We hold a small short position consisting of four Nov 27 272 puts that have flatlined. QQQ shows no inclination to break up or down, even if a Hidden Pivot target well below, at 272.84, remains theoretically viable. My gut feeling is that the Cubes will head higher, but not before they've corrected to at least p=285.99, or perhaps p2=279.42. The rally would have potential to 312.29, the Hidden Pivot target of a pattern going back to July 24's 251.32 low. The pattern looks authoritative, implying not only that the target will be reached, but that x=273.16 could be bought 'mechanically' with stop-loss at 260.11.
The futures spent the entire week in a tight range that reflected mounting uncertainties not only about whether Trump will reverse Biden's apparent victory, but how much more damage a resurgent Covid-19 will do to the economy. The reaction of stocks to vaccine news has become increasingly muted, since it is impossible to know at this point how much even a very effective vaccine would accelerate a recovery. Whatever the answer, it seems likely that even very good news will be the kind we are supposed to sell following eight months of bullish 'rumors'. We are constrained from doing much of anything in this vehicle, however, unless it re-visits the green line (11,193) to trigger a 'mechanical' buy. If it does, my gut feeling is that the subsequent rally will struggle for a long time to reach D=12804 if it reaches it at all. ______ UPDATE (Nov 27): With Friday's poke above p2=12.267, bulls have become an odds-on bet to achieve 12,804, although perhaps not with the reckless bravado we've gotten so used to over the years. They are now sharing the inflow of funny-money with small-cap stocks, a limitation that's likely to slow their ascent. _______ UPDATE (Dec 3, 6:46 p.m.): Although I have higher targets outstanding, the stall at a 12,550 minor target warrants caution.
The smell of stock-distribution is as pungent as wood smoke these days, but you've got to give DaBoyz credit for levitating a million tons of swill while they work their special brand of magic and deception. Usually Wall Street is pushing the 'Santa rally' narrative hard at this time of year, always leavened by urgent speculation about how "green" Christmas will be. But Santa obviously won't be making the rounds in 2020, especially in department stores where his beard would become a superspreader to rival the hydrogen bomb in killing power. Definitely not the Kris Kringle of our childhood. One holiday fixture that is certain to survive is endless TV showings of It's a Wonderful Life, the Jimmy Stewart classic with a conclusion that could bliss out Jack the Ripper. Not any more, though -- not since, metaphorically speaking, financier George Soros suited up to replace the no longer believable banker, George Bailey. Will there be anything about 2020 to look back on with nostalgia? If so, we are in for a very rough decade. A successful vaccine is everyone's best hope at the moment for 2021, but few believe it will return things to normal. For in fact, given the rancid political climate and the vast swaths of the economy that have been laid waste, most of us are finding it difficult to even imagine what "normal" might be. Something will sustain us in any event, but that old standby, bread and circuses, is going to ring hollower than ever.
