Rick Ackerman

The FAANGs barely blipped on Friday, suggesting they will continue to drag the broad averages lower. They fell by nearly 3%, performing much worse than the Dow and S&P 500, which shed, respectively, 0.7% and 1.0%. Expect portfolio managers to continue rotating money between the high-fliers and the stock market's also-rans, with the goal of sustaining a passable illusion of buoyancy in both. However, next time shares across all sectors move synchronously, be ready for the move to be steeply lower. We should remain open in the meantime to the possibility of sharp, out-of-the-blue rallies like last Wednesday's post-election show of bravado. It was driven entirely by short-covering that for the time being will remain capable of pushing a relative handful of stocks to new record-highs. AAPL in particular, because it is the most valuable company in the world, can tell us how likely this is to happen. It is an infallible proxy for institutional mindset, along with AMZN, which will be with it each step of the way. These two stocks will keep us confidently on the right side of the trend. If you don't like to be fooled or surprised, stay tuned them -- and to Rick's Picks .

Bulls flunked two tests with last week's rally: 1) they did not reach the 1794.10 midpoint Hidden Pivot shown, which was our minimum upside objective; and 2) they died inches shy of the 1794.81 'external' peak recorded on October 5. This was a weaker performance than we saw in the E-Mini S&Ps, which exceeded a corresponding midpoint resistance, although not the external peak. Because of this 'divergence,' we'll need to keep close tabs on both to determine whether the bull market is likely to get second wind. My gut feeling is that the E-Mini chart's bullishness is stronger than AMZN's bearishness and that bulls will ultimately prevail. Be aware, however, that I have warned of a possible bull trap if the S&Ps achieve new record highs._______ UPDATE (Nov 12, 8:21 p.m. ET): Use the 1599.68 midpoint support shown in this chart as a minimum downside target, and be ready to exploit a bounce from it if you trade the stock. _______ UPDATE (Nov 14, 9:38 p.m.): Today's $2.61 overshoot of the midpoint pivot is not visually significant, but if this 'hidden' support were to be exceeded decisively in the days ahead, that would put a 1415.36 target in play._______ UPDATE (Nov 15, 7:43 p.m.): If the bounce from today's sold-out low hits 1691.84, shown in this chart as a green line, it would trigger a mechanical short there, stop 1784.25. With initial risk of $9200 per round lot, we'd want to consider 'camouflage' options for doing the trade.

Last week's tentative rally has made a tiresome battle between bulls and bears more likely over the next 2-3 weeks. My hunch is that the bulls will prevail, eventually pushing the futures to a test of all-time highs near 2950 recorded in late October. I am leaning bullish because the rally decisively exceeded a 2775.13 midpoint Hidden Pivot resistance shown in the chart as a red line. However, the surge failed to exceed a key 'external' peak 2824.25  recorded in mid October. This somewhat timid price action has possible implications for the future, since it may foreshadow a bull trap the next time the E-Mini S&Ps are in record territory, assuming they get there.  This may sound a little crystal ball-ish, but it is simply a straightforward application of Hidden Pivot rules that have been tested and corroborated many thousands of times._______ UPDATE (Nov 12, 8:31 p.m. ET): The pattern shown tripped a 'counterintuitive' short at the green line, putting in play a 2707.13 Hidden Pivot midpoint support that is likely to generate a bounce that might be tradeable. If not and the futures bust the support easily, look for more slippage to as low as 2596.50 over the near term. _______ UPDATE (Nov 14, 9:46 p.m.): Today's moderate selloff missed the minor D target at 2679.50 shown in this chart. It remains viable, but if the futures reverse without hitting it and go on to exceed 2755.75, bulls would be back on the offensive, with a shot at 2871.00.  Alternatively, a decisive downside breach of D would leave the 2596.50 target given above in play._______ UPDATE (Nov 15, 7:47 p.m.): The futures tripped a theoretical buy signal for a shot at 2760.00 or perhaps even 2848.75!  Check out my 14:21 post in the 'Saloon' for a bullish trading idea

The flow of institutional money into stocks is under such expert control these days that we shouldn't doubt DaBoyz' ability to manipulate the broad averages to new record highs regardless of economic headwinds. On days when the FAANGs are soft, which was the case on Thursday, the Dow is firm. Conversely, when the FAANGs are raging, the Indoos are often subdued. This suggests that even though there are still large sums of fresh cash available to throw at the stock market each day, including surplus corporate funds with no better purpose than endless share-buybacks, portfolio managers still find it necessary to 'work' the money hard, rotating it constantly in order to levitate stocks as efficiently and convincingly as possible. Panicky Bears' Star Turn It helps that they are never in a hurry to achieve new record highs, which is the best way to regularly tweak the public's interest in stocks. In this task they can always count on the most powerful kind of buying there is: short-covering by panicky bears. The poor saps can be summoned at nearly any time for this chore, most particularly in the wee hours when volume is thin and the usefulness of "news" highest. The effortless overnight waft is usually completed by the opening bell with relatively little money or stock having changed hands. On nights when hoards of spooked sellers get in the way the opposite strategy is used: pull all bids and let stocks fall until the bears are spent; then, run 'em back up the old wazoo on near-zero volume. Rinse and repeat. Knowing how the game is played will not necessarily make us rich, but it can keep us from being steam-rollered when the bull market seems to stand logic on its head.

