Crude spent the week head-butting the 88.11 target shown. I'm not a big believer in rallies driven by artificial constraints on supply, but our enemies have shown enough persistence and cohesiveness to suggest they can hurt America economically. Pump price are pushing above $4 for regular gas, amounting to another stab in the eye for Wall Street shills who as recently as two weeks ago were talking about, not a soft landing, but about no landing. So much for bullish spin, even if Americans seem to have an inexhaustible supply of surplus dollars to foot the bill for rising energy costs that will push up prices for nearly everything Above 88.11, this pattern, with a 98.84 target will be well in play.
Last week's moderate weakness failed to achieve the green line (x=4454.25), where we've been looking to do some bottom-fishing. The stop-loss for the relevant pattern would be just beneath C=4397.75, implying entry risk of about $2,800 per contract. That means we'll need to craft a trigger on a chart of lesser degree in order to bring the risk down by around 90%. Although I am confident this 'mechanical' trade will produce a profit, I cannot guarantee that the implied bounce will get much farther than the red line, where we would typically take a partial profit. _______ UPDATE (Sep 13, 11:42 p.m.): Night owl special: Use the 4533.75 target of this pattern and a 1.75-point trigger interval to get short. This trade is for Chat Room 4 denizens only. _______ UPDATE (Sep 14, 8:41): Even though it went against an uptrend driven by lunatics and thieves, the short advised last night proved to be a lay-up. The futures dove 12.25 points after topping two ticks above the 4533.75 target drum-rolled above. Executing the trade with the 1.75-point trigger suggested, then partially covering the short at p and D, would have yielded a $475 profit in under 30 minutes. However, the eventual drop to 4522.00 could have produced additional gains worth $600 more per contract. Here's the chart. The futures have since lunaticked to higher highs ahead of the opening, but what do we care? We simply carved out an easy trade in the midst of the usual headless-chicken price action.
Bulls and bears ended the week playing patticake, somewhat shy of the green lie (x=1934.0) where bottom-fishing would become mildly enticing. A one-level bounce seems likely, although the pattern's elongated B-C leg has diminished the bullish impulsiveness of this picture sufficiently to make a run-up to D=1995.00 less than an even bet. Although that's unlikely to stoke your enthusiasm, we should try nonetheless to get a piece of the implied 'mechanical' bounce that is indicated with a tight 'reverse trigger'. Tune to the chat room for possible guidance on this. _______ UPDATE (Sep 12, 7:59 a.m. EDT): The futures have in fact come down to the green line, implying it's time to set up a trigger for the 'mechanical' buy suggested above. On the hourly chart, the nearly 4-point 'natural' a-b is a little rich for my taste, so I am using a= 1947.30 (9-11 at 9:00 a.m.) to set up the trade with a $$1.70 TI. Based on the so-far low at 1933.40, the trade triggered a few minutes ago at 1935.10. First partial profit would be at p=1936.70. For comparison, the more natural a-b, where a=1939.50 on 9-10, would trigger at 1937.40, based on the so-far low at 1933.40. We shall see. _______ UPDATE (Sep 13, 6:20 a.m.): Although the small pattern got stopped out for a $170 loss per contract, the more 'natural' $4 trigger went on to produce a gain of $380 in about an hour. This is not bad, considering we went long against weak, sloppy price action. Here's an interesting chart from Erik Volma at Gold-Eagle.com. It shows what gold prices did during stock market crashes going back to 1970.
The futures tripped a reverse-pattern buy signal Thursday night and then went blotto on Friday, unable to poke above the green line for more than a few minutes after three tries. There was no reason to hold a position over the weekend, but if you did anyway please let me know so that I can decide whether to provide a tracking position. Usually when a clear signal like this one produces...nada, it means the dominant trend -- in this case down -- will continue. Since I don't have a crystal ball to predict how this mud-dog will open Sunday night, I will wait for it to instruct me. If I had to guess, I'd say traders will scare themselves to death with a gratuitous feint beneath C= 23.13, paving the way for a weak bounce that will not likely be tradeable unless we're glued to the 3-minute chart.
