Rick Ackerman

The pullback to p=11,734 and subsequent bounce has brought a bigger, bullish picture into focus that supersedes the minor, bearish one we used a day earlier.  It projects to as high as 12,808, having tripped a 'mechanical' buy signal Thursday at the red line. I'll note as well that a plunge to 11,197, the green line, might seem harsh, but it too would signal a tempting 'mechanical' buy (even if we are unlikely to see this happen).  For now, trade this vehicle with a bullish bias, using the 15-minute chart or less to craft an entry set-up. I would not recommend taking a position home over the weekend, no matter how profitable it is at the bell.

I featured a cautionary headline atop this page for the last two days, but they way stocks have been behaving, we all might as well throw caution to the wind. Technical signs looked quite bearish when the week began, and the way certain stocks and index futures were acting gave me to infer they were headed for a nasty fall.  And fall they did, but by mere inches, not feet. In many trading vehicles, including the E-Mini S&Ps and AAPL, each ratcheting move lower was answered with the bullish equivalent of "Up yours!". The net result is that the downtrend, such as it is, has been well nigh unshortable for anyone not possessing rare patience and brass balls. I hate to break the bad news to all of you permabears, but if three straight days of weakness has pushed the Dow down by only 776 points, the pessimists may as well pack it in. Fortunately, many Rick's Picks subscribers are already locked and loaded for the inevitable bullish reversal via some way-out-of-the-money AAPL butterfly spreads acquired for just $36 apiece. They have the potential to hit $1000 if the stock catches fire yet again between now and November 20, when the calls expire. Members already cashed out of half of the position for twice what they paid, so there is zero risk in holding what remains. That means that whatever the options sell for at any point henceforth will be pure profit.

If you haven't been to any Wednesday sessions recently, this is an ideal lesson to help you get back up to speed. It begins with a bunch of mechanical set-ups, some good, some bad. Then we looked at some finely nuanced rABC opportunities with the goal of forcing a profitable trade. The final 15 minutes considers a closely reasoned rABC entry in Comex Gold. FYI, the second attempt produced a profit after the session ended.

The yellow flag is out, since the Nasdaq 100, AAPL and the E-Mini S&Ps have all failed so far to reach their respective Hidden Pivot price objectives on this week's run-up. In addition, VXX, which tracks short-term S&P 500 volatility, looks primed to turn higher following a withering decline begun more than a month ago. If this proves correct, it would imply that the next move in the underlying index will be down. Rick's Picks subscribers were able to reef the sails by cashing out half of the bullish AAPL butterfly spreads they'd put on a week earlier for twice their acquisition cost. The position was tied to a $152 rally target that lies 25% above, but my gut feeling is that it will be reached before the options expire on November 20. This is notwithstanding the stock's fall from a 127.32 peak on Monday to 119.65. We may look to load up on call spreads again if AAPL continues to fall, so subscribers should stay tuned to the chat room for real-time guidance. _______ UPDATE (Oct 14, 8:20 p.m.): Bears seem to struggle even when a preponderance of technical indicators swing their way. They were unable to inflict much damage on Wednesday, but even so, it feels like stocks are breaking down. Accordingly, most of my updates have adopted an outright bearish bias for trading purposes. Check them out if you're eager to play. Some subscribers have staked out a bearish position using VXX calls, but you'll need to visit the chat room for details.

The E-Mini Nasdaq returned to normal on Friday -- i.e., heedlessly over-revved -- by impaling a daunting-looking midpoint Hidden Pivot at 11669 (see inset) and then closing comfortably above it. If Monday produces more of the same, the futures will not only become an an odds-on bet to reach the 12,142 target of the pattern shown, it will also shorten the odds of an eventual rendezvous with the 12,808 target of a much large pattern shown here. There is a 12,271 'secondary' pivot associated with this pattern that you should also jot down, and also a midpoint pivot at 11,734 that is almost exactly where the action came to rest.  The latter has the potential to stop the rally cold, so we should pay heed. I have labeled it 'an interesting place for a pause' because it is.

The top of Friday's 39-point rally came within less than two points of the 3481.75 target I'd sent out the night before. If you got short up there as advised, set a break-even stop-loss for now and cover half if the futures pull back to 3473.00. I'll update my instruction if Sunday's opening is worse than merely weak. Alternatively, targets of a bigger, bullish pattern remain in play. They lie, respectively at p2=3478.13 and D=3571.50. Both are shown in the chart (inset) and, because of an adjustment to point 'A', are somewhat lower than the targets given here previously. ______ UPDATE (Oct 12, 6:26 p.m. ET): A strong, unpaused rally has made a potential short-term finishing stroke to D=3571.50 all but unavoidable. Short there aggressively with a tight stop-loss if you've caught a profitable ride up. _______ UPDATE (Oct 14, 6:55 p.m.): The at times maniacal upsurge of the last few weeks has in fact, and so far, curiously avoided a finishing stroke D=3571.50. This is mildly bearish on its face, but we should give bulls the benefit of the doubt, since the selling over the last couple of days has been quite subdued. This is no reason to give up hope that bears will roar before the week ends, but for now there is no reason to assume the weakness is anything more than a garden-variety retracement. Here's the picture. ______ UPDATE (Oct 15, 5:4 p.m.): Well, dear permabears, there is a growing list of reasons why you should give up hope, since you've accomplished precious little in three days. I've mentioned numerous times over the years that a trader could have reaped a fortune buying any downtrend on its third day. Further proof of this may come soon.

