Rick Ackerman

The Fed can ease all it wants, Yellen can out-Bernanke Bernanke, and Wall Street can binge on stocks when Congress finally excretes the legislative turd that is about to emerge on Capitol Hill.  All are about to be overwhelmed by a gathering storm that includes a full-blown relapse in the real estate market, the ominous ascendance of Obamacare's economic Death Star, and a steepening of the already worrisome decline in corporate earnings.  Four-and-a-half years into an alleged economic recovery that never got off the launching pad, it is time at last for bears to fight the Fed.

As you will already know, I think the bull market is over. In the chat room this morning I detailed my plan for shorting the stock market by legging into tight vertical put spreads with a strike differential of perhaps $1-$2 rather than the usual $5-$10.  I'd prefer to do this with stocks in a strong rally, but it's possible we may not see much of a rally if and when the urgently awaited legislative turd emerges from Congress in the form of a compromise.  To  get our minds right for the task, I'll suggest monitoring the January 120-122 put spread. It closed yesterday at 0.05, but we'll be looking to put it on for 'even' or better, starting with a purchase of perhaps 60 of the Jan 122 puts. To be in a position to short January 120 puts against them for at least as much as we have paid, we'll need to see a decline of about 1.20 points from the price where we've bought the 122s. _______ UPDATE (9:50 p.m.): Yesterday's chock-full-o'-nuts rally has encouraged me to think we can be a little more greedy about where we get short.  This could prove to be a game of 'chicken', but if we stick to the conservative spread tactic described above, our timing will not have to be so perfect. ______ UPDATE (October 20, 8:34 p.m. EDT):  Stay tuned for a short-able target, since this vehicle is headed higher if the E-Mini S&Ps are to reach their target at 1748.00. _______ UPDATE (October 22, 9:25 p.m. EDT):  With a rally target at 1767.00, we can remain patient. If and when DIA reaches a threshold analogous to that target, we'll want to short it aggressively.

Gold has bounced $27 from within a few ticks of the 1250.50 target we'd been using as a minimum downside objective for weeks, but now what? Someone asked in the chat room how this Hidden Pivot support can survive if Silver is about to dip below $20 as forecast. The short answer is that it can't -- and probably won't.  That's just a hunch, but we can nevertheless give the December contract the benefit of the doubt right now, since it ended the regular session by creating a second bullish impulse leg on the hourly chart. Moreover, because this latest A-B thrust is not likely to be read by others as a breakout, we can use it to initiate a long position via camouflage. For your further guidance, I've sketched this out in detail in the accompanying chart. _______ UPDATE (October 16, 10:20 a.m.): Trading the pattern I'd drawn could have produced a gain of as much as $1030 per contract overnight, since the futures made it to p=1284.20 and then some without incident after tripping an entry signal at 1278.90. However, the rally died $5.70 shy of the D target at 1294.90, implying that weakness below the surface remains dominant.

Today's E-Mini tout is cognizant of the old adage, 'buy the rumor, sell the news'.  Expect the market to move sharply higher on headlines of an accord on Capitol Hill, but don't get swept up in the enthusiasm, because it could be short-lived.  Mentioned in the tout is a Hidden Pivot target where you can get short if the buying gets giddy. _______ UPDATE (11:12 a.m. EDT): The rumor evidently has grown too tiresome to spark any buying, but I still expect a knee-jerk rally when the actual sausage-of-a-compromise is announced. We'll want to get short on the inevitable flurry of quote-unquote excitement, but be warned that it could be fleeting.