Wednesday's strong upthrust tripped a buy signal at 209.27, putting a 242.57 target theoretically in play. It's not an even-odds bet to be reached, although the 220.37 midpoint pivot is. Accordingly, I'll suggest using it as a minimum upside objective for now, and it may even afford us an opportunity to get short with risk very tightly controlled when it is reached. Your trading bias should be bullish in the meantime, alert as always to any 'camouflage' set-ups that occur on the lesser charts. Buyers' interaction with p will deserve our most diligent scrutiny, since it could tell us whether a bull market that has depended on AAPL for leadership has any juice left._______ UPDATE (Nov 10): A week of flailing around generated a bullish impulse leg on the hourly chart, but it looks too delicate to survive. Look for more flailing as the week begins, then something more decisive on Tuesday or Wednesday. There may be a trade in the offing, so stay close to the chat room if you care.

This session literally paid off for students, since many of them reported doubling or even tripling their money in mere hours after buying some VXX puts for just 0.04. The opportunity looked so juicy that double-, then triple-checked the option price before giving the green light to buy them. Hundreds were offered for 0.04 before they took off, so anyone could have filled the order. Our ability to exploit such opportunities should serve as a reminder of why these “graduate studies” sessions each Wednesday are so important and useful, especially for those who are able to attend during market hours.

When I projected a 549-point Dow rally here Tuesday night, I wasn't expecting it to unfold in a single day. The actual gain was 545 points, an exuberant reaction to a midterm election that will split power on Capitol hill between the two parties. The rally left the Industrial Average exactly 771  points shy of the record-high 26961 achieved on October 3, but I'd need odds to bet that it won't be reached. If so, and the blue chip average makes a presumably marginal new high, we should look for ways to get short, since many factors weighing on the stock market before the election will still be present. They include a strong dollar that will hurt the earnings of multinationals, an incipient collapse in residential real estate, rising interest rates and corporate earnings that may have peaked. In addition, any further gains from pro-business legislation on Capitol Hill are unlikely, since Trump's legislative agenda will be stymied by a House now ruled by anti-business Democrats. Under the circumstances, Wall Street's celebration could prove to be short-lived.

It's 8:24 p.m., and traders have yet to guess the outcome of the mid-term elections. The E-Mini S&Ps are up a few points, suggesting the results are perceived on Wall Street as a coin toss at the moment. We can expect traders to do much better this time in discounting the possibility of a big win for the Democrats, since the day began without the brash certitude about a Hillary victory that characterized election night coverage in 2016. My hunch is that if the E-Minis are up by 18 or more points later this evening, it will correctly signal that the Republicans have held onto their majority in both houses. Conversely, if the futures are down by 18 or more points, that will tell us -- again, correctly -- that the Republicans have lost the House and possibly the Senate.  There are some key Congressional districts causing index futures to fluctuate nervously as I write these words: Virginia's 10th; Kentucky's 6th; and Minnesota's 3rd, to name just a few. Watch 'em and place your bets!

I hesitated yesterday to hazard a guess about the next big move, but it now appears the Indoos are torquing up for a possible 549-point romp. However, this would be predicated entirely on an easy and decisive push past the 25,629 midpoint Hidden Pivot resistance shown (see inset). This is a big 'if' at the moment, since the DJIA will surely tank if Democrats take the House. The over/under bet is prohibitively expensive if DIA straddles are used, so we'll repair to the sidelines and await the election returns like everyone else. For investors, tonight's vigil puts one in mind of the science fiction film that ends with uncertainty over whether a meteor will collide with Earth or miss it by an inch. For investors, a big night for the Democrats would be almost as bad as the meteor hitting smack dab in the middle of the American heartland.______ UPDATE (Nov 7, 9:15 a.m.): Here comes that 549-point rally!  My friend Larry Amernick, a technical forecaster, explained the stock market's blase reaction to the election as follows: The investigations and impeachments the Dems have threatened will go nowhere, and ratcheting up their nastiness won't phase Trump. Legislatively, they will destroy their chances in 2020 and ensure Trump's reelection if they are perceived as too obstructionist. They are no longer the opposition party and will thereforeneed to Do Something legislatively. They now completely OWN Obamacare, and the Republicans can sit back and relax. Pelosi, Waters et al. can't do any real damage with the GOP firmly in control of the Senate. Etcetera.