Rick's Picks has tracked the Russell 2000 ever since it became apparent in mid-summer that the chimpanzees paid to throw your hard-earned money at a relative handful of stocks and invented themes had agreed to shovel the lion's share of it into small-caps. It should be obvious by now, even to hard-core permabears, that the ballistic skew of the Russell index -- and, in turn, all the others -- is oblivious to such matters as concern us in our daily lives. America polity may be unraveling before our eyes, and a fresh wave of Covid-19 has already crushed hopes of an economic resurgence. But as long as the stock market is held buoyant by a practically limitless inflow of ginned-up capital from around the world, how could it possibly crash? Indeed, it cannot. And yet, charts like the one above allow us to at least imagine a top, even if we have no clue what could cause it. The chart makes clear that nothing is likely to stop IWM, an ETF proxy for the Russell 2000, from reaching the 184.73 target. But this Hidden Pivot resistance is sufficiently clear and compelling to suggest that it won't be a pushover when bulls get there and want more. That is not to say IWM can't pop through. But if it does, we'd have to concede that the small-caps, perhaps joined by FAANGs and other growthies that have been relatively quiet lately, are embarking on a blithe path higher that will see the Dow trading well above 30,000 by 2021. _______ UPDATE (Nov 18, 9:04 p.m.): A wave of selling hit late in the session, offering bears a rare breath of fresh air. Now let's see if the scuzzballs who control the markets can reverse the mood on 'turnaround 'Tuesday, since a mere
Biden, schmeiden. On Wall Street, it would seem, no one cares. Stocks are up substantially since the election even though the unsettled presidential race remains one of two unusually large elephants in the room. The other is the pandemic, which appears close to going out of control in some areas of the U.S. This, too, has yet to have any discernible impact on stocks. We see only evidence that no matter what the news, and however great the uncertainties that govern our lives, the inexorable flow of money into shares is simply too powerful and steady to abate. There was a time when the stock market supposedly hated uncertainty. By now, however, it is clear that investors have become inured to the unknown. Something else will undoubtedly unsettle them at some point, but we can rule out fear of the future. An invasion from Mars would probably fall off the front page in three days. It is in our personal lives that uncertainty is taking a heavy toll. If Biden assumes office and tightens the lockdown, it is foreseeable that many millions of Americans will take to the streets and disobey him. Look for an insurrection over mask-wearing to come first. One might think the question of whether masks have helped suppress the pandemic would be settled by now. But you would be wrong, for the question has been settled only politically: hard-core liberals wear masks in their own homes, in their cars and during sex, while conservatives disdain them and wear them only indoors and out of politeness. Don't They Know? In the photo above, taken over the weekend in my hometown, Delray Beach, Florida, virtually no one is wearing a mask. The restaurants and sidewalks were packed, presumably with diners and pedestrians of all political persuasions. Don't they
Bitcoin's value has tripled since Covid-19 hit the U.S. in March, a spectacular performance that has earned it a spot on the home page. I've been tracking the BRTI symbol for years because its violent price action is ideally suited to 'mechanical' entries. Nearly all of them have been profitable, and we currently have a paper position in BRTI acquired at 7609 with a long-term target at 21,032. That symbol tracks best-bid/offer data in real time across many cryptocurrency markets. I will be covering GBTC from this point forward, however, because it is affordable and because entry risk can be much more tightly controlled. Most immediately, you should notice that the steep rally leg begun in October is within an inch of a potentially important Hidden Pivot resistance at 18.75. If it is impaled the first time it is touched, that would imply significantly higher prices lie ahead. In any event, it is a time for caution no matter how bullish you are. My decision to track and trade bitcoin is completely detached from my strong feeling that digitally encrypted money is an epic con-job. I don't deny that blockchain technology has enormous value for financial transactions and secure record-keeping. But no one has offered a shred of evidence as to why bitcoin should have any intrinsic value at all, let alone more value than gold, as some have tried to argue. My skepticism is irrelevant where trading bitcoin is concerned, however, especially since this vehicle promises to be one of the great bull trades of these digitally obsessed times. _______ UPDATE (Nov 17, 7:36 p.m.): GBTC blew past the 18.75 Hidden Pivot resistance with such force that there can be little doubt that significantly higher prices lie ahead. Even so, we should be curious to see whether BRTI follows
I've used a long-term chart not only to show an obvious and somewhat ambitious rally target at 3857, but the decaying pattern that produced it. It has already signaled a profitable 'mechanical' buy once at the green line (x) and would do so again if the futures were to revisit it. Although the pattern would have produced a solid profit for 'mechanically'-minded bulls, its strength has deteriorated, along with the prospect of effortless gains on the long side. Notice that the futures were unable to reach the mechanical trade's 'sweet spot' above the red line before relapsing to x. Also, anyone who got long at x would have suffered considerable pain on the pullback to within an inch of the 3197 stop-loss. Another sign of, if not weakness, then reluctance, is last week's failure to reach p2=3693 (the pink line). This implies that weakness and uncertainty are gaining a hold even if there is still a perhaps 70% chance of ES reaching the target. Our trading bias should remain bullish accordingly, but less aggressively so than during last summer's run-up. _______ UPDATE (Nov 16, 7:25 p.. ET): Buying interest has been so relentless that "less aggressive" trading is guaranteed to miss the boat. At least we know where ES is going. ______ UPDATE (Nov 17, 7:47 ET): We'll step back as ES takes the measure of a potential obstacle in the form of p2=3648. A pullback to p=3498 would trigger a 'mechanical' buy with a stop-loss at 3398.00. ______ UPDATE (Nov 19, 8:34 p.m.): Use a low-level rABC set-up to get long once the red line has been touched, but don't attempt it if you're not up to speed with this tactic.
