October 6, 2024 | Stocks Act Fearless as Oil Price Soars

If you can keep a cool head while everyone around you is panicking, perhaps you don’t understand the situation. That’s what they say, anyway. It is exactly what we saw last week when stocks barely shrugged even as the shooting war in the Middle East took another baby step toward nuclear conflagration. The oil markets certainly recognized the danger, spiking sharply after our titular president warned that Israeli warplanes might soon start targeting Iran’s refineries. Energy quotes scored their biggest weekly gain in years while stocks, although relatively subdued, appeared to consolidate for yet another psychotic upthrust. What seemed to matter most on Wall Street was not the threat of cities going up in flames, but a few meaningless, cooked job stats implying that droplets of juice from America’s financial bacchanal have begun to trickle into the parched gullets of gig workers, nurses and cocktail waitresses (if not yet retail clerks).

Longshoremen could join them shortly with a 62% raise to $69 an hour, including the union’s legendary no-shows.  It’s a little late in the Kondratief cycle for them to become rentiers, but the prospect of owning a few shares of Nvidia seems realistic enough. Although keeping up with the Joneses has gotten easier because the Joneses’ inflation-adjusted net worth has been stagnant for 50 years, chasing inflation has only grown harder. And that’s measured against phony data that understate inflation by half.  Take heart, all you working stiffs: beating inflation is going to be a cakewalk when the next recession brings it down to, like, minus five percent.

What About Microsoft?

Speaking of recession, this IBM chart, even to the unschooled eye, suggests the Beamer may be about to reverse in a big way. Although I have never tracked the company’s shares closely, there may be a few old-timers who still remember when Fortune and Forbes featured Big Blue on their covers regularly. Now, the computer services company is so little thought of, at least by traders, that IBM puts and calls barely register a pulse. Spreads are too wide to use options for shorting the stock even though it looks likely to make an important top at or near 226.34. I’ve been drum-rolling that Hidden Pivot resistance as a prospective bull-market top since last January, and now it’s finally time to flip long positions.  Does that mean MSFT, our #1 bellwether and currently trading for 416, will not test the all-time high at 464? Time  will tell.  Although its ABCD pattern is too obvious to work precisely, it is also too compelling for the ‘D’ target to give way easily. In any event, it’s hard to imagine IBM usurping MSFT as the stock to follow, but the relentlessly steep pitch of Big Blue’s bull market would surely qualify it as a full-fledged member of the lunatic sector (aka the idiotically misnamed ‘Magnificent Seven’).

Rick Ackerman October 6th, 2024

Posted In: Rick's Picks

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