Friday, March 27     Published daily Receive trading 'touts' free
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Question of the Week

Ever Been Ripped Off by Wall Street?


Rick’s Picks treats all securities markets like a carnival midway because both were designed to fleece rubes. Entertaining proof of this came in the form of the steep dive Apple shares took in the final minutes of Friday’s session. Money was lost, and we’re not talking about chump change, either, since AAPL, with a capitalization of more than $700 billion, is the most valuable stock in the world. ZeroHedge estimated that the sudden, $2 drop caused $10 billion in market cap to vanish in minutes.

All in a day's work on Wall StreetAnd to what end? We may never know for sure, but you can bet that those who were short expiring call options at the $127 and $126 strikes were pleased when the stock dove from $128 to $126 just ahead of the bell. Open interest totaled a reported 105,000 options, but it’s impossible to tell the extent to which they were hedged. There were almost certainly some very big winner and losers, but my guess is that no heads will roll. Call it business-as-usual in a world where humans can nearly always find a machine to blame. Which brings us to the Question of the Week: Have you ever been ripped off by Wall Street?

Thought for Today

Index Futures Unusually Frisky Ahead of a Friday

Index futures were friskier than we’ve seen them in a while on a Thursday night.  The E-Mini S&Ps were up the equivalent of 70 Dow points, but there looks to be further upside potential. I’ve detailed a ‘mechanical’ trade in this vehicle, as well as in the June Euro, so night owls looking for something to do should check out my touts.

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$GCJ15 – April Gold (Last:1201.90.)

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$ESM15 – June E-Mini S&P (Last:2057.25)

Pullback to the red line could be boughtThe futures are up the equivalent of about 70 Dow points late Thursday night, having pushed past a 2053.25 target that I’d flagged in the chat room intraday. It took about 90 minutes of head-butting for buyers to accomplish this, but the payoff could come in the form of a rally Friday to 2069.00 or higher. That’s a Hidden Pivot resistance, and traders should consider its attainment an odds-on bet if this vehicle pushes past the 2057.75 midpoint pivot.  Night owls can try a mechanical entry after the futures have traded 2059.75 or higher. A pullback to 2057.75 could be bought ‘mechanically’ with a stop-loss at 2054.00. If you use the ‘camouflage’ technique instead, you can step up the size.

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$CLK15 – May Crude (Last:50.37)

Another dead-cat bounceI’d initially regarded this rally, now in its eighth day, as a dead-cat bounce. However, with Saudi Arabia growing increasingly nervous about the Shiite takeover of neighboring Yemen and about to enter the fray there on war footing, the steepening, upward skew in oil prices is not likely to abate any time soon. I’m not going to hazard a price target for the rally, but I wouldn’t suggest trying to intercept it if you should come up with a target of your own. ______ UPDATE (March 26, 11:46 p.m. EDT): The rally turned sloppy overnight when traders decided that Saudi airstrikes on Yemen jihadis probably wouldn’t end the world.  There was more than a little hubris in their collective sigh of relief , however, and because the end-of-the-world fear is not entirely farfetched, I’d strongly suggest trading crude with a bullish bias for now.  The hourly chart suggest upside potential to as high as 55.29 over the near term (A=47.00 at 4:00 a..m. on 3/25).

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$AAPL – Apple Computer (Last:124.25)

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AA – Alcoa (Last:13.09)

Does Alcoa know somethingMy friend Richard ‘Doc’ Postma reminded me the other day that Alcoa, always among the first big companies to report earnings, has traditionally been a pretty good mine canary when it came to warning investors of weak quarterly earnings. If bad news concerning Q1 does indeed lie just ahead, the stock has gotten quite a jump on the broad averages, which have been acting as though investors didn’t have a care in the world. Alcoa has fallen by 25% since early February, reflecting global weakness and oversupply in the aluminum business. Judging from the look of the weekly chart (see inset), any rally would be an enticing short sale. Assuming the ‘Alcoa indicator’ has done its job, Wall Street will have no excuse when the bad numbers start rolling in.  With earnings due out April 8, the stock looks primed to rally as other stocks fall — a case of sell-the-rumor, buy the news. This point was made by a trader in the chat room who noticed that the lesser charts look more bullish than the weekly shown.

