Dollar bears seem to be everywhere these days, so perhaps it's a good time to revisit the longer-term charts, which remain bullish. Notice that each visually significant upthrust in the Dollar Index exceeded an external peak. This has serially refreshed the bullishness of the chart while implying that any bout of weakness is merely corrective. However, a key resistance lies not far above in the form of a 100.71 midpoint Hidden Pivot. Although this number can be used as a minimum upside target for now, DXY would need to push decisively above it, to perhaps 103 or higher, before we could infer that the 113.16 'D' target is solidly in play. At that point, p2=106.93 could be used as a minimum upside objective. In an earlier DXY tout, I provided a long-term view as well as a detailed explanation of why I think the dollar is ultimately headed much higher. (Note: DXY represents a basket of currencies that is 60% weighted toward the euro.) An extremely strong dollar would be congruent with the global deflationary collapse that I believe is necessary to correct millennial excesses of debt in the financial system. I see this as unavoidable. For my essay on the coming debt deflation, click here.
The futures trampolined last week from 1.00 point above 2900.00, a round number whose psychological importance seems obvious in retrospect. They are bound now for the 2972.75 target shown in the chart (click on inset) and should have little difficulty getting there, judging from the way buyers blew past the midpoint pivot at 2937.00. Now, a pullback from the green line from no higher than 2949.50 should be used as a mechanical buying opportunity, stop 2900.75. ______ UPDATE (May 5, 6:21 p.m.): None of us imagined there was still bad tariff news out there to disrupt the markets, but that is exactly what has happened this evening with a bellicose tweet from Trump. This too shall pass, but the slimeballs who work the markets on Sunday evenings have taken the E-Mini S&Ps down 54 points so far in order to make certain that any buying they have to do is sufficiently discounted to turn a profit on Armageddon. There's a Hidden Pivot support at 2894.50 that is working thus far to contain the fraudulent air pocket, but I wouldn't lean on it too heavily._______ UPDATE (May 6, 12:15 pm.): The fraudulent air pocket seems just a tad overdone at these levels, but if it snowballs, the futures could fall all the way to 2800 to pick up 'structural' support from some key lows recorded there in late March. The resurgent tariff war and a shooting war between Israel and Hamas that is threatening to go out of control are providing a double whammy, but it's impossible to estimate how much of a bounce stocks would get if there's a cease-fire agreement overnight.
Sometimes we're blessed not to possess insider information. Several pointed examples surfaced in the last few days. If we had known, for instance, that Fed Chairman Powell would tell the world on Wednesday that the U.S. economy is holding steady as a rock and that no changes are contemplated in monetary policy, we'd have jumped on call options a day earlier. Lo, the Dow began a 500-point plunge the moment he began to speak, turning our would-be call options into dross. Go figure. And then there was Yeti, a terrific young company based in Austin, TX, that makes some of the best cooler chests and thermoses we've ever owned. On Thursday they announced their first profitable quarter, reflecting a swing from $3.3 million in losses a year ago to a $2.2 million profit in Q1. The results beat analysts forecasts, and yet the stock got sacked, down nearly 10% intraday and fully 18% from a 36.60 peak recorded earlier in the week. Can you imagine how you might have reacted if someone had whispered in your ear a week ago that Yeti was going to report its best quarter ever. The May 35 calls were trading for around 2.50 at the time and would have seemed an easy bet to double. Instead, they lost more than 99% of their value, trading down to 0.02 before day's end. TSLA Rallies, But Why? Finally there was Tesla, which announced it would try to raise $2.3 billion by selling stocks and bonds. Founder Musk had insisted earlier that money-raising would not be necessary, but he changed his tune after the company reported one of its worst quarterly losses in history. Sell the stock short just ahead of the news? Not on your life. The stock was up as much as $16 on Thursday,
Is Tesla down for the count? The latest blow was this headline Wednesday in the LA Times: "Ugly Turns Uglier as a Tesla Filing Shows Results Were Goosed by a Surge in Credits". Indeed, had first quarter earnings not been augmented by $200 million in regulatory credits, the company's $702 million loss would have been even worse. The fact that Musk didn't mention this adjustment in a recent analyst call, and that it was buried in the company's 10-Q filing with the SEC earlier this week, is bound to make analysts and investors skittish. From a technical standpoint, the stock must hold above the 230.75 Hidden Pivot support shown in the chart or it will sink to 180, or 23%, in search of traction. For our part, we wish Musk only good fortune. The company's predicament appears quite serious, and Tesla could go into a death spiral if creditors decide to get tough. Regardless, unlike some web sites that have stalked Tesla's every move, and who have questioned whether the company's sales figures can be trusted, I stop well short of inferring bad faith on Musk's part, let alone criminality. This is mainly because, unlike cloud-app twaddlers like Uber's Travis Kalanick and other digital-world whizzes who happen to be in favor on Wall Street, Musk has produced an actual thing that is a marvel of beauty and performance. Now he is doing whatever it takes to survive -- and Tesla most surely deserves to survive no matter what accounting tricks it takes to keep the financiers on board. We should all wish him success, since, if Tesla flames out, a hundred years might pass before we see another entrepreneur with Musk's energy, bold imagination and can-do spirit. _______ UPDATE (May 2, 9:50 p.m.): The stock has taken a sharp bounce
There was something for everyone in this lesson. First we looked at ‘mechanical’ set-ups in various futures contracts. Most had not triggered but showed promise looking out over the next fewl days. We also attempted to force a trade in the E-Mini S&Ps, which were uncooperative – which is to say, eventless. Finally, a Q&A session delved into some subscribers faves that may be of interest to all.
