Bulls have so boldly ignored the deepening global recession that I've switched to a bigger 'reverse' pattern with a higher rally target at 87.43. Don't expect the March contract to get there any time soon, though, since it has already spent more than a week head-butting a midpoint Hidden Pivot resistance at 78.87. In the meantime, a sharp relapse to the green line (x=74.59) should be used to get long with a 'mechanical' bid, stop 70.31. This one's for subscribers who know how to cut entry risk down to size by using a micro-pattern to initiate the trade. This is what we call 'camouflage' trading, and it is much easier than you might imagine. Ask in the chat room if you're curious. _______ UPDATE (Jan 4, 7:16 p.m.): In the chat room today I suggested buying 13th Jan 67.5-70.0 vertical call spreads for 0.25 to 0.49, day order. However, you can bid 0.25-0.30 for them on Thursday, provided the futures are trading 73.00 or higher. Please let me know if you bought any spreads so that I can determine whether to provide a tracking position. ______ UPDATE (Jan 5, 11:45 p.m.): No one said a word, so I won't be updating with further guidance.
Three weeks of jitterbugging around the 104.08 midpoint Hidden Pivot support has left the Dollar Index primed for a fall to at least p2=102.13, and thence to D=100.18, a target first signaled in late November. The weakness has somewhat alleviated pressure on gold and silver and promises to contribute to their further ascent, possibly with a spike finale to an intermediate top. Presumably, it would occur above the 1908.10 peak currently forecast for the March Comex contract. ______ UPDATE (Jan 6): The Dollar Index shook us briefly out of complacency by adding an Ali Shuffle to its all-too-familiar jitterbug routine. A bull-trap rally before Friday's opening bar reversed with such ferocity that we should infer the bearish targets above are still likely to be achieved. I'll reconsider only if it pops above 105.81. Here's the picture.
Be skeptical if stocks start the new year on a positive note, since that would be the perfect way for Mr Market to set the hook to trap bulls and bears alike. It would probably take most of the opening session on Tuesday for an enticing rally to build up steam, since the bears who would be doing most of the buying via short-covering will need some painful prodding before they hit the panic button. Mr Market has had an especially hard time trying to stampede them lately, since he holds such lousy cards. Recession is upon us, tightening its grip as the shares of such former world-beaters as Apple, Tesla, Google, Facebook and Amazon have collapsed. This has caused the "wealth effect" to deflate precipitously, unnerving investors who understand that the carnage will end only when a tsunami of exhaustion selling lays waste to the most resilient bulls. Not Bottomless My best-case scenario comes from AAPL's chart, which looks ugly but not bottomless. In fact, the stock need only fall a further $8 or so, to around $121, to find good support at a trendline I've been drum-rolling for months. "Get Apple right and you get the stock market right" has been Rick's Picks' mantra for nearly two years, and it has served us well. Because the stock provided a decade-long free ride for portfolio managers and has hooked them like dope, it will always tell us exactly what's on their minds. Now, despite grim headlines and dark clouds of war and recession hanging over 2023, Apple's chart says the stock market's decline may have just a little further to go before either stabilizing or rebounding. Some of my guru colleagues appear to expect strongly otherwise and have been predicting a January disaster. But don't be surprised if stocks
Bulls and bears fought to a draw last week, surfing a killer wave of boredom. The futures looked bound for 3683.89, a secondary Hidden Pivot support that lies 5% below these levels. Alternatively, I wouldn't get my expectations too high for a Santa rally, since just staying afloat looks like as much as this vehicle can handle at the moment. A move up to the green line (x=4014.63) would trigger a 'mechanical' short, but we'll want to use extra caution getting into the trade because the big ABCD pattern does not have much downforce.
With a deepening global recession starting to weigh on iPhone sales, AAPL has been leading the stock market south. If it falls to the lower channel-line shown, that would equate to a drop of 8%. Support comes in at around 120.50, but it could take 3-4 weeks at the rate things are going, meaning the eventual bottom would be under $120. And it would be a bottom of sorts, although I expect the stock to fall eventually to $50 or lower. Alternatively, the stock would need to surpass the 149.97 peak recorded on December 13 to generate an impulse leg of daily chart degree. The stock will continue to be tradeable regardless, so stay tuned to the chat room for timely ideas such as the call-option recommendation I put out last Thursday. ______ UPDATE (Dec 28, 6:01 p.m.): AAPL's plunge toward my minimum downside objective has been steeper than I'd imagined and could take less than two weeks, not the 3-4 I'd initially predicted. The channel line is so clear and compelling that the smart money that manipulates the stock cannot do anything about it. AAPL will not only reach the trendline, it will begin a significant bear rally from very close to it. Any other outcome would turn the chart even more bearish than it already is. My long-term forecast is for a fall to at least $50. For your further guidance I've recalibrated the trendline and determined that it comes in at 121.75 this week and 121.40 next week. You can play the bounce using sub-$1.00 calls expiring by mid-January, or by bottom-fishing with an rABC 'como' trigger.
