Rick Ackerman

The seemingly unstoppable rally since Bertie bottomed at 52,619 on September 6 will test the idea that the best shorts occur in places that inspire the most fear in bears. Friday's wilding spree tripped a fearsome but technically appealing 'mechanical' short using the green line (x=59,858). That doesn't mean you're supposed to get short at that price, only that you have a proper signal for setting up a 'camouflage' trigger that minimizes the otherwise 5158-point entry risk of a position stopped above the pattern's point 'C' high. I suggest a trigger interval of 625 points, implying $2500 of entry risk on four lots. This trade is only for those who understand the mechanism and are comfortable with the risk.

My confidence in the pattern shown is high. It is that pretty, and the 'mechanical' short triggered on Friday when a two-day bounce touched the green line is therefore likely to fall to at least 99.90 before TLT could find traction. However, a decisive breach of the red line would imply more slippage over the near term to as low as 98.56. The bigger picture remains bullish and points to 105.49 over the near-to-intermediate term, with long-term potential to as high as 150.12 (!).  The much lower interest rates this implies should not be regarded as good news, since yields could fall to those levels only in the throes of a very deep recession or a depression.

The 65.95 downside target of the pattern shown is sufficiently clear and compelling that we might have expected it to contain the powerful bear cycle begun in early July from around $85. Instead, the futures breached the Hidden Pivot support by a not insignificant $1.34. This implies the nearly $5 bounce that has occurred so far is likely to sputter out without surpassing any significant prior peaks on the daily chart (the nearest of which lies at 76.40).  For now, I can offer a rally target at 69.76 as a minimum upside projection (30m, A= 64.99 on 9/11), or at 71.94 if any higher. These Hidden Pivot resistance points will obtain as long as 67.58, the pattern's point 'C' low, is not violated first.

The so-called 'wealth effect' is the Tulipmania of this era on steroids, creating untold sums of money from speculative spume. If materializing vast quantities of spendable cash is the goal, a revved-up wealth effect makes the Fed Open Market Committee look like a ladies' luncheon club. Indeed, it can take long months or even years for the central bank to stoke the consumption furnace using swaps, repos and direct purchases of Treasury debt. These obfuscations are designed mainly to make the promiscuous use of credit more attractive to everyone. However, the money must be borrowed into existence for profligacy to work its magic on the economy, and that takes time. There is a much faster and simpler way to inject cash into the system. It works every time, and the result is instantaneous, effectively showering Wall Street with a blizzard of $1000 bills. This is a monetization trick that is not taught at Wharton. An added feature is that even Joe Sixpack can pitch in simply by buying stocks on margin. Turbocharged by a 4x multiplier and a steeply rising stock market, Joe will be driving an Escalade and living in a grandiose suburban home he will never own in practically no time. The chart shows how it's done, satisfying America's money sickness in ways even the financially ingenious Dutch might not have imagined. Their seaborne empire was at its height in the 1630s, when greed and hysteria combined in just the right proportions to make the masses believe a rare tulip bulb could be worth as much as ten acres of prime farmland. The Burghers who invented the open-outcry exchange had the good sense to restrict futures trading in flower-bulb contracts in one crucial way: traders could not sell them short. Shorts Power Bull Markets In contrast, a key

By midweek, we had reason to expect a 2% drop to at least 5429.38, the midpoint Hidden Pivot support shown in the chart. Unfortunately, the small penetration of this level in the late afternoon on Friday implies more slippage is likely. Now, you can use the magenta line (p2=5309.19) as a minimum downside objective. But be prepared for additional weakness down to as low as d=5189.00, the blue line) if selling snowballs. There is no reason to believe the dropoff from a range of small peaks recorded over the last two weeks will be any worse than that. However, and nevertheless, we should be mindful of a possibility I first broached here months ago -- i.e., that because the range of small peaks occurred below mid-July's record summit, the S&Ps may be replicating the lower highs and lower lows that occurred in the summer of 1929, just ahead of the stock market's crash in October 1929.  Microsoft's performance will be crucial to the way we view these developments, so be sure to read the latest MSFT 'tout' immediately below for more-finely nuanced insights.

