a.m. ET): Overnight, the futures have given up two-thirds of the very substantial gain they achieved via Friday's explosive short squeeze. If DaBoyz have to take the futures down by 40 points just to dry up sellers this morning, stocks are in worse shape than I'd thought. The rallies have become almost too scary to short, but also too fleeting to distribute. That's dangerous. Our best bet -- effectively against sanity, and still reasonably priced -- is VXX calls. _______ UPDATE (May 13, 11:23 a.m.):  The buy triggered at 2821.81. The implied initial risk per contract, using a 2726.00 stop-loss, is $4750 per contract, or $19,000 for a four-contract position. Best to paper trade this one to see if it works. If so, it should add to your confidence in mechanical trades in general. _______ UPDATE (May 14, 10:48 a.m.): If you took a position with real money as some subscribers appear to have done, book profits on half near 2838 -- $850 per contract at the moment -- and use a break-even stop-loss for what remains.

Bulls failed on the last upthrust to take out a 1293.10 'external' peak recorded in mid-April, but we'll give them the begrudging benefit of the doubt anyway because bears seem even more enfeebled right now. A push above p=1292.10 in the early going on Monday would put the futures on track to hit D=1304.00. We'll watch for a 'mechanical' buy set-up to develop in the meantime, since such opportunities are few and far between in this oft-leaden trading vehicle. _______ UPDATE (May 13, 11:34 a.m. ET): The futures have popped to 1300.70 today, making them an even better bet to hit the 1304.00 target. They did so, however, without having pulled back to a mechanical bid that would have triggered at 1286.20. For the record, I regard the so-far $13 rally as pretty weak, considering that the Dow is down nearly 600 points at the moment.______ UPDATE (May 13, 9:40 p.m.): The futures topped at 1304.20 tonight, two ticks above the rally target provided above, before pulling back by $4 [and now $29!]. The next thrust would need to exceed 1314.70, equal to an 'external' peak recorded on April 10, to refresh the bullish energy of the hourly chart. _______ UPDATE (May 19, 10:39 p.m.) Selloffs are as unconvincing as rallies, so we should be surprised if this one takes out lows near 1268 recorded within the last month. If it does, use 1256.80 as a target.  Here's the chart. ______ UPDATE (May 23, 2019): I love this rally -- to get short, that is! You can do so mechanically at 1292.40, stop 1304.20. The chart linked in the May 19 update is still relevant. ________ UPDATE (May 29, 10:06 a.m.): Cancel the short. I'm hating gold as usual, but somewhat less so at the moment because it could head-fake