Rick Ackerman

Last night's commentary explained away a 300-point Dow rally earlier in the day by noting that Wall Street seems blithely unconcerned about the growing tariff war. Tonight, index futures are getting socked hard -- and can you guess what is being touted by Bloomberg.com as the cause?  You guessed it:  tariff wars!  My suggestion is to tune out such blather and focus solely on the charts. At the moment, they suggest that fear remains on holiday no matter how many truly menacing concerns continue to pile up against a bull market that yesterday entered its 113th month.

I've asserted here many times that the stock market's ups and downs drive the news rather than the other way around. This implies that if shares are in a strong rally, we tend to shade our interpretation of the headlines more bullishly. But what if stocks are going nuts in the face of indisputably bad news? That is currently the case, and the seeming paradox is so extreme that it all but settles the argument about whether the stock market's tail wags the news media's dog. What we are seeing is a ballistic surge in the broad averages even as the mainstream media bombard us with the grim certitudes of a mounting global trade war. Seldom has the disconnect between news and stocks seemed more perplexing. And yet, we find so strong an advocate of free trade as the Wall Street Journal downplaying the significance of Trump's tariff war against China, Europe and Canada in order to account for Wall Street's seeming indifference to it. While the Journal's editorial page has yet to come around on this, the news editors have been propagating the crazy idea that America's economy is so strong that it can weather even steep new levies on imported goods. Leave it to the Journal to cheerlead the nine-year-old bull market even if it means having to be be dismissive of something as pernicious as protectionism. The 'Chimps' Will Need Help The portfolio-managing chimps who make their living throwing Other People's Money at a handful of stocks will need all the cheerleading they can get if they're going to keep the bull market alive for yet a few more months in order to distribute millions of shares to the rubes. Stocks are already facing serious headwinds from stubbornly high oil prices, a strong dollar, a top in

Monday's lunatic-powered leap brought AMZN within striking distance of the 1745.12 target I'd flagged here earlier. It is a clear and compelling midpoint Hidden Pivot, and if the stock gets through it easily or closes for two consecutive days above it, that would be strong evidence that more upside to D=1843.29 lies just ahead. The stock gapped up on the opening bar and barely paused for breath over the next six hours. That suggests shorts will remain trapped at the opening bell, presumably after a rough night. It goes without saying that a strong rally in this stock over the next several weeks would lend buoyancy to the stock market._______ UPDATE (July 10, 6:54 p.m. EDT): After stalling pennies from the 1745.12 target flagged above, AMZN popped above it, ultimately topping at 1750.00 before relapsing $18.  Overall, the action was mildly bullish although not sufficiently so for me to to say the 1843.29 target is well in play. A two-day close above 1745.12 would change the picture, however. Here's an updated chart. _______ UPDATE (July 11, 9:32 pm.):  As the broad averages fell on Wednesday, AMZN did an effortless backstroke against the current and has continued to move higher this evening. The divergence is approaching insane extremes, so something will have to give. If the stock can close for a second consecutive day above 1745.12, it would turn me more cautious, notwithstanding what I said in the previous update. Another possibility is that AMZN, the Dow and the S&Ps get in synch to the upside as the week ends. That would make me even more cautious, since it would smell like a perfect bull trap._______ UPDATE (July 12, 1:55 p.m.): Yet another lunatic leap has brought AMZN to within pitching-wedge distance of the 1843.29 target flagged above. If and when

As always, I'd suggest monitoring AMZN closely to determine whether the nine-year-old bull market that has been in remission since February is about to resume. The stock looks primed for a 5% fall, and if this were to occur the broad averages would likely decline as well. Conversely, if AMZN resists the pull of gravity on Monday, it will be signaling a possible breakout to the upside. The rally would have the potential to hit 1842, about 7.8% above Friday's 1710 close. We would expect the broad averages to rally commensurately, with the Nasdaq index recording the biggest gains. I doubt that the week will pass without a clear signal from AMZN concerning what may lie ahead.

The bearish pattern shown looks almost too pretty to fail, implying we should expect the stock to fall eventually to 1628.31. In this case 'fail' would mean head-faking above 1725.00 before the bottom drops out; or alternatively, continuing higher to at least 1745.12, or perhaps even 1843.92.  Those are Hidden Pivots associated with a large, bullish pattern begun on May 23 from 1566.  What make me reluctant to sound the alarm is that AMZN tried unsuccessfully last week to take out two midpoint supports, including the one at 1676.66 shown in the inset. The first time, it bounced from the pivot precisely and rallied to stop out the pattern. Then, two days later, on Thursday, the stock began a rebound, still continuing, after not quite falling to the midpoint support of a subsequently created pattern. Both occurrences are mildly bullish.  My guess is that Monday's price action will bring decisive clarity to the short-term picture. Specifically, a breach early in the session of the 1676.66 pivot would probably clinch more downside to 1628.31. But if bulls hold their ground, going no lower than around 1690, short-covering is likely to push the stock above 1725.00 by no later than midsession Tuesday.