We've had our sights trained on a 449.42 rally target for a month. Given MSFT's premier bellwether status, this was sufficient reason to infer that the bull market as a whole had further to go despite a mounting pile of good reasons for its imminent collapse.  We also said that if the stock corrected down to 401.54, this would present a back-up-the-truck buying opportunity for an implied 48-point ride back up to 449. The first phase of our plan came to pass last week when MSFT plunged 17 points, or 4%, before settling at 401.82 ahead of the weekend. Although the stock initially trampolined $10 after kissing the target in the early morning, it relapsed to end the day, and the week, with an $8 loss. Although this may have been scary for investors who have ridden the stock down from the record 468 achieved in early July, it still looks like a juicy buying opportunity for those who have been waiting for fire-sale prices. Indeed, the 'reverse abcd pattern' shown in the chart would appear to offer great odds for anyone buying at the green line. A $16 rally to the red line (p=417.50) seems assured, although a follow-through to D=449.42 can no longer be confidently touted as a near certainty. Even if the stock does achieve D=449.42, that would leave open the possibility of a 1929-type secondary top in both MSFT and the broad averages. Alternatively, if MSFT continues to fall, surpassing the C=385.58 low of the pattern projecting to 449.42, that would be strong evidence that the bear market investors have feared for years has begun. _______ UPDATE (Sep 11, 9:49 p.m.):  MSFT has now rallied $23 from within a hair of the 401.54 correction target flagged above, in my tout, my weekly commentary and the chat

Two weeks ago, we said this bitcoin proxy would fall to at least 54,701 from around 60,000. And so it has, although the tradable reversal we might have looked for at that Hidden Pivot support failed to materialize on Friday under hard selling. That will have bearish implications for the near-term. Specifically, it implies a further fall to at least 49,543, the pattern's 'secondary' Hidden Pivot support. Odds are about 80% this will happen. However, they are no worse than 70% that there will be further slippage to D=44,386 in order to fully correct this hype-driven, fire-breathing dragon. Although that might sound like a painful outcome for investors deeply immersed in bitcoin, it is in fact scripted to bring cryptos down to levels where it can be safely accumulated more or less indefinitely. It helps that there are no real sellers in bitcoin, let alone shorts; and that its biggest boosters, the money center banks, have precious little skin in the game. They have helped huckster bitcoin mainly because their clients like the stuff, and because it will retain speculative appeal until the inevitable day when cryptos fall to their fair, intrinsic value near zero.

We've been using an ambitious rally target at 2771.70 (newly corrected) for months, but the wait has begun to impact the odds it will be reached any time soon.  The midpoint Hidden Pivot at 2549.30 has become a barrier to October Gold's upward progress, and there can be no guarantees the target will be achieved until such time as buyers push decisively past that number. So far, they have failed to breach it, having spent the last month screwing the pooch just below it.  A pullback to the green line (x=2438) may be needed to give the futures a rest and a running start. That would generate a 'mechanical' buy signal in theory, although it would not be strong because the pattern's C-D leg has dragged on for long enough to squander the bullish energy created by the A-B impulse leg. For now, though, the longer the futures hover just beneath p, the greater the chance they will relapse 50-100 points to regroup for another try. ______ UPDATE (Sep 12, 11:30 a.m.): No pullback or running start was necessary, since the futures have turned the 2549 midpoint Hidden Pivot into chop suey this morning. The move looks sufficiently powerful to all but guarantee a run-up to at least p2=2680.50 over the near term, and thence to the 2771.70 target flagged above.

I’ve been waiting for the futures to fall to the 27,800 'd' target of the reverse pattern shown so that I can get a reliable and precise handle on trend strength. Can a beaten-down Silver summon the moxie to embark on a bull cycle that would challenge May's imposing high at 33,500?  If so, it will need to put up a few strong bars on the daily chart, and soon. My gut feeling, however, is that the December contract has languished for too many days just a hair above d=27.800 to imply that it is gathering such strength. More likely is that the futures are fixing to dip below 'd', then test the key low at 26.885 recorded on August 8. _______ UPDATE (Sep 13, 9:41): The futures have spiked precisely to the D=31.04 target shown in this chart. Expect a pullback, but if not, count on more upside to 31.795, a Hidden Pivot calculated by sliding the 'A' low down to 27.06, recorded on 8/7.