Today's modest pop exceeded two more external peaks on the daily chart, bringing the total to three -- all by a rally that has yet to correct. This implies a powerful impulse leg in the making -- one that could soon dispel any doubts about the importance of the September 1 low at 91.71. If this is in fact the start of a major bull move in the dollar, all of the trends that have been in motion since the bombed-out March 23 low are going to reverse: Shares, including the FAANGs, will fall, the precious metals will turn weak and T-Bonds will get new respect as a safe haven. None of this will necessarily happen overnight, but as the implications of the dollar's strength become more apparent, that will turn the tide. Debtors are headed for trouble, and the effects of Fed stimulus are about to go deader than Kelso's testicles. _______ UPDATE (Sep 23, 9:23 p.m. ET): This week's surge has exceeded two prior peaks on the daily chart, two of them 'external', without taking a breather. Now, if the rally punches through D=94.61 with little effort, that would further strengthen the argument that we are witnessing the beginning of a major move. _______ UPDATE (Sep 24, 9:47 p.m.): Thursday's rally to within two cents of the 94.61 target I'd drum-rolled has the entire world on edge. Exciting though this may be, it does not call for speculation; we'll let price action over the next day or two speak for itself.
Buyers re-enthused so quickly after getting raped on Tuesday's bull-trap opening that I've raised my short-term projection. The pattern shown implies AAPL will hit 117.46 if it can get past p=113.31, my minimum upside projection for Wednesday. If the stock does in fact achieve 117.46, the optimists will surely be thinking at that point that new all-time highs are likely. We'll be extra careful ourselves, since our day-to-day outlook is based in part on the certainty that when conditions are perfect, as they may well be now, Mr Market will set a trap that to snare everyone, not just bulls. That would imply the current bounce will pick up momentum in order to trigger a short-covering stampede. Whatever the case, we will have our eyes wide open in the days and weeks ahead to avoid getting fooled.
Bears should have been able to close the Dow down at least 1000 points on Monday. Instead they turned gutless before the session was even halfway over, driving the futures into a short-covering spasm that was continuing into the evening and had recouped more than half of the day's losses by around 8:30 p.m. The buying binge is attributable in part to the fact that DaBoyz had bullish control of AAPL all day long and would not let it touch 100. This is no surprise, considering DaDirtballs are covering shares that were shorted as high as $138 in the post-split rampage. Regarding the E-Mini S&Ps, they would trip a weak 'mechanical' short if they reach x=3347.50, the green line. The bearish target thereafter, D=3131.50 (see inset) is derived by sliding the point 'A' high up to the 3574.00 high recorded on September 3. We'll paper trade the short because it is not ideal due to the weak impulse leg. _______ UPDATE (Sep 23, 9:43 pm. ET): The two-day detour has not altered the odds of a fall to at least 3131.50.
The target we've been using at 3238.50 (corrected from a dyslexic 3228.50 given here earlier) still looks like minimum downside from here, but also a place to attempt bottom-fishing with a tight stop-loss, especially if you've been short on the way down. It can be used as well to 'mechanically' short the futures from either p=3329 or x=3374.25, although I am not recommending either trade explicitly until I've seen how the little sonofabitch opens Sunday night. As always, a decisive penetration of the 'D' support, especially on first contact, would telegraph even more weakness to come.
We've been using a 100.99 target for this selloff, but the 98.65 pivot shown in the new chart should be considered as an alternative because the first bounce from the pattern's p=110.68 was fairly precise. Either will work in conjunction with the Sep 25 95/100/105 call butterfly I recommended buying last week for 0.30. The stock's descent since then has pushed up the value of the spread, and you'd be doing well now to buy it for around 0.80. If anyone got aboard last week for less than 0.70, please let me know and I'll establish a tracking position. Note to Pivoteers: If the point 'A' high shown in the chart had greater separation from the spiky 'marquee' high, this would be the kind of gnarly pattern whose target could not fail to provide a tradeable bounce. As it stands, the pattern generated a profitable 'mechanical' short last Tuesday that is still in effect. Bottom-fishing at p2=104.66 is recommended only to those of you who know how to tightly control the entry risk with an rABC set-up. ______ UPDATE (Sep 21, 8:36 p.m.): We'll spectate for now, since AAPL has shorts by the scrota again. An upthrust touching 112.20 would be warning of a squeeze capable of doing quite a bit more damage to bears. The pros are working the stock hard, and the post-split squeeze to $138, followed by an engineered plunge to a so-far low of 103.11, ranks as one of the most lucrative criminal scores of all time. This is a multi-trillion dollar stock, remember.
