Rick Ackerman

Our bear-market target has been 129^03 for quite some time, but price action at the p midpoint of a lesser but even more bearish pattern suggests we should lower our sight to 127^16. As I mentioned toward the end of last week, this would equate to yields on the 30-Year of about 4.12%-4.15%, and 3%-plus on the Ten-Year. If the move happens quickly -- i.e., this week -- those who still cling to the absurdity that the latest housing boom is  other than a dead duck are apt to capitulate, with very negative implications not only for yield-based calculations but for the broad stock-market averages as well.

The point 'A' high shown in the chart is not of the highest pedigree, but I've used it anyway because it corresponds to a p midpoint pivot where the downtrend has stalled very precisely. As always, a move through clear support would imply more downside to the 'D' sibling -- in this case a 1634.50 target that corresponds to a drop in the Dow of about 150 points. Because the midpoint has actually been exceeded by a single tick, traders -- night owls, presumably -- should position from the short side. Shortly before 2 a.m. EDT Monday, there were some serviceable patterns that would have worked, but with no follow-through due to DaBoyz' apparent reluctance to trash the so-far overnight low at 1649.50. This suggests that they are waiting for news to drive shares one way or the other. If the initial move is higher I'd suggest fading it, since bulls have shown no gumption in weeks, and for good reason.

A HIdden Pivot target at 1411.60 remains my minimum rally objective for the near term.  Notice that Sunday night's modest move toward that number has stalled precisely at the 1383.60 midpoint pivot of a minor bullish pattern -- one whose 'D' target precisely coincides with the target of the larger one given here earlier.  That implies it will have double stopping power -- but also that any decisive move past it will all but guarantee a finishing stroke to at least 1428.60, a target given here ten days ago when December Gold was trading just above $1300.

Here’s a perplexing new twist in the story of America’s supposed recovery from The Great Recession. While auto manufacturers can barely keep up with demand, sales at Wal-Mart, Macy’s and some other big retailers have gone flat. What’s going on here?  The easy explanation is that auto showrooms attract a different class of shopper, one with more discretionary income. Our take, however, is  that more than a few Wal-Mart shoppers who have cut back on non-essential purchases are in fact driving shiny new SUVs. While this might seem paradoxical, there’s a simple explanation – namely, that even households that don’t have two nickels to rub together at the end of the month can easily qualify for a $40,000, five-year car loan. With interest rates as low as they are, especially for big-ticket items purchased on credit, the buy-now- pay-later engine of the U.S. economy is able to thrive even with real incomes stagnant and new employment coming mainly from minimum-wage jobs. The Question of the Week is:  What’s your take on the recovery? Is it about to come to a screeching halt?  Did it ever really begin?  Will the economy ever return to “normal,” whatever that means? Are college grads doomed to live with their parents until they are 35 or older, like they do in Spain?  Anecdotes drawn from personal experience and the lives of friends and neighbors are welcome.

The resemblance of yesterday's bullish spike to the picture I'd sketched out hypothetically on a chart was striking -- and quite bullish, as the tout itself will have made clear. There has been no correction so far, and it's possible the impulse leg will eclipse yet another 'external' peak or two before bulls take a rest. For now, I'll suggest kicking back and enjoying this effusion, since boarding at these heights is going to be diabolically tricky at best.  If the rally retraces 50% of the nasty decline from October's 35.445, the futures are bound for at least 26.815.

Index futures are all quiet and cuddly Thursday night, as they sometimes get when even DaBoyz are clueless about how the markets will trade at the opening bell. My hunch is that if The Smart Guys fail to promote a bounce of at least 50 Dow points, stocks are going to end the week with another treacherous slide.

Buyers blew past the 1341 midpoint pivot of the pattern shown so easily that a follow-through to its 1411.60 'D' sibling appears all but guaranteed. The rally played out in less than ten minutes, leaving bulls and bears to duke out for, so far, the next eight hours.  Traders have the prospect of a nearly $50 ride, but I'm not going to pretend it'll be easy to get aboard, even for expert camouflageurs.  I would expect the next leap to occur only after a bamboozling series of feints higher and lower, the latter blowing any workable scheme of risk management to smithereens.

Yesterday's cascade transformed the summer's innocuous, oft-tedious shuffle into an impulsively bearish menace that seems unlikely to recede quickly.  Notice that the selloff exceeded three prior lows on the daily chart, two of them 'external'. This is a powerful 'impulsive' start for bears, and it will likely become still moreso next week if there is only a modest bounce to end this one. Analytically speaking, we'll be best able to judge the bear's ferocity by whatever follow-through occurs after an upward correction. For now, though, we can use 1645.75 and 1629.00 as downside targets. The first number would represent at 0.618 retracement of the record-achieving rally begun on June 24; the second, a 50% retracement of same.

Stocks were falling when this lesson began, but we went cautiously against the trend in Google to come up with a winner that took all of three minutes to play out. Who cares about the trend when one can make $500 in just a few minutes by catching a small twitch up or down in a $900 stock? In an average day, Google probably twitches hundreds of times. You may be surprised at how easy it is to spot the nervous ups and downs that can deliver quick, painless profits. ________________________________________________________________ By Brian Catalucci on August 1, 2013 Two losing trades stopped us out for small change during this session, but that was a small price to pay for the lesson learned. What are the limits of system trading on a day so trendless that the Dow was barely able to move 10 points up or down for the entire six hours? You’ll find an interesting and enlightening answer to that question in this recording.