Rick Ackerman

DaBoyz milked the impending trade deal for all it was worth last week, squeezing shorts relentlessly until they evidently exhausted themselves on Friday before dawn. I can't recall a more enticing instance of 'buy the rumor, sell the news'. The trouble is, both rumor and news have exhibited manic bipolarity on a weekly basis, to the point where the usual idiots who have fixated on Trump's tweets and nothing else have turned the stock market even more psychotic than usual. Still, there is little reason to doubt that the ratcheting short squeeze begun a week ago will sputter out somewhere shy of July's highs, since the U.S. economy, if not yet the widespread perception of it, is moving toward a recessionary tipping point. An opportunity to leverage an autumn crash would appear to be nigh, even if Mr. Market is not making it easy for us. The mere fact that it looks like such a juicy bet implies that an unpleasant surprise may yet lie ahead for righteous bears.

GDX held up well last week, considering the fever that gripped non-bullion stocks. I have assumed that most subscribers cashed out of call options acquired for a pittance nearly a month ago. I still hold the 6th Sep 29/31 vertical spread myself and plan to keep it until expiration, since there remains an outstanding rally target at 31.57 (see inset). The spread was marked at 0.87 on Friday, but my order to close out a third of my position for 1.35 (which I announced in the chat room) went unfilled; alas, the spread traded no higher than around 1.20. I would not recommend duplicating the spread with just four days left on it. But if GDX pulls back to x=28.60 by Tuesday afternoon, consider buying a few 6th Sep 29 calls naked as a speculation. _______ UPDATE (Sep 4, 10:45 p.m.): I closed out more spreads today for as much as 1.57 but still plan to hold a few for a shot at full value (i.e., 2.00) on Friday. _______ UPDATE (Sep 5, 10:40 p.m.): A few subscribers reported buying calls, but without specifying which. Sit tight for now, since gold's corrections tend to last longer than a day or two.

Eager as I am to short this ginned-up hoax-of-a-rally, I didn't flag the 'reverse ABC, counterintuitive' sell signal for action on Friday because the bet would need to have been carried over the holiday weekend. You should stay tuned to the chat room nonetheless if you're interested, since a spikier point 'C' high would give us better entry odds. For the time being, look for more downside to the 2887.75 midpoint Hidden Pivot of the pattern shown.  I expect a bounce from very near it, although you'll need to improvise your own strategy if you want to bottom-fish there. A five-tick stop-loss is as much as I'd give it. ________ UPDATE (Sep 4, 12:01 a.m. ET): The futures bounced from 2890.00, five ticks from the target given above. There was no mention of this in the trading room, however, and so I have assumed that interest in this vehicle is nil. For what it's worth, ES appears to be under distribution at night on thin volume and mildly anxious short-covering.

Gold came under pressure last week because the institutional thieves who tend the markets were busy pumping up shares. Even so, I am going to raise my minimum upside target to 1666.10 because of the healthy look of the monthly chart (see inset). The 1622.60 target of a lesser pattern I'd displayed here earlier remains valid. In fact, the pattern that produced it would trigger a weak mechanical buy if the December contract were to pull back slightly more, touching x=1522.40. I say 'weak' buy because the C-D leg never quite rallied to our sweet spot around 1574 before pulling back; it got no higher than 1565. I am not recommending the trade for that reason, but also because of the implied risk that the futures will breach C=1488.90 before resuming their upward course. How long that will take depends on how much more short-covering DaBoyz can milk from a supposedly imminent -- for about the 50th time -- trade deal with China. We already know that whatever supposed deal is reached, it will be a face-saving nothingburger, and that the broad averages will be an attractive short on the news. Until then, we should be prepared for stocks to waft higher. _______ UPDATE (Sep 5, 10:35 p.m. ET): Today's selloff tripped a mechanical buy at 1522.40, stop 1488.80, but I've suggested paper-trading this one because it has $13k of initial risk on four contracts.  Here's the chart; let's see how it goes. 

The bounce in the Ten-Year Note lasted all of eight days, implying Treasury rates are about to fall to new lows. Check out my latest update below for a chart that shows how 1.30% is likely, and soon. We can look for a play in interest-rate ETFs to leverage the move, so tune to the Rick's Picks trading room if you're interested.

A subscriber who follows gold closely was having second thoughts in the Rick's Picks trading room Tuesday about bullion's rally. "Some of the experts say gold hit a high and is going to plummet by Labor Day," she noted.  "You know better," I replied, "than to let what 'some of the experts say' affect your thinking. None of them is any better than his last ten predictions. Meanwhile, I've hung out very bullish rally target at $1623 -- not just for your benefit, but for mine too. I've avoided blowing out my call spreads too early simply by hedging them with high-leverage put spreads that cost me almost nothing and which I don't mind having go to zero. Don't Wait for Bargains "Waiting for gold to plunge, as it always used to, so that we can scoop up some bargains has not been a winning strategy lately. The experience should have made you 'feel' by now that the experts you mentioned are wrong -- also, to understand that when gold finally took off, as it clearly has, how it would do so in a way that would trick bulls out of reaping the rewards they have so patiently anticipated for the last eight years. As [another serious gold trader] has repeatedly emphasized in here, this is not the time for bulls to turn skittish." Bottom line: The rally in gold is for real. If you hold a long position, it's okay to trade around it, possibly with covered writes, or even to trade in and out of it. But when occasional shakeouts occur, as they will, consider them buying opportunities --  time to reload.

The tweet-driven stock market has exhausted my patience, as I am sure it has yours. Expect a short-covering rally lasting perhaps a day or if and when Xi and Trump shake hands on a face-saving deal. The rally that ensues will be as phony as the deal itself, and that's why we should view it as a great opportunity to get short. The news media will pretend something has happened, celebrating nothing so much as their own ability to invent a story where there is none. Don't buy any of it. If the agreement has any value at all, which is doubtful, it will lie in the extent to which it reduces Beijing's ability to coerce U.S. companies to give away the store technology-wise if they want to do business in China. How many Dow points would that be worth? Answer: Not many. [Note: Rick is on holiday but will be updating these commentaries as warranted. Check back daily for new developments.]

The strong surge that ended the week has brought clarity to the very bullish pattern shown. Its 1622.90 rally target will become a good bet to be reached if and when the futures blow past the 1555.90 midpoint Hidden Pivot. This is slightly lower than the target given here earlier, but it can serve for now as a minimum upside objective. How quickly the December contract gets there will depend on how the stock market does, since the chimpanzees who are paid handsomely to throw other people's money at a tiny universe of institutionally sanctioned stocks can only handle one theme at a time, even with the help of powerful computers. For the foreseeable future, that theme will remain: buy stocks, sell (or ignore) gold and bonds; or, sell stocks, buy gold and bonds.

The strong surge that ended the week has brought clarity to the very bullish pattern shown. Its 1622.90 rally target will become a good bet to be reached if and when the futures blow past the 1555.90 midpoint Hidden Pivot. This is slightly lower than the target given here earlier, but it can serve for now as a minimum upside objective.  How quickly the December contract gets there will depend on how the stock market does, since the chimpanzees who move the markets can only handle one algorithmically enabled theme at a time. For the foreseeable future, it will remain: buy stocks, sell (or ignore) gold and bonds; sell stocks, buy gold and bonds.