With a 2.5% gain, AAPL outpaced all of the lunatic stocks on Friday save AMZN,  but it wasn't quite enough to push the stock past a prior 'external' peak at 118.83. That would have created a bullish impulse leg and set the stock up for a certain test of supply that is thickest around 120. I'll be looking to get short there via a tight rABC, even if it seems likely that AAPL will eventually punch through. The midpoint resistance at 127.53 would become our minimum upside objective at that point, but even before it reaches that threshold, the 140/150/160 Nov 20 call butterfly we own would start to come alive. We are sitting on 16 of them @0.36, offering half to close at 0.72, good-till-canceled. The spread has a delta value of 0.03, meaning it should gain 3 cents in value for each $1 move higher in the stock. _______ UPDATE (Oct 12, 3:25 p.m.): Subscribers reported cashing out half the position for as much as 0.73 with AAPL exploding to the upside.  Officially, I am now tracking eight remaining spreads that effectively cost us nothing, so no loss is possible. I will leave you to manage the position as you see fit, but be sure to save 25% of it for a potential moonshot, since this  butterfly spread has a maximum theoretical value of $10, which translates as $1,000 in your trading account. This price would obtain with AAPL sitting at $150 when the options expire on November 20, a little more than five weeks from now.  A lot could happen between now and then, but the target will remain valid as long as the stock does not exceed C=103.11 to the downside. _______ UPDATE (Oct 15, 5:42 p.m.): Bid 0.28 for 16 more butterfly spreads, day order,

Gold will need a couple more days like Friday, went it shot up $41, to signal the likely end to the consolidation begun in early August from a record 2089.20. Specifically, an 'external' peak at 1983.80 recorded in mid-September must be exceeded to generate the first bullish impulse leg on the daily chart since July. The immediate potential thereafter would be to 2050.60, the midpoint Hidden Pivot resistance of this pattern; and eventually to D=2250.10. All of this will of course depend on the dollar, whose weakness would turn ugly, if not to say impulsive, if it starts the new week as badly as it ended the last. _______ UPDATE (Oct 14, 7:35 p.m. ET): Bulls are working MUCH harder than bears to push this vehicle around. Even after struggling for altitude over the last 30 hours, they have yet to recoup losses that the bad guys inflicted on gold in a mere 90 minutes the day before. Price action has been too tedious to monitor closely, but I will recommend nonetheless that you bottom-fish at p=1895.20 (click here for chart) with as tight a stop-loss as you can abide. An rABC set-up with a very short A-B leg  (i.e., 8 points or less) should be suitable for this purpose. If the trade gets stopped out, it would shorten the odds of a further fall to D=1872.90. _______ UPDATE (Oct 14, 10.09 p.m.): The 1895.20 pivot worked out exactly, to the tick.  Here's the chart.  If you bottom-fished there, even a one-tick stop-loss would have worked. Your profit at the moment would be about $2600 on four contracts. Exit half and manage the rest at your discretion. _______ UPDATE (Oct 15, 8:09 a.m.): A few subscribers reported jumping on the trade in the chat room and making substantial gains. I'm

December Silver performed beautifully on Friday, gaining some tough yardage at the end of the day that put it just above an 'external' peak at 25.30 recorded on September 21.  This subtle but technically significant feat, which created an impulse leg on the hourly chart, adds to the likelihood that gold will duplicate it shortly.  It also implies that the current rally will be stronger than the one which lifted the futures off a deeply oversold bottom at 21.81 recorded on September 24. Stay tuned to the chat room for trading guidance, since getting aboard a rally this steep will require deft use of a 'mechanical' set-up on a lesser chart. ______ UPDATE (Oct 13, 1:57 p.m.): So very delicately attuned to the dollar's ups and downs have silver and gold become that today's strong rally in the former has caused quotes in the latter to plunge.  This has not undone the bullish impulse leg noted above, it has merely brought bulls another all-too-familiar day of disappointment. ______ UPDATE (Oct 14, 7:47 p.m.): With a point 'B' low that is pure sausage, the downtrend shown in this chart lacks the legitimacy and authority of the one I've suggested bottom-fishing in gold. Be that as it may, Silver's ABC looks good enough for government work, implying you can try bottom-fishing anyway at p=24.08. This assumes you know how to minimize the entry risk with a small-interval rABC set-up or some method or your own. ______ UPDATE (Oct 15, 9:13 a.m.): The trade worked almost as well as the one suggested in December Gold, producing a theoretical gain of as much as $1100 per contract overnight. The futures have since relapsed and appear bound for the pattern's 23.43 'D' target. _______ UPDATE (Oct 15, 5:56 p.m.): Although the futures fell overnight, a 28-cent