Rick Ackerman

Skip to the last ten minutes if you want to see how we got dinged for $200 putting on a ‘CI trade in AAPL, but then jumped right back in to hit a $400+ winner. The trade is tightly rationalized so that you’ll be able to remember what worked the next time you attempt this one. We also looked at a put calendar spread in FB that mimicked a strategy I wrote about for SFO magazine. (The article is available online.) Some HP grads reported doing the trade, which is designed to leverage distant strikes and to make a few bucks even when we are wrong.

Is it safe to go back in the water? Merely asking that question is to suggest that only an imbecile would dive fearlessly back in the drink. Even so, there are most surely enough imbeciles to keep stocks buoyant in the days or even weeks ahead. If they eventually are joined by panic-stricken bears as sometimes happens, we could see a rally capable of persuading otherwise sane folks on the sidelines that new record highs await. 'Trader Mike' caught a fascinating aspect of the game in the chat room today with this wry observation concerning market psychology:  "Markets require people to give up. Read the Turtle book. The Turtles got their brains bashed out trading coffee, then they decided to stop trading coffee, then it produced the largest single trade in the history of mankind. That's how it works. I exaggerated a little. I'm sure Bitcoin is the largest trade ever, but you get the idea."

I've been offering more high-leverage option trades lately, but the most difficult place to find them, paradoxically, is in ETFs like this one that track market volatility. On Tuesday, for instance, although a stock-market rally shaved nearly 8% from the value of VXX, anyone who had correctly anticipated the move buying put options would have been disappointed with the results. Out-of-the-money puts at the 38 strike went from  0.29 to 0.85, but even a nimble trader with a crystal ball would have found it difficult to get aboard for less than 0.56, or to exit for more than 0.75. This was hardly the quadrupler we look for when we trade options on this vehicle. We've done quite well on these trades in the past, but mainly by catching big multi-day moves rather than precipitous declines that play out over just a day or two. Bottom line: This is a terrible vehicle for scalping in and out of options. Better to wait for reversals from major Hidden Pivot targets that can deliver big price swings.

Monday's slow-motion selloff didn't generate much fear, but it likely exhausted sellers for a while. Although I've put out a somewhat lower target in the E-Mini S&Ps for Tuesday, the big moves in the FAANGs appear to be over, or very nearly so. Rick's Picks had been using a 1496 downside target in AMZN that came within a millimeter of catching the exact low of a so-far $68 bounce. (Click on the inset to see this graphically.) DaBoyz looked like they might want to revisit the low Monday evening, but they are going to have difficulty pushing the stock significantly beneath it, if even merely to it, since it's such a clear and compelling Hidden Pivot support. Similarly, AAPL hit a longstanding downside target at 208.04 before trampolining more than $6 from just beneath it. A relapse is unlikely to exceed the low by much, if at all, and that's why the issues I refer to as the 'lunatic stocks' -- i.e., the ones most heavily owned by portfolio-managing chimpanzees -- should be supportive of the broad averages over the near term.

AMZN has trampolined $68 so far from within a hair of the 1496 target we used to keep on the winning side of this brutal selloff.  A subscriber reported getting long a few dollars off the low, but because his was the only such report posted in the chat room, I have not established a tracking position. The stock was getting sold down hard in after-hours trading, hitting a so far low at 1515 after bouncing as high as 1563. However, the original target at 1496.61 was sufficiently clear and compelling that I would expect bears to have difficulty pushing this gas-bag much below it overnight or Tuesday morning. If they succeed at this anyway against the odds, a Hidden Pivot at 1479.60 is the best alternative I can offer, even if it is no technical beauty. _______ UPDATE (Oct 30, 8:45 p.m.): The 1479.60 target proffered Monday night caught Tuesday's low within less than $3. Here's the chart, if you want to see how close that was. The subsequent rally hit $1540.99, providing subscribers who trade this vehicle with a explicit way to earn a quick, easy profit. We'll back away for now, since there are no compelling targets immediately below, nor any good rally targets to infer from the day's choppy action._______ UPDATE (Oct 31, 5:48 p.m.) The pattern shown should keep us well on top of AMZN's gyrations on Thursday, but you may need to recalculate if the stock dips beneath the 1577 point 'C' low._______ UPDATE (Nov 1, 9:57 p.m.): The pattern shown in my 10.31 update and its 1717.32 target remain viable.