[QQQ] The chart shows two Hidden Pivot 'D' supports, either of which is capable of generating a tradeable bottom. Subscribers reported success using SQQQ, an ultrashort ETF, to play the move. The downside targets lie, respectively, at 260.69 and 258.42. However, sliding 'A' up to the marquee high at 303.50 recorded on Sep 2 would produce a downside target as low as 243.85. Friday's bounce precisely from p=262.15 of that pattern has validated this target and the pattern associated with it while also providing a rationale for bottom-fishing at 243.85 with a very tight stop loss. ______ UPDATE (Sep 21, 8:42 p.m.): Subscribers reported making hay with the 260.60 target, which caught the low of a nearly 7-point plunge within 58 cents. The bounce is strongly impulsive, but I expect it to fade well shy of last week's peaks near 280.00 In any event, we'll repair to the sidelines for now.
[DIA] Bears turned chicken Friday afternoon, scrambling needlessly to cover shorts ahead of a weekend that was unlikely to produce 'good' news. Now, a rally to p=278.76 would trip a weak 'mechanical' short, stop 280.59. I'd suggest paper-trading this one unless you've caught a profitable ride up to 278,76. The trade should be executed with a rABC set-up on the 15-minute chart (or less). As always, if the eventual, expected fall to D=273.29 exceeds the target, especially on a closing basis, that would warn of more weakness to come. _______ UPDATE (Sep 21, 8:49 p.m. ET): Sellers are probably done for now, having achieved the 'D' target of a three-week-old pattern almost exactly. It is calculated using the highest possible 'A' on the chart; my original target used a secondary high recorded on Sep 3 and was relatively conservative. Here's the chart. _____ UPDATE (Sep 22, 5:16 p.m.): This pattern, with a 274.68 rally target, can serve for trading purposes, implying a 'mechanical' long from x=271.01, or a short from D=274.68 for those who have enjoyed the ride up. Please note that a gap opening in the morning -- something that occurs regularly in this vehicle -- could negate the pattern or at least diminish its usefulness.
There was not a mask in sight Saturday afternoon on the Ocean City NJ boardwalk even though it was packed with strollers, including your editor. Although it's not possible to tell from the picture which are political liberals and which are conservatives, it's probably safe to say that voters of both persuasions were well represented in the dense throng. The beaches and boardwalks in South Jersey and elsewhere are among the relatively few places where no one seems to give a damn about Covid-19. In such locales, the disease seems as powerless as the Wicked Witch of the East in Munchkinville. We know this because nearly everyone in America would be infected by now if it were otherwise. What about indoor spaces? Popular wisdom has it that if you share a poorly ventilated room with someone who has the disease, and you breathe the same air for an hour or two, you are likely to become contaminated yourself (although not necessarily symptomatic). However, there is at least one bar in nearby Margate, NJ, where drinkers often stand two or three deep because all of the stools are taken. Three-way conversations are happening with faces separated not by the state-mandated six feet, but by 10-15 inches. On a recent weekend when I had dinner there -- outside -- the bar resembled a scene from a Heironymous Bosch painting, where earthly pleasures are celebrated with wicked abandon. If they turn out to be superspreaders, we should know by Halloween. Pancake Risk I had a mask-less breakfast Saturday morning with two friends, both physicians, in a restaurant that is famous for blueberry pancakes and which has been doing brisk business since 1946. The place has barely missed a beat during New Jersey's lockdown. One of these friends has treated dozens of Covid-19 patients,
When we trade rABC set-ups, the length of the A-B segment is crucial to profitability. This lesson delves deeply into rABCs with greater detail and clarity than ever before. If you are already proficient with the technique, there are some advanced ideas here that will be helpful, including creating 'artificial' A-B segments to perfectly match your appetite for risk and your confidence in a particular pattern.
Rick held this unscheduled presentation on Thursday, September 17, to explain why the recent rise in the dollar could be warning of disaster. If the dollar continues to rise, he notes, it will undo Fed stimulus, cause stocks and bullion to fall, and make it impossible for the central bank to meet its 2% inflation target. Worst of all, it could mark the beginning of a massive, deflationary squeeze on all who have borrowed dollars. The alarm would come if DXY, the Dollar Index, hits 93.99; it is currently trading for around 93.09. Rick also discusses strategies to safeguard one's nest egg and the possible long-term effects of deflation on bullion. As the market continues to shift quickly, getting timely insights from Rick and fellow traders is imperative for you to profit and minimize your losses. We are discussing this important update in our member's only chat room as well as several other timely trades. Get access now and unlock your 14-day trial of Rick's Picks.