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$ECM15 – June Euro (Last:1.0889)

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$+TLT – Lehman Bond ETF (Last:131.49)

Smidgen higher in TLTBased on a report in the chat room from a subscriber who has been long call options since TLT bottomed two weeks ago, I’m establishing a tracking position: long two April 17 129 calls for a CREDIT of 1.68 apiece. The subscriber bought the calls using a 124.50 correction target I’d proffered, and although TLT subsequently went lower, bottoming at 122.97, the subscriber held onto the position because I had not suggested a stop-loss. She cashed out of half of those calls yesterday for 3.30 — more than four times the 0.81 she paid. I have imputed the gain thereof to the cost basis of the call she still holds. (She bought two contracts, but our standard practice is to start with a multiple of four; that’s why the tracking position is two contracts.) For now, do nothing further. If perceptions grow that Fed tightening has been pushed back indefinitely, the nice rally in T-Bonds since early March is just a warm-up. This is notwithstanding the pullback I expect in this vehicle from 131.72 (see inset).  I still see long-term rates falling below 2% — perhaps as low as 1.74%. _______ UPDATE (March 20, 12:15 a.m.): Since few subscribers appear to be on board, I’m going to look for a low-risk entry opportunity suitable for novices in the days ahead. One possibility would entail legging into a $1 or $2 vertical call spread at no cost.  We’ll need a day or two of weakness to make this work, so stay tuned to the chat room for real-time guidance if you’re interested. _______UPDATE (March 22, 6:12 p.m.): My latest update for T-Bond futures is very bullish, implying we may not be able to get long in this vehicle on a leisurely pullback. Subscribers eager to board should interpolate the T-Bond forecast to craft a camouflage entry strategy. This implies using the 1-minute chart to jump on the first micro-ABC pattern that offers the enticements we typically look for. _______ UPDATE (March 26, 12:10 a.m.): Yesterday’s selloff occurred without TLT having achieved a minor rally target at 133.31. This is a mildly negative sign for the short-term, but the target will remain valid nonetheless as long as the downtrend does not exceed 130.27.

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$GDXJ – Junior Gold Miner ETF (Last:24.88)

If GDXJ support gives wayFor four months, GDXJ has been playing toe-sies with a 20.83 target that was put in play back in August. While there is always the possibility that this popular junior mining-stock vehicle is about to turn higher, the weight of the visual evidence suggests lower prices are more likely. If so, a 16.54 (!) target would be logical, calculated by sliding the point ‘A’ high of the pattern up to the peak labeled A2 in the chart. The resulting Hidden Pivot at D2, midway between p and D, would be my minimum downside objective if 20.83 is decisively breached. It’s hard to imagine what factors might account for such an extreme drop, but you don’t have to be a chartist to see the visual logic of it. As a possible alternative, it would take an explosive upthrust exceeding the 54.56 peak from August 2013 to break the spell of the bear market that has pummeled gold stocks for more than four years. _______ UPDATE (9:08 p.m. EDT): GDXJ exceeded the 20.83 support, but only by 15 cents. Bulls will get the benefit of doubt here, but only barely. _______ UPDATE (March 15, 11:25 p.m.):  GDXJ spent Friday probing a midpoint resistance at 22.35. If it can get past it today, look for more upside over the near term to exactly 23.16 (5-min, a=21.18 on 3/11).  _______ UPDATE (March 18, 1:55 a.m.): Buyers quit just above the midpoint resistance flagged above. Now let’s see if they can hold the line at 21.16, a minor Hidden Pivot support. _______ UPDATE (March 22, 5:41 p.m.): Friday’s encouraging thrust refreshed the bullish impulsiveness of the hourly chart with this potentially tradable pattern: A= 23.02 on 1/19; B= 24.37 on 3/20; C=?.  ________ UPDATE (March 25, 12:30 a.m.):  GDXJ looks primed for more upside to at least 25.64. On the hourly chart, here are the coordinates: A= 22.65 on 3/19 at 10:30 a.m.; B= 24.37 on 3/20; and C=23.92 on 3/20.

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$USM15 – June T-Bonds (Last:165^10)

