Rick Ackerman

Bulls and bears duked it out on Thursday for a third straight day, setting up a grudge match on Friday that could produce more volatility than we've seen so far this week. Whatever the case, I'd suggest using the chart shown (click on inset) to guide you. It implies minimum downside to 2623.13, a Hidden Pivot midpoint support that can be used to bottom-fish with a stop-loss as tight as 2622.75.  If it's hit, take it as a sign that the futures are likely to continue lower, presumably to the 2559.75 target shown. They could conceivably trace out a set-up for a mechanical short from the green line, so be alert to this possibility in the early going.  If I'm in the chat room when it occurs, I'll provide further guidance. _______ UPDATE (Dec 14, 12:30 p.m.): Today's plunge brought the futures within a hair of the 2591.44 secondary pivot shown in the chart (click on inset). Tightly stopped bottom-fishing would have warranted on Friday, but not within an hour of the closing bell. If the pivot is decisively exceeded Sunday night or Monday, you can assume the downtrend is likely to continue to D=2559.75. That would be a high-odds spot to attempt bottom-fishing with a tight stop-loss, but you should do so aggressively only if you've made some money being short on the way down._______ UPDATE (Dec 17, 2:12 p.m.): With the 2559.75 'hidden' support giving way, here's the new picture we must consider, with a 2456.50 target. Please note that although a whopping rally from here touching 2629.00 would feel like the stock market was back on track for a decent Santa dead-cat bounce, it would actually set up an enticing 'mechanical' short.

The stock market kept its cool Thursday, demonstrating yet again that traders are deaf, dumb and blind to whatever is going on in the real world. The Dow rose moderately even though the headlines were a full shade darker than usual. Trump was threatening to punish GM for closing an auto plant in Ohio. (He could kill two birds with one stone if he waits for his nemesis Musk to take over the company.) The Saudis were planning a sharp cut in oil exports in order to drive up prices; the U.S. budget deficit hit a record in November; and Pimco raised the odds of a recession over the next 12 months to 30%, a nine-year high. Despite the menacing tone of the news, the Industrial Average eked out a 70-point gain while the S&Ps fell slightly. Let's hope retailers don't chime in with a dour yuletide report or we're liable to see a Santa rally in reverse. Seasonality is strongly in bulls' favor, but if DaBoyz are unable to seize the advantage on Friday to end this unusually turgid week, Wall Street will face a ponderous overhang of supply come Monday.

Although stocks have taken an unpleasant hit since early October, the market is not exactly falling apart. Let your eyes take in the big picture shown in today's chart (inset). It wouldn't be stretching things visually to say the blue chip average has spent most of the year in a consolidation, presumably biding its time until economic news turns more favorable. In the meantime, one could reasonably infer that shares have held their ground under difficult circumstances, including growing weakness in the housing, automobile and retail sectors. If AAPL Goes Crazy... Now try to visualize an imaginary price bar plunging well beneath current levels. It looks 'wrong' simply because the eye wants to create symmetry in the chart. In this case, that would mean more pooch-screwing price action similar to what occurred between February and July. While we have much more sophisticated techniques at our disposal to interpret charts, sometimes a visual first impression can give us a good sense of what's on investors minds. That they have been conflicted during most of 2018 is obvious. But what seems equally obvious is that they may not be ready to send stocks into a fearsome plunge below 20,000, at least not yet. Accordingly, Rick's Picks subscribers have bought a slew of way-out-of-the-money call spreads in AAPL for relative pocket change. I suggested this longshot bet in case Wall Street should do something really crazy and stupid before the year ends. It wouldn't be the first time. The foregoing goes directly against my gut feeling that the bull market is over. It also flouts a VXX chart presented here yesterday that suggested volatility is about to spike due to a plunge in the S&Ps.  Will the simple picture described above carry the day? We should know soon.

Incredible! The Dow swung 570 points on Tuesday without breaking above or below the previous day's range.  This is what chartists refer to as an "inside day." In fact, the blue chip average didn't traverse even half of Monday's epic, 1214-point swing. Get used to the wild oscillations, since volatility is unlikely to subside until we come to regard a bet on more of it as a sure thing. Paradoxically, because the big moves up or down lately have more or less alternated from one day to the next, VXX, which measures short-term S&P volatility, has remained relatively subdued. Don't dare let down your guard, though, because a blowoff to the 56.30 target (see inset) looks like a lead-pipe cinch. Unfortunately for investors, VXX could never reach such heights without a correspondingly wrenching selloff in the S&Ps. If the finishing stroke lends symmetry to the big pattern shown in the chart, the selloff will probably occur within the next 3-4 weeks. Although we'll be able to say then that we were ready for the move -- expecting it, even -- don't be surprised if whatever happens to cause VXX to hit 56.30 still seems shocking.

AAPL, our #1 stock-market bellwether, turned sharply higher from the 'wrong' place Monday, reversing off a 163.73 low that lay fully $3.50 above our target. This suggests bears still have some work do do, although, given the ferocity of yesterday's short squeeze, they can be pardoned for not wanting to risk impalement just to look courageous. AAPL's bellwether status is more secure than ever at the moment, since the institutional chimps who manipulate it and who have made Apple The World's Most Valuable Company will need to do some serious levitating between now and New Year's Eve to have a shot at recouping bonus money lost in this autumn's market sell-off. It's all right to bet against them, but we should look to straddle the bet as cheaply as possible.

