It was three weeks ago that Goldman Sachs' best and brightest put the knock on Apple, sending the stock into a 22-point dive that elicited barely a yawn in these precincts. We can be sure they had their reasons, but it is unlikely anyone at Goldman was actually bearish on the stock. More likely is that they wanted to beat it down in order to shake loose a few shares at relative bargain prices. The low of the move was around 265, but it had no effect on a 313 rally target I'd disseminated to subscribers with the stock trading nearly $40 lower. Rick's Picks stood by this very bullish prediction, however crazy it may have seemed at the time, for technical reasons. Specifically, AAPL had obliterated a midpoint Hidden Pivot resistance associated with 313 on the way up. Major and minor targets have changed slightly since, and there is still one at 347.24 if the short-squeeze goes out of control. More immediately, look for the stock to hit 308.50, or if any higher, 322.86. Both of these Hidden Pivots are shown in the chart. _______ UPDATE (May 11, 4:27 p.m.EDT): Hidden Pivot targets are now beside the point, since a rendezvous with all-time highs near 328 has become the main thought on traders' febrile brains. Here's a chart, also presented in the update to my commentary, that shows the muscular reverse head-and-shoulders pattern that currently holds sway. As always, we need only get AAPL right to get the stock market right.
One might have imagined that fighting a deadly global pandemic would transcend political differences in America, but instead it has only sharpened them. A friend who plays in a weekly poker game that features high stakes and nine players says the ones who get their news from Fox want to re-open everything, while the CNN/MSNCB guys want to keep the quarantine tightly in place more or less indefinitely. This comes as no surprise to me personally. Several weeks ago I emailed a brother who lives in San Francisco a YouTube video in which a noted epidemiologist explained the futility of trying to defeat the new coronavirus with lockdowns, however strict. My brother took the email as a political affront and we haven't spoken since. Although the civil rights dimension of the lockdown is the big story now, the ACLU unsurprisingly has sided not with you and me, but with state and local enforcers. On the far left of the pandemic divide is the New York Times, which has buried its head in the sand on the matter of whether the virus originated in a Wuhan lab. Neither the Times nor anyone without top security clearance has seen a report that Trump and a few others are saying makes a compelling case for the lab theory. Evidence aside, the Times has scoffed at this claim rather than graciously acknowledging we should simply wait for the facts. If they come, however voluminously, expect the Gray Lady to reject them as either inaccurate or poorly supported. Racist Beekeepers? Since I don't read the Times, I have no idea whether it has picked up on reports of a 'murder hornet' with well-documented origins in Japan turning up in the U.S. Mother nature's heavily-pincered, two-inch version of an attack drone has been savaging the hives
It requires very close attention to trade this nasty little bugger, and that is why I am calling on Pivoteers to post away in the Trading Room if they see any opportunities develop intraday. The pattern shown offers a heat map for doing so, with a 36.90 target that looks very likely to be achieved. That's evident from the way buyers impaled the 33.14 midpoint Hidden Pivot on first encounter. In retrospect, Friday's wicked swoon to the green line was a great opportunity to get long with a 'mechanical' bid, but I was too busy with other tasks to do anything more than be awed by the way this vehicle's canny handlers defenestrated bulls before getting out of the way of a short-covering panic. The lesson here is to realize that any feints lower are fright-mask tactics orchestrated to keep even true believers from making money on an uptrend that is strong, credible and all-too-obvious. _______ UPDATE (May 6, 5:40 p.m. EDT): Here's a bottom-fishing strategy to consider if GDX continues to visit pain on bulls. If the trade triggers, I will establish a tracking position once two or more subscribers have reported doing it. _______UPDATE (May 7, 9:35 p.m.): The rally left our stingy bid choking on dust. The 36.90 target is looking good, but use a 'dynamic' trailing stop if you're in from lower levels. That means shrinking the stop so that it is always equal to a third of the distance between the target and the current high. _______ UPDATE (May 10, 9:55 p.m.): The 'dynamic' stop would have triggered Thursday at 35.09, although this will have no bearing on the odds of the 36.90 target being achieved. If an opportune buying set-up presents itself we may be able to catch a ride, so stay tuned to
Monday's commentary typically goes out before markets lurch back to life Sunday evening, but it appeared likely that the weakness we saw on Friday will continue and perhaps gain momentum. Rick's Picks unfurled the yellow flag just in time Thursday night after the S&Ps and AAPL both failed to reach respective Hidden Pivot rally targets by crucial inches. Concerning the latter, Warren Buffett turns out to have dumped about 25% of Berkshire Hathaway's $72 billion stake during the first quarter. [Late-breaking note: I am now informed by my source that Berkshire Hathaway did not in fact sell a significant portion of its Apple holdings, at least not as of March 31. My hunch, however, is that Berkshire eventually will be shown to have sold quite a few shares of the stock as it rallied into the April window. RA] Well before this news, we had characterized Apple's powerful bear rally as smart money unloading as much stock as possible into a short-covering panic. Buffett being Buffett, he and his ilk have been very careful about not dumping so much stock into the buying frenzy that it might risk overwhelming it. On the evidence, this is exactly what has been happening, and it seems all but certain that Buffett and the Masters of the Universe will continue to distribute stock as deftly as waning demand will allow. With AAPL's ascent to heedless levels, the smart guys will probably increase the supply commensurately. We are on record with a prediction that the shares will eventually trade for less than $100. Although Buffett and DaBoyz are not likely to be so bearish, they undoubtedly have the good sense to recognize that exiting above $250 is a time-limited opportunity that might never come again. In any event, Rick's Picks remains bearish as all get-out