Gnarly pattern yields a clear targetI provided only bullish targets in my last update, but the futures will need to achieve the corrective ones first. Most immediately, that would imply more downside to the 158^02 target shown. I expect this Hidden Pivot to provide a tradable bounce, but if not, the next stop on the way down would be 156^28, a target derived by sliding up to the next valid point ‘A’ (shown here as A2).  Slide one rung higher still, and you would come up with 155^15. ______ UPDATE (March 5, 11:53 p.m.): A swoon in the early going came within two ticks of the 158^02 target identified above.  Is the worst over?  The futures appeared to consolidate for the remainder of the day, but unless they can leap a 159^11 ‘external’ peak recorded on Wednesday, and soon, a relapse down to 156^28 is hardly a longshot. ______ UPDATE (March 6, 10:32 a.m.): Based on strong payroll data out this morning that no one actually believes, and which reflects a strong job market that does not in fact exist, T-Bonds have taken their worst single-day hit in years. The mini-crash has put into play a 153^17 target whose coordinates, on the 60-minute chart, are A= 168^11 (2/5); B=158^30 (2/19); and C=163^07. _______ UPDATE (March 10, 9:21 p.m.) The rally looks promising, but it will need to exceed 159^10 to turn the hourly chart bullishly impulsive. _______ UPDATE (March 15, 11:30 p.m.): The futures spent most of Friday head-butting a midpoint resistance at 160^00, but if they can push above it today, look for more upside over the near term to at least 161^12. (60-min, A=158^01 on 3/11)._______ UPDATE (March 18, 3:53 p.m.): What a blast!  You can use a 164^18 target now, based on (180-minute chart) A=154^27 on 3/6. _______ UPDATE (March 22, 5:47 p.m.): Friday’s rally left the futures just shy of a 164^18 target that kept us properly bullish last week. My hunch is that the  futures will blow bast it today or tomorrow, presumably bound for a 165^22 target based on these coordinates (60-minute): A=161^09 on 3/18; B=164^07 on 3/18; and C=162^24 on 3/19. _______UPDATE (March 25, 12:36 a.m.): Go, you little mother! The precise stall at p=165^18 (see chart, a new one) yesterday implies that the futures will be on their way up to exactly 168^12 when they surpass the pivot.

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DXY – NYBOT Dollar Index (Last:97.08)

A little more sellingIt’s no coincidence that the stock market’s steep rise in February began just days after an equally steep rise in the dollar stalled in late January.  The dollar has been moving sideways ever since, extending a monotonous sine-wave correction that is setting up the dollar’s next powerful rally. It projects to at least 96.30, a relatively modest move of about 2% that would leave DXY a tad shy of  a small but technically important peak at 99.25 recorded in August of 2003 (see inset). The dollar has already blown past a more significant ‘external’ peak at 99.25 from 2005, so it’s got nothing to prove. But if the next upthrust eventually exceeds the 96.30 target as I expect, it would add a robust new dimension to the bull market begun in earnest last year.  It would also put considerable pressure on U.S. stocks, perhaps even ending February’s joy-ride on Wall Street. _______ UPDATE (February 26, 10:15 p.m. EST): Yesterday’s sharp rally generated a bullish impulse leg on the daily chart. If this is the breakout we’ve been waiting for, a run-up to 96.58 is imminent. If DXY needs more time to  consolidate, look for oscillations around a midpoint pivot at 94.92 in the day ahead (daily chart, A= 92.15 on 1/21). _______ UPDATE (March 6, 12:04 a.m.): DXY popped to 96.59 (see inset, a fresh chart), a penny from the target identified above a week ago. Any higher would imply bulls are eager to take on the 99.25 peak also mentioned above. A move through it within the next few weeks would imply the dollar bull is just warming up. _______ UPDATE (March 15, 11:32 p.m.): Bulls proved unstoppable once again last week, pushing above the 99.25 ‘external’ peak with no evident strain. This has further extended the impulsive rally begun last May, offering a picture of power that could eventually challenge peaks near 121 that occurred almost 14 years ago. More immediately, I’ll be looking for a pullback from exactly 101.10 (weekly, A=87.63 on 12/19/14)._______ UPDATE (March 20, 12:31 a.m.): The pullback we were expecting came from slightly below the 101.10 pivot. Now, if the bull is still feisty, corrective abc’s should not reach their d targets._______UPDATE (March 2, 5:53 p.m.): Friday’s corrective action breached a midpoint support (see inset), implying that it will take at least somewhat lower prices to shake out the last of the nervous Nellies. If so, look for a tradable low at the 96.30 target shown.  _______ UPDATE (March 25, 12:42 a.m.): DXY bounced off a 96.39 low yesterday, but if it dives anew, breaching my target, look for a more durable low at 95.70.  This is a back-up-the-truck number for bulls who have been waiting out the correction.

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$KSS – Kohl’s Inc. (Last:74.71)

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The laser-like accuracy of Rick Ackerman’s forecasts are well known in the trading world, where his Hidden Pivot Method has achieved cult status. Rick’s proprietary trading/forecasting system is easy to learn, probably because he majored in English, not rocket science. Just one simple but powerful trick -- managing the risk of an ongoing trade with stop-losses based on ‘impulse legs’ – can be grasped in three minutes and put to profitable use immediately. Quite a few of his students will tell you that using ‘impulsive stops’ has paid for the course many times over.

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