I was initially surprised at how easily sellers penetrated the 24177 Hidden Pivot support we'd been using as a minimum downside projection. However, a look at the chart reminded me that the point 'A' high of the target pattern was not exactly first quality. Fortunately, the new point 'A' shown in today's chart (click on inset) is the only one remaining, and we can therefore assume its corresponding 'D' target at 23,765 will be hit. The leg down to it would be strongly impulsive, implying that any subsequent rally, however spectacular, could conceivably set up an opportune short. If you want to bottom-fish the expected reversal from 23765, the equivalent target in DIA lies at exactly 237.69. _______ UPDATE (Oct 30, 8:54 p.m.): Keep the bottom-fishing trade in mind, but note as well that a push above 25308 would make the odds of filling our bid a longshot.______ UPDATE (Oct 31, 5:58 p.m.): This gas-bag exploded on the opening, stranding our niggardly bid. You can try to get long again using this developing 'counterintuitive' set-up. The trade is recommended only to those who have recently viewed a Wednesday tutorial session -- including today's, which caught a $400+ 'CI' winner in AAPL._______ UPDATE (Nov 1, 10:03 p.m.): The DIA trade set-up worked, but not in a way that would have been easy to leverage. For now, use 25,529 as a minimum upside target. That's the midpoint resistance of a pattern on the 60-minute chart that projects to as high as 25,956 (a=24,481 on 10/30, b=25,336).

The 2706.50 target I put out Sunday night came within two ticks of nailing Monday's high, which gave way to a 104-point avalanche. In the chat room, I suggested covering half the position for a small profit before the move started to snowball, but at least a few subscribers took my further suggestion that they hold a contract or two for a swing at the fences.  This tactic didn't pay off until late in the day, when it finally dawned on bulls that the broad averages were not coming back.  The 2610.00 downside target I subsequently proffered near the end of the day gave way easily, suggesting the even though the futures subsequently bounced a whopping 43 points from an intraday low of 2603.00, they are likely to fall anew to the 2587.75 target shown before sellers are spent. I would reconsider this prediction if the December contract pushes above 2683.50 overnight or Tuesday morning. ______ UPDATE (Oct 31, 10:47): See my chat room posts for new rally targets that were disseminated in timely fashion earlier this morning.

After plummeting 96 points from Thursday's peak, the futures trampolined Friday off a low that lay just 2.25 points beneath the 2629.50 target I'd sent out to subscribers the night before. I heard from one who covered a winning short position near the low; however, because no one reported getting long down there I have not established a tracking position. The bounce carried 64 points, generating a quite-bullish impulse leg on the lesser charts that projects to  2706.50 (see inset). Consider it an odds-on bet if buyers blow past the 2673.75 midpoint resistance Sunday night or Monday. I'll update when appropriate, since, as you will have surmised, the stock market's wild volatility is capable of just about anything on a given day. It's even possible that bigger swings than the ones we've seen in October are coming. If we stay tuned to the lesser charts as we invariably do, however, we're not apt to be fooled._______UPDATE (Oct 29, 10:22 a.m.): The futures have rallied 37 points overnight, topping so far at 2707.00 -- two ticks above the 2706.50 target proffered above. Two subscribers reported getting short there, so I am establishing a tracking position of four contracts. Two have been covered per my 10:15 post in the chat room, and the remaining two are tied to a 2707.25 stop-loss. A third contract should be covered at 2697.00, with the last contract (or 25% of the position) held for the usual swing-at-the-fences.______ UPDATE (12:28 p.m.): Minutes ago in the chat room, I advised covering the position near 2668. This would have produced a gain of about $2500 for anyone who followed my instructions, which were explicit and timely. The sequence of updates is time-stamped so that you can verify the trade and determine for yourself whether you could have followed it.

I've presented this chart before, with a bull-market target at 27,251.  If the Dow had gotten within 5-10 points of this Hidden Pivot and begun to fall, I'd have treated the weakness as the almost certain beginning of a major bear market. What happened instead was that buyers sputtered out 300 points shy of the target. Initially, this led me to expect one last charge higher. But with the sharp decline we've seen in October, odds have grown that a bear market has indeed commenced.  Even so, you can see that a further fall to perhaps 20,000 would not alter the very bullish look of the big picture. Imagine a descending price bar reaching into the low 20,000s or high teens, and it would be easy to infer that such a move was not just corrective, but overdue. From a Hidden Pivot perspective it would not become bearishly impulsive on the monthly chart until such time as the tiny but still significant 'external' low at 20,379 is exceeded to the downside. Many market observers, especially permabears, would be saying at that point that the end of the world was nigh. But I am writing these words as much for you as for me, a reminder for later that if and when the Dow has fallen by 4,000-6,000 points, this could mark the completion of a correction within a bull market destined for much greater heights.