Stocks dove on the latest non-news from the Fed. The headless-chicken response to routine announcements from the central bank is evidently so deeply ingrained that even when Powell has nothing new to say, the trade-desk geniuses can't help tripping over themselves trying to get out of their own way. The Fed chairman said monetary policy, such as it is, will hold steady for the time being, since inflation is low and the economy appears to be slowing slightly. This revelation not only caused stocks to plunge, it also aborted a rally in gold that, gold being gold, was probably doomed anyway. Look for cooler heads to prevail on Thursday, after the usual gallimaufry of jackasses have gotten a grip on themselves.
Google has joined my list of 'dead stocks walking' -- companies facing revenue slowdowns for one reason or another but which have inexplicably rallied steeply in recent months. The shares of Apple and Facebook are brazen standouts in this category for reasons that are well known and which I have written about extensively. There is also Boeing, whose price has steadied well aloft despite the widening scandal related to two fatal crashes of the 737 Max. None of this precludes my forecasting higher prices based on the stocks' respective charts, but it does imply there will be a day of reckoning. Please note that my technical outlook allows nonetheless for a further 1400-point rise in the Dow before this happens, an eventuality that would demonstrate once again the bull market's determination to remain blithely untethered from economic reality.
Surprise, surprise. AAPL has miraculously popped to 213.00 this evening, exceeding by 13 cents a 212.77 target first noted here weeks ago. This Hidden Pivot has been in play since April 1, when the stock was trading for around 190. Like virtually all significant rallies in the stock, and in most others, the move was driven almost entirely by short covering on volume-less, after-hours trading. Panicky, dim-witted bears are the best thing AAPL's institutional handlers have going for them, accomplishing in mere minutes what mere bullish buying could not have accomplished in months. The wilding spree of the last seven weeks has also helped to obliterate any concerns about iPhone's pronounced sales slowdown in the U.S. and in China, Apple's second largest market. Nor do investors seem concerned that the company's answer to weakening sales is to plunge deeper into the hyper-competitive entertainment world with streaming content. Profit margins from this business are unlikely to equal those achieved selling overpriced iPhones -- but again, who cares? We'll back away from the stock for now, since the put options we might have bought if the stock had reached the target during regular business hours won't begin to trade until morning, when the surprise has worn off. _______ UPDATE (May 1, 9:40 p.m.): Today's thrust above an 'external peak at 210 recorded last November has created yet another impulse leg, refreshing the bullish energy of the daily chart. This implies that any pullback of less than $25 should be seen as corrective and thus a buying opportunity for a shot at new record highs. _______UPDATE (May 8, 8:49 p.m.): AAPL looks bound for 197.12, a target shown in this chart. It is appealing despite the lack of a true impulse leg. Please note that a print slightly below the target, at 196.20,
Google was down a hellacious 112 points, or 9%, at Tuesday's low, but the plunge did little damage to the bullish look of the weekly chart (click on inset). The fact that this occurred after the stock had pushed above last July's record high makes the selloff merely corrective rather than impulsive. It was attributable to a dour earnings report which suggested Google is losing ground in advertising to Amazon and Facebook. From the look of the chart, however, it seems predictable that the company will find a way to cope and get back in the race. Another thing to be inferred from the stock's steep dive is that it was engineered by the same institutional wiseguys who have been buying it all along. They've created for themselves a fire-sale opportunity, and we should therefore look for GOOG to stabilize, presumably at somewhat lower levels, before the accumulation cycle begins anew. Alternatively, the stock would need to fall a further 290 points (!), or 25%, exceeding the 894 'external' low recorded last June, to turn the weekly chart bearish. This seems unlikely, even after today's heavy losses. _______ UPDATE (May 8, 8:58 p.m. ET): With GOOG struggling for altitude, I'll note that any slippage could send the stock down to at least 1123.71, a midpoint Hidden Pivot support shown in this chart. It is associated with a 'D' target at 1056.68. _______ UPDATE (May 13, 2:33 p.m.): The stock has bounced $12 so far after bottoming at 1122.11, an inch below my minimum downside target. If a relapse crushes the target, that would imply more slippage to as low as D=1056.68._______ UPDATE (May 16, 4:14 p.m.): Bears have gotten squeezed hard for two straight days, but the pressure appears to have eased slightly with a close in the middle of
Investors (click on inset) could be pardoned for wondering why IPO underwriters for Lyft and Uber have used accounting trickery that smells worse than ten-day-old fish in order to promote the deals. Is bogus too strong a word? Judge for yourself. In their prospectuses, neither firm subtracted promotional incentives and refunds from sales totals, as is customary. This allowed them to grossly overstate revenues and profits. In Lyft's case, revenues would have been 16% lower than the $2.16 billion reported and Uber's would have been 12% lower than the $11.27 billion reported. These numbers were aired in a Wall Street Journal op-ed piece Monday by Howard Schilit, co-author of Financial Shenanigans. Passengers Don't Count What adds to the stench is that in order to use these accounting gimmicks, the ride-hailing companies had to categorize their drivers as customers. Passengers seem not to matter: "Because end-users access our platform for free and we have no performance obligation to [them], [they] are not our customers," Uber's SEC disclosure filing notes without a trace of irony. This doublespeak would be laugh-aloud-funny if not for fact that similar chicanery is undoubtedly a key ingredient in keeping the ten-year-old bull market going. Schilit exposes the accounting ruse for exactly what it is by asking this question: Who would Uber/Lyft consider the customer in a self-driving car? It's a question that most of the bozos clamoring for Lyft shares, and Uber's when it goes public, are evidently not taking too seriously.