Last week's high not only failed by a few points to reach a clear and compelling Hidden Pivot target, it also failed to exceed a small but technically significant peak created in early April at 2975.00 (see inset). The latter shortfall was just ten points, but that's sufficient for us to infer that short-covering grew less urgent at the top of last week's parabola. The futures subsequently came down hard to end the week, but the slide did no serious damage to the hourly chart. It did, however, generate minor impulse legs the whole way down, and that's why there was no compelling reason to cover shorts on the close. Let's see how they open Sunday night before we speculate as to what is likely next. _______ UPDATE (May 4, 9:34 p.m. EDT): Bears failed miserably yet again to drive a stake through this beast's heart, and so we should expect more of the same -- i.e., another burst of irrational exuberance that seems all but certain to hit the 2860.08 target shown in this chart. Short there with a tight stop only if you've made at least $500 on the way up. ______ UPDATE (May 5, 8:36 a.m.): Next stop Willoughby! Bears had such an easy time of it driving this giddy bag of gas to 2860 overnight that I've skipped a point 'A' low at 2788.50 (9:45 a.m. yesterday) in order to calculate a potential short-term, end-of-the-line top at 2874.83. Shorting 2860 overnight was the predictable 3:00 a.m. ordeal we've come to expect, accessible only to subscribers who live outside of U.S. time zones, but the payoff was as much as $5600 on four contracts. The anticipated correction came from a temporary peak at 2865, implying an rABC set-up would have been less stressful than the tightly stopped
My latest commentary tees off on AAPL, reiterating my forecast for an eventual move below $100, but strictly speaking, Friday's price action, nutty as it was, provided no technical basis for predicting that the stock is about to fall apart. It would take a plunge exceeding last Tuesday's 278.20 low to generate a threatening impulse leg on the hourly chart, and although that's hardly inconceivable, we'll let the stock speak for itself before drawing any conclusions. A 'mechanical' buy would trigger at p=285.26, stop 278.65, but I'd suggest spectating just to familiarize yourself with this bold tactic for getting long/short where others fear to tread. _____ UPDATE (May 4, 9:40 p.m.): A deftly engineered plunge on Friday's opening bar exhausted sellers, paving the way for a spectacular 12-point short-squeeze that has left bears off-balance as the new week begins. Monday's action started out with similarly deceptive weakness, just not enough of it to bring the stock down to our infotainment bid at 285.26. The 305.08 target shown in the chart still obtains, but we can use a lesser Hidden Pivot at 302.19 as a minimum upside target for the near term (5-min, A=278.20 on 4/20 at 4:00 p.m.)
The S&Ps and Apple shares fell slightly shy of their respective Hidden Pivot rally targets on Thursday, so I am unfurling the yellow flag. Without offering any specific projections, Apple showed weak revenue growth and sees at least a couple of tough quarters ahead. Under the circumstances, I would advise particular caution if the broad averages rally on Friday without exceeding Thursday's highs. With just a little good news on the pandemic front, that could be sufficient enticement for traders to take long positions over the weekend. Whatever the news, nothing will have changed the grim outlook for the economy for the foreseeable future. A new wrinkle is that overly generous unemployment checks are making it hard for businesses trying to reopen to hire help. A Portland operator/owner of 20 restaurants hires cooks for $15/hour, but the ones it laid off are collecting the equivalent of $25 an hour for not working.
On its own, the chart suggests DIA is still a good bet to reach a 250.43 rally target that has kept us confidently on the right side of an otherwise unbelievable uptrend for more than three weeks. Short there as instructed earlier if DIA gets within 0.07 of the target, using puts priced under $1 with just a week left on them. Note, however, that because AAPL and the E-Mini S&Ps failed on Thursday to reach their respective Hidden Pivot rally targets, there's a chance DIA will not reach its projected top at 250.43. Put options will be a riskier buy if DIA spends the day meandering without achieving the target, but if it closes up on the day without having surpassed this week's 247.67 high, don't hesitate to take a few puts home over the weekend.
With so-so earnings out after Thursday's close, DaBoyz conspicuously failed to goose the stock to the 305.08 rally target sent out to you last night. AAPL fell more than $4 shy of that mark and looked unlikely to try again -- unless the stock's resourceful handlers can scare up a gaggle of short-covering maniacs overnight. Meanwhile, the E-Mini S&Ps similarly failed by a few points to reach a clear Hidden Pivot target. Taken together, these small disappointments suggest that the spectacular short-covering panic of the last five weeks may be sputtering out. Friday will probably provide opportunities to make money trading in either direction, but beware of taking long positions over the weekend if the broad averages close higher without having exceeded Thursday's peaks.
A seemingly small trend failure in the E-Mini S&Ps has bearish implications for the stock market as a whole. Thursday's pump-and-dump short-squeeze in the dead of night missed achieving a 2973.25 rally target I'd drum-rolled by eight points. That was no big deal, but a corresponding failure to take out the 2975.00 peak at the left-most edge of the chart (inset) is troubling. That's because, under the rules of the Hidden Pivot Method, healthy rallies must exceed at least one prior peak with each new up-leg in order to renew their energy. That's not what happened here, as you can see. The stubborn peak was tiny, but because of the way it was formed, it has the same weight as any of the larger sub-peaks in the chart. Small failures like this one should not be ignored, and that is why I am cautioning against taking a long position over the weekend if the futures entice with a rally that has not exceeded the 2965.00 recovery high. Regardless, let the buyer beware!