Bill Mauldin's latest commentary warns that the Fed may be about to lose control of interest rates, mainly because a dangerously irresolute Helicopter Ben chickened out after telling the world he was going to taper. So much for the Fed chairman's crucial ability to inspire fear on Wall Street.  But is there any technical evidence to support a prediction that interest rates are about to rise and bond prices to fall, ostensibly because actual forces of supply and demand will finally have their day now that Bernanke's credibility is gone? I considered two charts in search of an answer, and it turns out to depend on which of the two charts you trust more. The regular weekly chart for the December contract is bullish, implying lower rates and perhaps even a new bull market are coming. But the composite version displayed below it is less encouraging, implying that prices could go either way. On balance, I'll bet on the former, at least for now, since the highs and lows that are crucial to my analytical method are actual rather than 'blended'. Another reason I favor the regular weekly chart is that, from much higher levels, it predicted the September low within half a point. Even so, the futures will now have to pull back a bit more, to at least 131^19, then stage a 'booster' rally of at least  1^12 points, to get airborne, and to do so with sufficient power to imply that the bond prices are indeed headed significantly higher (and yields therefore lower).

Bears were getting battered senseless when last week ended, so expect them to be buying with both fists to cover short positions when stocks get rolling on Monday. This will not preclude the possibility that DaBoyz will manipulate stocks lower Sunday night in order to shake out sellers still nervous about Washington's dithering.  However, the supposedly smart money will be betting in any case that a deal is inevitable and that the market will roar higher when it is announced. From a technical standpoint, trends both minor and major are in synch to drive stocks higher, presumably toward either of the two targets shown in the chart. Notice that the midpoint resistance of both patterns gave way easily, and  that each has since become a point of consolidation. This has shortened the odds that the lower of the two rally targets will be reached. Looking beyond this, my concern is that the political currents that have pushed stocks hither and thither in recent weeks will turn out to have been a red herring. Many investors are bound to assume that a temporary peace in Washington will clear the way for a stock market rampage to who-knows-how-high.  If so, this attitude would beautifully 'set the hook' to trap bulls at the top. My gut feeling is that Obamacare alone, effectively a huge new tax on the middle class, will suffice to turn an already moribund economy into a deeply recessionary one. If so, with stocks just a short distance from all-time highs, investors are manifestly unprepared for the gathering storm. More immediately, traders working the night shift should ignore the news from Washington and look to bottom-fish whatever sleazy shakeout occurs ahead of Monday's opening bell. If you use the camouflage technique to get long, watch on the 15-minute chart for

Today's E-Mini S&P tout is bullish as all get-out no matter what happens in Washington, but with a caveat: Whatever spectacular new highs are coming, they could set the nastiest hook of them all for bulls. For a more detailed explanation, check out the E-Mini tout and the chart that accompanies it.

In a recent Question of the Week, we sought to determine why the so-called good life has edged beyond the reach of the broad middle class. If this perplexing turn of events is causing pain and frustration for many, it is about to rain calamity on the lives of Baby Boomers, who as a group have not saved nearly enough for retirement. This means they will have to rely on today’s twenty-  and thirty-somethings to pay a hefty chunk of their Social Security and Medicare benefits. This is preposterous on its face, since there are not nearly enough good jobs for young people to meet their own financial needs, let alone those of scores of millions of new retirees. Is there a chance the situation will improve?  Probably not. America’s standard of living appears destined to remain in a downward spiral that will abate only as wages in the U.S. move toward equilibrium with those paid elsewhere in the world. The most lucid explanation of this we have seen was posted recently at ZeroHedge, where the rough-and-tumble discussion often yields insights that will forever elude a mainstream media that knows only how to pander. The author has identified himself as ‘chindit13’, and although we are unable to credit him by his real name, we are most thankful nonetheless for the brilliant clarity of his thoughts, to wit: The Debt Problem “All the arguments and frustrations expressed in these periodic meat-tossing, cross-generational smackdowns are symptoms, not causes, of the underlying problem, which is that on a worldwide basis, labor has lost its pricing power.  The world is too efficient at production, and cannot create sufficient demand, except through debt.  The debt problem is a symptom.  Debt was the stop gap solution as society tried to find a reason to be for

Just three simple tricks can greatly improve your results when you trade using the camouflage technique. We cut to the chase in this lesson, focusing on those tricks rather than getting bogged down in such Hidden Pivot ephemera as ‘k-A segments’, distinctions between ‘internal’ and ‘external’ peaks and all the rest. The tricks are proprietary, but if you want a quickie refresher on how to use them, this recording is a must-see.