Two potential trades loom for the week: a 'mechanical' buy at p=282.74 that would require a stop-loss at 275.64; and a short initiated at the 304.07 target. The A-B impulse leg of the pattern is ersatz, since it failed to exceed the record high peak at 295.87 recorded just before stocks collapsed. But because it's all we've got, we can try to make the most of it. Even fake patterns yield Hidden Pivot targets and levels that are usable even if sometimes imprecise. My hunch is that the rally target will be achieved because Monday's bullish 'vaccine' gap was so powerful. If the lower is not, however, it would be because bulls are more eager to jump in today than to let stocks fall to relative bargain levels.
A rally to the green line would trigger a mechanical short using the unconventional rABC pattern shown. We can attempt to leverage it by buying puts if QQQ touches the line on Monday or Tuesday. For now, bid 0.80 for four Nov 27 272 puts, contingent on QQQ trading 292.62 or lower. There's a lot of guesswork in that bid, but don't pay up or jump the gun, since I will adjust it as warranted on Monday. We may also have an opportunity to turn the position into a riskless spread if we get filled on the puts and QQQ subsequently falls as expected. I am taking pains to minimize risk in order to provide new subscribers with a positive experience. _______ UPDATE (Nov 16, 10:12 a.m. ET): The puts are getting crushed. I'll recommend a 0.70 bid, which will be closer to fair value if the stock reaches my 292.57 target. It has gotten as high as 292.45. If you bought 'em already, offer half for 1.60 gtc. I tried -- unsuccessfully, it would seem -- to emphasize that you shouldn't jump the gun on this trade. There is no urgency and no need to pay up. Every penny counts, since the deck is stacked hugely against retail customers making directional bets with naked options. ______ UPDATE (Nov 16, 7:34 p.m.): We hold four Nov 27 272 puts for an average 0.70, based on reports in the chat room. Kiss your $280 good-bye and avert your eyes for a few days. We are speculating against one of the most powerfully irrational rallies ever.
Gold's bull market has been plagued by mischievous interventions, to put it mildly. With last week's 'Pfizer takedown', DaBoyz demonstrated yet again that they can make bullion move violently against common sense and logic whenever they please, albeit usually only for short periods. The 100-point selloff was triggered ostensibly by news that the drug maker has developed a Covid vaccine that is 90% effective. Is there any obvious reason why that should be bearish for gold? None that spring to mind. But with stocks in a spectacular rally that reversed sharply, investors' anxieties appear to have infected gold, exacerbating what might have been a day of ordinary weakness for the precious metals sector. The beneficiaries of the selloff would have been commercials who reportedly had amassed large short positions. In this case, they seized an opportunity that they themselves had created. The fact that the selloff was likely a fright-mask fraud will not make bulls' climb up the steep wall it created any easier. But they got a good start ahead of the weekend, and this will make gold more responsive to any news that could be construed as bullish, or possibly even to a short squeeze. That would lessen the effort required to trigger a 'conventional' buy signal at the green line (1947), putting a 2247.10 target theoretically in play. That's just $3 lower than our previous target, implying that the selloff, though scary, did almost no technical damage. _______ UPDATE (Nov 19, 9:17 a.m. ET): December Gold is breaking down and looks bound for the 1809.60 target shown here, at least. The A-B impulse leg lacks a one-off 'A', but the pattern should be good enough for government work -- in this case, bottom-fishing with a small-interval rABC set-up.