We’ll use the pattern shown, with an 81.95 rally target, since it has already produced a picture-perfect 'mechanical buy at the green line and would signal yet another on a pullback to the red line (p=76.13, stop 74.19). There is nearly $2000 of entry risk per contract on this trade, so we'll need to use a 'camo' trigger to initiate it. That would entail switching to the five-minute chart or less if and when the Feb contract touches 76.13, then setting up a mico-abcd pattern with commensurate initial risk. Also, the D target at 81.95 is shortable with a tight stop-loss that can be fashioned from a small rABC (i.e., reverse) pattern.
In an economy that over decades has grown increasingly dependent on revved-up holiday sales, investors have responded by praying more fervently each year for a Santa rally. It's an odd metaphor, however, considering that Wall Street even at its seasonal cheeriest has a heart as cold and dark as volcanic glass. The Santa of investors' imaginations is assuredly not the fat, jolly one originally drawn by a Dutch artist Haddon Sundblom for the Coca-Cola company, but rather someone more like Fed Chairman Jerome Powell gone silly in a headdress of fluffy white dove feathers. Unfortunately, Powell has not left much room for silliness in this holiday season. Gone are the days when Neiman Marcus could get a rise by featuring his-and-hers Bentleys in their Christmas catalog. The typical American household is thinking about more practical presents in these recessionary times: PG&E gift certificates...bread machines and pasta makers...survivalist seed packets...battery chargers. More Turbulence The result for investors has been a balky stock-market shaped more by Scrooge than Santa. Even with bullish seasonality at maximum force last week, the Dow Industrials could muster only a 300-point gain. They closed on Friday at 33,203, down a thousand points since Thanksgiving. More turbulence seems likely in the final days of 2022. Perhaps the best we can hope for when the markets lurch into gear on January 3 is that stocks continue to drift through a circa 1914 minefield without triggering a nuclear war or the debt deflation we all know is coming. [What do the charts say? Click here for my latest interview with Howe Street's Jim Goddard. RA]
The dollar's timid rally last week increased the likelihood that it eventually will fall to the 100.18 target shown before it can turn around. That would equate to a 12.7% decline since DXY topped at 114.78 on September 28. The correction would be mild relative to the spectacular run-up that commenced from around 90 in mid-2021. Bullion investors should enjoy the favorable tailwind provided by a weak dollar while it lasts. It is also providing respite to Powell & Co. by alleviating deflationary pressures that eventually will asphyxiate consumer inflation and usher in a global economic depression.
Friday's dive stopped a hair shy of the 3848.00 midpoint support shown. Since the trouble began with the March contract's failure to get anywhere near the 4245 rally target I'd proffered, and because minor abcd downtrends subsequently have exceeded their 'd' targets, it seems clear that the bear market is about to return following a two-month hibernation. The 3848 Hidden Pivot was worth bottom-fishing, but because the futures went no lower than 3855, the trade I'd planned to do myself did not trigger. However, several chat-roomers caught the low and bottom-fished it profitably after a subscriber posted a chart showing a 3855 downside target. For now, for purposes of forecasting and trading, I am treating that number as erroneous even though it 'worked'. Regardless, it, too, puts the March contract in a perilous place. If selling resumes on Monday and produces a close below 3848, that would telegraph more downside to at least p2=3682.00. _______ UPDATE (Dec 21, 8:34 p.m.): A vicious short-squeeze, for sure, but I doubt the rally will get legs because of the way sellers crushed p=3849. At x=4014.63, it would trip a 'mechanical' short, stop 4181, but I'd suggest paper-trading unless you know how to cut the $33,200 theoretical entry risk on four contracts down to $1600 or less using a 'camouflage' trigger. ______ UPDATE (Dec 22, 12:06 p.m.): Now that's more like it! The futures are getting savagely pounded, a reality-based Santa Rally in reverse. Use the 3682.00 (p2) secondary Hidden Pivot shown in the chart (inset) as a minimum downside target for the holiday season, but keep in mind D=3516.00 as a worst-case projection for the near term. A cascade could make that happen sooner than most on Wall Street might imagine.
In this week's Morning Line commentary, I explained why AAPL's dismal trajectory is about to worsen with a 10% plunge that will sink the stock market as well. More immediately, we are going to see a test of the 130.92 Hidden Pivot target shown in the chart (inset). There is additional, structural support from a key low at 129.69 recorded back in June, so don't expect the stock to break down straightaway. Like many stocks, AAPL is falling after having failed to achieve a clear rally target of daily chart degree. If this ostensible correction overshoots its 'd' target, that would affirm the likelihood that the bear market is back in force after hibernating since October. _______ UPDATE (Dec 21, 8:46 p.m.): My downside target at 130.92 caught the low of a so-far $7 bounce from 129.89. Let's see how well DaBoyz exploit this opportunity, which was ordained by cyclical forces beyond their (and our) understanding. A small reverse pattern (a=140.00 on 12/7 'daily') says AAPL will get to at least 139.85, and that a pullback to 132.37 could be bought 'mechanically' with a stop at 129.87. _______ UPDATE (Dec 22, 8:40 p.m.): See my 13:22 chat room post for an explicitly detailed bottom-fishing gambit using expiring at-the-money calls. If you have enabled 'Notifications' on your account dashboard, you would have received a timely email concerning this trade.
