Rick Ackerman

However bearish we might want to be, we must reckon with the bullish look of AAPL's chart. The company is big enough -- the largest in the world, by capitalization -- that it can drag the stock market higher, or at least hold the broad averages buoyant, even when there is little determined buying. The pullback to the secondary pivot has not met our requirements for generating a mechanical 'buy' signal, but if AAPL corrects all the way to p=128.97, it would be difficult to justify not buying it there. We'll attempt this if and when the opportunity presents itself, but for now it's a good time to move to the sidelines and spectate. _______ UPDATE (May 21, 6:30 p.m. ET): Forget about a pullback all the way to 128.97, since AAPL needn't correct any lower than 150.95 (click here for chart) to be considered fully recharged for another leg up. If the stock catches fire without falling even that far it will get to 155.13 before any significant resistance is felt. An easy move past that number would imply it's on its way to 160.55. _______ UPDATE (May 22, 9:45 p.m.): The way DaBoyz trapped bulls on the opening bar suggests they will take the stock lower before running it up again. If so, look for a tradeable bounce from 151.47, the midpoint Hidden Pivot support of the pattern shown. _______ UPDATE (May 23, 6:46 p.m.): Today's dreary price action caused the midpoint 'hidden' support to migrate upward slightly to 151.88. _______UPDATE (May 26, 1:31 a.m.): The stock has scuddled sideways to correct, enhancing the attractiveness of bottom-fishing at 151.88. A 15-cent stop-loss is advised, but cancel the order if it hasn't filled by 1:00 p.m. ET).

Today's fleeting stab above the 1263.00 midpoint pivot (see inset) was not sufficient for us to infer that a further run-up to the 1311.70 target is a done deal. Regardless, a pullback to 1238.70, the green line, should be regarded as a buying opportunity. Done with a 'mechanical' bid at that price, the trade would imply a stop-loss at 1413.30 and initial risk of more than $2400 per contract. Clearly, there are better ways to get aboard, including a 'camouflage' entry that we might expect to cut theoretical down to perhaps $40-$60. Accordingly, I'll suggest zooming down to the five-minute chart if the futures should fall to 1238.70; then, using any minor, uptrending abc pattern that occurs subsequently to generate a conventional entry trigger. _______ UPDATE (May 21, 6:04 p.m. ET): The futures stair-stepped higher on Friday rather than correcting for a second day as I'd expected. Now, if they can take out the 1257.80 midpoint Hidden Pivot resistance shown, they'll be in good shape for a run at the 1269.80 target. Pivoteers, please note: The 1256.70 peak recorded Friday on the way down has the potential to generate a great 'camouflage' entry opportunity if there's a bc-type pullback from slightly above it on the one- or three-minute chart.

I posted a 2390.25 rally target in the chat room Friday midway through the session, but the futures never quite got there. At the closing bell, they had failed in this relatively modest task by 2.25 points. In retrospect, as the chart makes clear, buyers felt no urgency about taking on the 2388.75 peak where Wednesday's refreshing but unfortunately short-lived dive commenced. Looking just ahead, I'll go out on a limb with a prediction that because short-covering bears have been temporarily squeezed for all they're worth, they will be unable to furnish sufficient buying power on Monday to push the broad averages into new record territory. But don't expect stocks to fall apart -- only to screw the pooch for a couple of days until bears have recouped enough confidence to be ready for another ass-whooping. Bears forced to cover short positions continue to be the main source of buying power in this bull market, but even they need a rest now and then.

I've updated my touts for some key FAANG/lunatic stocks with new charts to make clear that they want to go higher, especially AMZN. If this proves to be the case, bears shouldn't get their hopes too high that Wednesday's refreshing plunge will resume in earnest as the week draws to a close. Even so, the intraday charts of GOOG and AAPL leave room for a downside resolution of Thursday's moderate bounce, and it's possible they could check AMZN's rambunctiousness. Whatever happens, we might have a better idea of what's on portfolio managers' tiny, febrile brains when the day is over.

It was of course unthinkable that the stock market would decline for two consecutive days. But bears shouldn't despair, since the short-squeeze rally was noticeably lacking in vigor and could fade quickly. We should respect the minor bullish impulse leg that ended the day nonetheless, but if it should fail to reach its 2379.00 target (see inset) overnight, that would add to the evidence that Wednesday's lows are likely to be revisited. Night owls can use the green line to trigger a bull trade, but be prepared to take at least a partial profit if the implied rally reaches p=2370.50, since that could be it for the night. A relapse to below c=2362.00 would change my parameters, so please take note. This seems probable, since DaBoyz will probably need to bring the futures down a bit more to exhaust sellers and set up a second-wind short-squeeze.

Bob Hoye's Pivotal Events, published every Thursday, is consistently one of the most insightful and well-written newsletters in the financial world -- a great read that could be compared in quality only to Grant's Interest Rate Observer.  Bob's latest dispatch suggests that the banking sector is one of several key areas of the U.S. economy that could lead the next major stock-market decline. If so, the chart of the Bank Stock Index provides good reason for investors to worry. The index ended Thursday sitting at 89.24 (see inset), just above the 88 threshold that Bob regards as a crucial support. From a Hidden Pivot standpoint, it would be speculative to conclude that a breakdown is inevitable. In fact, the bounce from the 88.53 midpoint pivot shown in the chart could be interpreted as a sign that the bull is healthy because the correction has stalled, and possibly is reversing, after having gotten only halfway to the 83.38 correction target. However, it would take a very powerful rally surpassing 97.07 to confirm this. That seems extremely unlikely to occur, especially with the housing and auto sectors already rolling over. Far more probable in my estimation is that BKX will soon fall decisively below the midpoint pivot. That would indicate more downside to at least 83.38, at which point we might conclude that it is game...set...match not only for the bull market, but for the still-struggling U.S. economic recovery.

While Wall Street was getting pummeled on Wednesday, Rick's Picks subscribers had a great day. Many were long put options in QQQ and calls in VXX.  The latter more than quintupled in price over the 0.50 we'd paid for them just a day earlier. As for the puts, we'd nearly given up on them as they wallowed near 0.20, a third of their original cost.  However, by day's end they were trading at 1.84, giving subscribers an opportunity to more than triple their 0.61 investment. The VXX calls expire on June 2, the puts a week from Friday, so there will be an opportunity to profit even more if stocks continue to fall.

Use the chart shown to get a precise handle on this wicked move. The pattern is pretty gnarly, but the precise bounce from the midpoint pivot at 2358.00 justifies using it. The implication is that the futures will fall to at least 2341.50 before they find enough traction for a bounce. Night owls should trade the futures from the short side, but please note that a 'mechanical' sell signal at the red line has yet to trigger. Ordinarily I'd suggest waiting for a rally to the green line to initiate, but this looks dangerous to me because a rally to the green line would be strongly impulsive.  If you attempt bottom-fishing at D=2341.50, I'll recommend a very tight stop-loss at 2340.75.

As incredible as it seems, U.S. stocks are getting hit Tuesday night on supposed concerns about the political turmoil that has engulfed the Trump administration. When was the last time traders gave a rat's ass about anything that happened in the real world? This is truly unusual -- and potentially entertaining too, since Rick's Picks subscribers were able to use a Hidden Pivot target in VXX to buy some call options two pennies off their intraday low. Since then, VXX has taken an unwonted leap in after-hours trading. We'll repair to the sidelines for now and hope the selloff gets legs. I've provided some precise benchmarks in my latest E-Mini S&P tout (see below) to help you determine whether DaBoyz for once may have been caught with their pants down.