Brian Catalucci

Gaps are not usually discussed as part of Rick's proprietary system but its something in my bag of tricks that has produced results for me. I have noticed when there's a gap right after point 'A' there's a very high probability it's the 'A' you want to use. It's the same reason why single bars increase the odds of a pattern playing out-- there's some kind of panic that allows the Fibonacci projections to play out.  Could it be that gaps are like head and shoulders patterns and you see them everywhere especially if you are looking for them? Perhaps. But in my experience gaps near 'A's are associated with too many successful patterns to be just a mere coincidence. Another observation I want to point out with this chart is that although we hit P before dipping below C and breaking this pattern is that failed patterns will still produce reliable P2 and d targets. So set alerts at 27,019 and 28,239 as I believe they will produce reactions.

Henny Penny or more commonly called Chicken Little in the U.S. is a folk tale about a chicken that believes the sky is falling when an acorn lands on its head. That's what I see when I turn on television everyday. Just one Henny Penny after another proclaiming the end of the bull market. The only problem is Henny Penny hasn't been paying attention to the Russell 2000 which this week broke out to new all time highs. There are a pair of P2 and d targets (1658.15 and 1637.49 respectively) directly above which we can use to gauge the strength of this market. Whether we get a tiny overshoot or a miss of each target will provide us with a wealth of information as to the state of this bull market.  At the end of the folk tale Henny Penny and all the other animals that follow Henny Penny are invited into a lair by a fox and all of them are eaten.

As an avid gardener I am very sensitive to the weather. Having grown up in Marin county here in the SF Bay area in the 80's I have fond memories of incredibly hot weeks where you could barely sleep at night it was so hot. And it wasn't just a few days of hot weather. The 100 degree weather would go on and on for weeks. I am surprised at how cold it has been the past 7-8 years. We are in the middle of May and it's still very cold outside and my garden is quite the sad scene due to the relentless cold. To experience back to back 90 degree days is now quite the anomaly. As an investor being a contrarian is an integral part of my life as I am always looking to do the opposite of the herd. Is it possible we've been wrong all along and we are actually entering a mini-ice age? A team of European researchers seem to think so and the mini-ice age could come as soon as 2030. If an ice-age is coming I don't think Florida will be far south enough. And how will an ice-age impact agriculture? What kinds of investments can we make now before things get really cold. These are the kinds of things I think about when it's a quiet day in the markets.

A chatroom subscriber that goes by LukeDog requested a chart on Bitcoin. Any investment instrument capable of moving up or down 50-100% in such a short period of time is what I consider a psycho trade. That is- you'd have to be psychotic to want to trade this. With only 6 months of history I don't see anything other than 4455 d target pain in Bitcoin's future. If bitcoin can muster up the strength to take out the 12,075 C that would certainly change my outlook.

As a recovering Gold bug I have great sympathy for what die-hard bitcoin fans are about to experience. Years and years of grinding lower with the occasional wicked spikes up that bear markets are known for. Don't get me wrong-- I'm with the minarchists (e.g. Libertarians) and anarcho-capitalists in my excitement for crypto-currencies and their ability to transact anonymously not to mention their portability allowing you to move your entire net worth across national boundaries with a click of a mouse button. But with the crypto-mania having its blow-off top along with the retail public buying bitcoin it's clear the top is in for now and it's time to move onto the next big thing. So what about the original alternate currency- Gold? And more importantly the leveraged gold investment play- the HUI Gold Bugs Index? The good news is I believe the major low is in. Why do I think that? Take a look at the attached long term chart where we missed our clear d target. Without giving away too much of Rick's proprietary system one thing I like about this chart is the short and unintuitive B-C leg and then the subsequent interactions with P, P2 and d. The bad news is that we are still not ready for prime-time. The inset chart shows a possible P2 target of 155.77 which coincidentally happens to be near the low made in Nov-Dec 2016.  Taking out this low by a few dollars should be enough to freak everyone out that the bottom will fall out. Experienced pivoteers won't be afraid to buy this low. When the next leg up in gold takes us to $2500 and higher we will look back at this coming low in gold stocks as the buy of a lifetime.

The 10 year treasury hit 3% today and 2 year treasuries haven't been this high since back in 2008.  Is the 5,000 year low in rates behind us? Let's just say I don't think we'll see these lows again in my lifetime. If you are considering selling your house this could be your last chance as once the bonds start to collapse rates can double very quickly. The DOW had a light volume day but it did refresh its bullish impulse leg on the hourly.  According to the SEC there is over $3 trillion sitting in money market funds. You can be sure this money will be waiting to jump in when the markets end their consolidation and decides to make its next move.

On a rather ho-hum day buyers were able to refresh the bullish impulse leg by taking out the 24,977 March 21 peak. Zooming into the hourly the P 24,989.89 was tagged on this clear pattern using a one-off 'A'. As we are still in "consolidation" mode I expect more of the same mundane activity for a bit while longer although I wouldn't blame you for wanting to get long using a mechanical buy at 24,853.7.

The Euro/USD looks to have made a temporary low and should bounce a bit here. We don't normally discuss currency pairs and the Forex market at Rick's Picks but it's important to understand what's happening globally to understand what will happen domestically. With the constant bashing of the Fed compared to what's going on in Europe the U.S. Fed looks like the Rock of Gibraltar. When you buy a U.S. Bond you are buying a bond representing all 50 states. Can you imagine buying a California Treasury Bond or a Florida Treasury Bond all with different yields? That's exactly how the Euro was set up, with each European member having its own bond instead of a unified bond market like we have here in the U.S. This is the Euro's fatal flaw and this is why the German Bund is trading at 200 basis points lower than the equivalent U.S. treasury, because German Bund investors think they are going to get Deutsche Marks when the Euro finally collapses. Once the Euro/USD bounce to the trendline resistance concludes (could take a few months to play out) it's easy to see it dropping into the abyss below the critical 1.16 area and all hell breaking loose in Europe. Not only is this going to fuel the flight to U.S. equities but also catapult the U.S. dollar much higher. How high could the dollar go? The 1985 highs are not outside the realm of possibilities.

Earlier this year finding a video card was nearly impossible. The markup on used video cards on eBay was double the new price and all video cards were backordered indefinitely. I've voiced my frustration many times in the chatroom about this situation due to the bitcoin miners and at the same time I had been keeping an eye on Nvidia's stock price as they were the primary beneficiary of this crypto-mania. As they say during a gold rush you make your money selling shovels and NVidia has sold a lot of shovels. As the bitcoin mania has subsided I noticed I started getting alerts a few weeks ago from my favorite hardware retailer B&H Photo that the various video cards I had been monitoring were back in stock. I checked today and things appear back to normal where dozens of different video cards in all price ranges were available. Looking closer at the NVDA chart we got within 17 cents of a long term target of $260.67. So far the d target has stopped this rampaging bull. If the crypto-mania decides to take a multi-year long break I just can't see how NVDA can keep this ballistic rise. Stay tuned in the chatroom for ways to get short this stock by zooming in on lesser timeframes.