The bullish pattern shown (see inset) is a beauty that meets all of our rules, implying that more upside to at least 2810.00, the pattern's 'D' target, is very likely over the near term. However, that would leave the futures just shy of the key 'external' peak at 2814.00 recorded in mid-March. A decisive push above it would be quite bullish, since it would generate projections to as high as 2997.75 (equivalent to Dow 27,000). Another possibility to which we should be especially alert is for the rally to sputter out a few points above or below 2814.00. If so, we would take steps to prepare for a possible 'counterintuitive' short in the usual way -- i.e., using SPY or DIA put options. Another scenario calls for a downturn from current levels followed by a plunge into hell. This seems unlikely, but we should be ready in any event. I mention it because Friday's high occurred in a crucial spot, almost precisely at the 2768.00 'midpoint pivot' of the big pattern projecting to 2997.75. We should know by week's end whether the long-term bull market is about to get back in gear following five months of nasty chop since early February's steep sell-off. Stay tuned for updates, the most timely of which will be posted in the chat room.______ UPDATE (July 9, 4:35 p.m.): If the stampede continues at its current pace the futures will reach the 2810.00 target drum-rolled above by no later than the end of Tuesday's session. The rally's trajectory hasn't been this steep since early May and seems oblivious to headlines concerning trade wars. The ability of buyers to push this vehicle above 2814.00 is still crucial to the intermediate-term picture, as noted above.______UPDATE (July 10, 10:31 p.m.):  DaBoyz have pulled out the rug, sending the

On the eve of Independence Day, The Wall Street Journal ran three stories that together suggest that the decline and fall of some vital American institutions may be approaching its terminal stage. Judge for yourself whether corruption, greed and hubris have become endemic at the highest levels. Leading the Journal's front page on Tuesday was news that the Fed had allowed Goldman Sachs and Morgan Stanley to avoid flunking an annual stress test by having them agree to freeze payouts to shareholders at a combined $13 billion. The banks originally had hoped to pay out $16 billion, but that would have put them nearly $8 billion below what they needed in reserves to avoid a failing grade. The deal they struck with the Fed will effectively allow the banks to pay out $5 billion more than what they would have given back if they had decided to retake the test to get a passing grade. 'Do No Evil'? Yeah, Sure... The second story, which concerns the corporate giant whose motto famously promises to 'Do no evil,' attests that they flat-out lied.  Google had said a year ago that it would no longer scan Gmail users' inboxes in order to personalize ads. In fact, the company has continued to allow hundreds of software to developers to do just that. It gets worse: The snoops at one of those firms, Return Path, were allowed to read 8,000 unredacted emails to help train the company's software. What can we do about this outrage? I would not insult you by suggesting that you write your Congressman. The third story, which ran on page two, reported that about half of the students who have graduated from some of America's top colleges and universities this year, including Harvard, Princeton and Johns Hopkins, have done so with

Americans don't know how to handle the Fourth of July when it falls on a Wednesday. Do we punt the entire week? Work Monday and Tuesday, then take a five-day weekend?  The show will go on as usual at Rick's Picks, but your editor has decided not to get too exercised about covering all of the bases on Thursday and Friday. The stock market is a tough read right now anyway, the moreso because of Monday's devious price action. Seasonality powerfully favors bulls in the days immediately before and after Independence Day. If so, and stocks are statistically likely to move higher ahead of the weekend, then why did the Masters of the Universe gap the FAANGs up sharply on the opening bell? This trapped bulls, short-covering bears and rubes, making them less likely to support stocks into week's end.  AMZN, our bellwether of bellwethers, was a case in point. It gapped $9 to $1725, then slid to $1692 --hardly a vote of confidence from insiders who make their living leveraging the order book. Buybacks Keeping Bull Afloat Portfolio managers will commence Q3 buying on Thursday, perhaps coming to the rescue. But maybe not. CNBC reported that although corporate buybacks set a record in Q2, investors sold stock-based funds in June more aggressively than ever.  It's no stretch to suggest, as this article did, that buybacks are the only thing keeping the stock market afloat these days. It's worse than that, actually, since buybacks push stock prices and earnings multiples higher and higher without producing any economic growth. The companies evidently have nothing better to do with their spare cash, not that Wall Street cares. Although it's hard to see how this seeming perpetual motion machine could seize up, nothing could be more certain than that it eventually will.

Nothing of interest could be inferred from Monday's listless price action, although as much could be said of a baseball game in which no batter has reached first after six innings. It only seems dull to those who don't know the game. For those who keep up with the savvy, cynical commentary at ZeroHedge, even Wall Street's most tedious days take on a sinister hue.  Whatever scheming oligarch may have caused Monday's ups and downs, we can only be thankful he was evidently in a good mood, since any damage done early in the session, when the Dow was down about 200 points, was rectified by day's end. This left me less bearish than I'd been when I updated my touts (see below) for Sunday night.  For perspective, however, I'll note that an 800-point rally or decline from these levels wouldn't change the technical picture one bit. By my runes, the outlook remains bearish for the intermediate-to-long-term.