Rick Ackerman

Gold is playing the tease once again, bettering September's key high at 1370.00 by an inch before receding again into the murk. Although this has not much affected the odds that the 1394.20 rally target we've been using for more than a month will be reached, it has put gold into limbo for the moment. At the very least, somewhat lower prices seem likely over the near-term. That's because last week's uptrend stalled to-the-tick at a 1354.30 midpoint I'd flagged, turning a weak rally into a mildly bearish formation. It projects to 1320.70, a Hidden Pivot support you can bottom-fish with a 1320.80 bid for a single contract and a stop-loss as tight as 1319.90. If the position goes in-the-black, you'll be on your own.

Friday's avalanche crushed a 25,741 target we were using to stay comfortably on the right side of last week's carnage. The Hidden Pivot support evinced no bounce whatsoever, implying sellers are not yet spent and that the plunge is likely to spill into next week.  Accordingly, I'll recommend using the 25426 target shown (see inset) as a minimum downside projection. If it is easily exceeded, shift the target down to 25314. If that last number gives way easily, take it as a sign that bulls, for the first time in years, are seriously on the run. _______ UPDATE (Feb 5, 9:40 p.m.) Sellers have shredded numerous Hidden Pivot supports effortlessly, making the unstoppable power of this downtrend increasingly apparent each step of the way. Look for a bounce from the 23995 midpoint support shown, but please note that if gets trounced the 23197 target would be in play. _______ UPDATE (6:34 a.m.): The E-mini Dow made an overnight low at 23088, a little more than a hundred points beneath the 23,197 target flagged above. This has bearish implications for Tuesday despite the powerful overnight bounce to 24,120. Basis the mini-futures, and assuming the overnight high at 24120 is not exceeded, we could see a drop to 22928, or even to 21,735 if things turn really ugly.

I've added homebuilder Toll Brothers to the list of stocks tracked by Rick's Picks because it could hold the key to determining whether we're in a bear market. A friend and former chat-room regular who runs a home construction company in the Philadelphia area alerted me to the fact that homebuilder shares - LEN, DHI, BZH and PHM among them -- presciently led the stock market's plunge this week by several days (see inset). My friend rates Toll Brothers as the most astute player in the game and says that as an investor, he always wants to be doing whatever Toll Brothers is doing. They are still acquiring land, he notes, and this would seem to imply the firm has not turned bearish on housing. We needn't wait for evidence of such a change to surface in a quarterly report, however; as a practical matter, we should be able to predict it based on what TOL's charts are saying. So far, they have yet to turn decisively bearish, but that could change as early as Wednesday with a print beneath the 43.74 low labeled in the chart. Although we've seen broad averages swoon and recoup losses in mere hours, the reflexive bounciness of shares over the course of this bull market has been driven mainly by portfolio managers who have consistently underperformed index funds, dart boards and even chimpanzees.  They are nonetheless handsomely remunerated for throwing Other People's Money at a relative handful of stocks -- a bad habit that undoubtedly will thrive with the Dow Average on its way down to 5000.  The shares of home builders, on the other hand, are driven by more-astute calculations that take into account the true state of the economy presently and prospectively.  Although home builders are not immune from hubris, theirs operates

Wild-eyed buyers seemingly can't get enough Apple shares at the moment. They've pushed the stock up $7 in after-hours trading following a downbeat earnings forecast for Q1.  Here's the Bloomberg headline that seems to have inspired the buying stampede: Apple Forecast Falls Short After iPhone Sales Miss Estimates.  A clear case of sell the rumor, buy the news? Punk sales of iPhone X have been in the news for weeks, so the story presumably was well discounted before today's announcement. If the stock is in fact turning around following an 8% slide from $180 over the last two weeks, it could help clear the air for a resurgence of the tech sector. We'll know soon enough.

We have higher targets outstanding for April Gold, most immediately the one shown at 1373.10 (see inset). Odds that it will be achieved within the next couple of days would shorten significantly if buyers are able to push easily past the 1354.30 midpoint resistance.  At the close of Wednesday's regular session, buyers were stalled precisely at that number, but the shallow pullback so far is encouraging. A higher target of larger degree at 1394.20 that was first broached here a month ago still looks very likely to be achieved. (Note: We exited a profitable 'counterintuitive' trade around mid-session Thursday because it was taking too long to get airborne. The trade was associated with the 1373.10 target noted above.)

A fresh dollop of stale news from the Fed sent stocks into a swoon Wednesday, but the bullish finishing stroke seems unlikely to dispel whatever has been troubling Wall Street this week. The latest pronouncement from the central bank left rates unchanged but preserved the option of raising them later in the year. It was the final Fed decision under Yellen, not that it matters who's in charge. The Dow ended the day up a mere 72 points -- pretty subdued considering that Trump's upbeat State of the Union speech polled extremely well in the heartland, garnering a 75% favorable rating.  Regardless, my hunch is that stocks will head lower over the next couple of weeks. I have lowered my downside target for the E-Mini S&Ps to 2789.00, but I'll revisit the forecast if this Hidden Pivot support gets trounced.

Pivoteers may have noticed that April Gold tripped a 'counterintuitive' buy signal when it rallied through the green line Wednesday afternoon. Odds that the rally will now reach the red line, a midpoint pivot at 1354.30, over the next 12-18 hours are at least 80% -- about what we have come to expect for this type of trade. However, a decisive penetration of the pivot would imply this vehicle is on its way at least somewhat higher, to the 1373.10 target associated with the midpoint resistance. Above it sits the 1394.20 target of a much larger, bullish pattern that goes back to July 2017. (Note: For the March contract, the published target was 1389.60.) _______ UPDATE (Feb 1, 12:30 p.m.): If you did the trade, perhaps belatedly, I recommend exiting the position now at around 1346.00 for a small profit. CI trades in particular should NOT be allowed to test our patience.

Despite the wack-o rally in the final hour, I have lowered my minimum downside target by 19 points, to 2789.50 (see inset). A Fed announcement that added nothing to our store of knowledge about future rate hikes caused shares to gyrate wildly in the final two hours of the session.  It was the usual sturm und drang, signifying nothing in particular. From a technical standpoint, the futures became a 'mechanical' short when they rallied to the green line (2827.03). I'd suggest paper-trading such signals until you become thoroughly familiar with various entry tactics possible using the Hidden Pivot Method. _______ UPDATE (Feb 1, 5:27  p.m. EST): Despite a wild couple of days that included two 25-point rallies, I still expect the futures to fall at least 2789.50 before they can set up for a push to new record highs.  That said, it is all but impossible to stay short to the target if you intend on keeping risk:reward in a healthy relationship.

The weight of selling remained palpable at the close, so we should expect even lower prices on Wednesday. My immediate target is 2808.50, and you can risk a theoretical $460 shorting one contract mechanically at 2836.50, stop 2846.00. The relevant pattern, derived from the hourly chart, is a= 2868.25 (1/29 at 2:00 p.m.; b= 2831.00 on 1/30). The inset shows how far the futures would need to fall to generate a bearish impulse leg on the daily chart.  Exactly 92 points, actually -- equivalent to a plunge in the Dow of nearly 800 points. ______ UPDATE (10:58 p.m.): Shorts are getting squeezed hard tonight, so I'll recommend canceling the trade suggested above.  The 2808.50 target will remain viable, however, as long as 2845.75 is not exceeded.