Although we are technically justified in using the 1415.62 Hidden Pivot shown as a minimum downside target, it would seem that bulls are not about to go quietly into the night.  The pattern shown does not warrant a 'mechanical' short if the stock should rally to the green line, since the downtrending B-C leg did not fall quite far enough. Actually, I'd be tempted to buy a pop at 1688.62, given that the turn would have come almost precisely from a midpoint pivot. That is usually a sign that the countertrend is just that -- i.e., corrective.  We'll cheer from the sidelines for now, but the 1415.62 target will obtain until such time as 1779.62 is exceeded to the upside. _______ UPDATE (Dec 12, 9:44): We'll continue to observe -- unless tedium does us in first. Although that'd be unusual for this wacko-powered stock, it has achieved no net gain over the last two weeks. _______ UPDATE (Dec 14, 11:41 p.m.): AMZN dipped below the 1597.83 midpoint Hidden Pivot support for the second time this week, probably by enough to make more slippage to at least p2=1506.83 likely. You can bottom-fish there if you've been short for at least a portion of the ride south._______ UPDATE (Dec 17, 10:06 p.m.): The stock bounced from 1505.01, a hair beneath the minimum downside target given above. However, the rally would need to hit 1620.41 -- the sooner, the better -- to hint it's capable of getting legs. That's a tick above a minuscule 'external' peak discernible on the 15-minute chart. Alternatively, a close below 1506.83 would grease the skids to as low as 1415.83, a Hidden Pivot target that I posted in the chat room today. _______ UPDATE (Dec 19, 9:33 p.m.): With today's brutal reversal, the 1415.83 target looks like it

AAPL's manic bounce came from a technically awkward place that makes the rally suspect. The stock should have fallen at least to the 161.14 target shown, or to an alternative target given here earlier at 160.23, before turning around. The actual low occurred at 163.33, implying that sellers have more work to do. I wouldn't recommend getting too aggressively in the way of this rally in the meantime, even if it seems likely to turn out to be a fake.  It projects most immediately to 172.67, assuming it can get past a midpoint Hidden Pivot resistance at 170.24. I'll recommend a modest speculation in case I'm wrong: Bid 0.04 for 20 Dec 28 195-200 call spreads, taking 0.01 of discretion. I will adjust the price once I've determined how the spread actually trades, so stay tuned for updates here and in the chat room._______ UPDATE (Dec 11, 5:32 p.m. ET): We settled on a 0.03 bid as the session worn on. Leave it in (or re-enter it) on Wednesday as long as the stock is trading 167.50 or higher._______ UPDATE (Dec 12, 9:50 p.m.):  Several subscribers reported filling the order, so I've established a tracking position consisting of 20 Dec 28 195/200 call spreads for 0.03. Our total risk is $60 plus commissions, and we are shooting for a payoff of at least 10-to-1. It is a longshot bet, so keep your expectations low. For now, offer 10 of the calls to close, g-t-c-, for 0.06. It would take a rally to around $177 this week to get us filled.

Odds that long-term rates have made an important top increased with the recent plunge in yields beneath the trendline shown in today's chart (see inset). The U.S. Ten-Year Note fell to 2.826% last week, down from a high a month ago near 3.25%. The decline narrowly missed exceeding a key low at 2.808% (#1) recorded in August, but if and when that happens it would generate an impulse leg of weekly-chart degree that could weigh on rates in 2019. And if the downtrend were to exceed two prior 'external' lows shown in the chart at, respectively,  2.759% (#2) and 2.717% (#3) without an upward correction, that would shorten the odds even further that long-term rates have topped. _____ UPDATE (Jan 2, 6:03 p.m.): Some of you  may have wondered why I reactivated a tout originally published on Dec 10. I had intended this update, with an immediate downside target of 2.633%. Let's see what kind of bounce we get._______ UPDATE (Jan 3, 10:24 a.m.): Plunging yields didn't even pause at 2.633%, so look for more slippage to at least 2.505%. Here's the chart._______ UPDATE (Jan 28, 6:01 p.m.): The rally in yields to a recent high at 2.799% looks corrective on the daily chart. Since then, TNX has tripped a sell signal to at least 2.617%. As always, price action at the midpoint pivot is likely to be illuminating concerning trend strength and the bigger picture. _______ UPDATE (Feb 5, 8:06 p.m.): The bounce we were expecting has come from a recent low at 2.628%.  Now, if the midpoint support just beneath that low gives way, more slippage to 2.436% would become likely. The target will remain viable as long as C=2.799% has not been exceeded to the upside.

The 65-point bounce from today's lows may have seemed impressive, but we know by now not to get too excited about it. Seemingly more impressive was the unhealthy breach of the trendline I'd drum-rolled here earlier; it came in around 2609, versus an actual low of 2583.  The support was sufficiently clear and compelling that we must regard its violation as a sign that sellers are not yet through. We can give bulls the small benefit of the doubt in the meantime, provided each new upthrust they generate exceeds some minor 'external' peak on the 15-minute chart from earlier. That kind of price action is the best indicator we have for a continuation of the trend, and it cannot fail us as long as we have the patience and diligence to stay focused on the lesser charts.  For now, though, a downside target I proffered here earlier at 2543.75 will obtain until such time as 2709.75 is exceeded by an upthrust._______ UPDATE (Dec 12, 8:30 a.m.): Short-covering has continued overnight, and although the futures are up a seemingly impressive 23 points at the moment, the rally is technically insignificant. It would still need to exceed the 2709.25 benchmark noted above to create a bullish impulse leg on merely the hourly chart.