This vehicle served up a profitable dollop of dreck on Friday's opening bar, triggering a reverse-pattern entry at 34.14 that was spelled out in my tout. Making actual money on the trade would have been fairly easy, since GDXJ pulled back to the green line where the trade triggered after busting through it in the first minutes of the session. The surge got past p2=34.69, implying you could have been out of 3/4 of the position before the rally succumbed to gravity. The plunge was so relentless and dispiriting that we can only infer that still lower prices impend. A hidden Pivot support at 33.79 is the closest target. Since it is but an inch beneath last week's low, we might expect a tradeable reaction with a 'counterintuitive' (i.e., rABC) trigger interval of 0.23. The pattern yielding the 33.79 target starts on the 30-minute chart with A=34.80 on 9/6 at 10:00 a.m.
Can the Wall Street Journal's headline writers save America's juiced-up economy from going bust? They are certainly trying. Check out the lede atop Friday's editions: The Fall in Home Prices May Already Be Over. Fancy that! With mortgage rates headed toward 8%, many readers must have done a double-take when they scanned this seeming howler. Your editor wondered why the copy desk had not punctuated the headline with three or four exclamation points, lest the story fail to goad potential buyers who have been sitting on the sidelines into action. However, the article itself, written by one Nicole Friedman, had a somewhat more nuanced take on the housing market. Although she gave Realtors an opportunity to do some boisterous cheerleading for the industry, she did not allow them to claim that residential sales are strengthening. For how could they be? It turns out that prices are no longer falling because transactions have all but dried up. Few homeowners are listing these days because the price of any home or apartment they might move into would be just as pumped up. Although there are probably millions of Baby Boomers who would love to downsize in order to free up more money for retirement travel and other pleasures, it seems increasingly unlikely there will ever be buyers for their homes at today's insane prices. Millennials and Gen-xers are already so tapped out that they can't even pay back student loans, let alone buy their parents' 4,000-square-foot McMansions in the suburbs, or keep Social Security and Medicare solvent. Our kids will eventually inherit the homes, even if they are unable to afford upkeep and taxes. It is predictable that lawns will go to seed and that the amenities of suburban towns will wither for lack of property-tax revenues. What AAPL Is Saying Here's
Officially we are short from near 189.90 via the purchase of four Sep 8 180 puts for 0.12. This is a 'mechanical' trade, and although the green line (x=189.90) is neither a target nor a resistance, it is where most trades of this kind are signaled. The fact that the rally topped two cents from the target is mere coincidence, even if it may have felt like we got the trade exactly right. If time erodes our puts to the vanishing point by mid-week, we may try again. Regardless, you should be offering half of the puts to close for twice what you paid for them. _______ UPDATE (Sep 6, 2:40 p.m.): Today's so-far quadrupling-or-better of AAPL 180 puts extends a Rick's Picks winning streak that stretches back beyond memory for option trades posted either as touts or as spontaneous 'berries' in the chat room. Anyone who bought the puts for 0.09 to 0.12 on last week's guidance should be out of half to three quarters of the position by now. Save a few for Friday, since the explosion of these still-out-of-the-money options has spooked the clowns who are short them. Even if they did so as part of a hedge, they would still be in trouble due to the deadly negative-gamma exposure of options that only yesterday were $10 out of the money. Here's the chart, so lovely and gratifying. _______ UPDATE (Sep 7, 2:16 p.m.): Nailing the 189.90 top of AAPL's hellish plunge within two pennies, and timing it nearly perfectly, produced quick gains of as much as 10,000 percent on puts that could have been acquired for as little as 0.06 just a couple of days ago. They traded as high as $6.60 today in panic selling that deepened the already-punitive losses from a day earlier. Many subscribers apparently
This ETF proxy for long-dated Treasurys looked promisingly perky until last Thursday, when it spiked to a high that narrowly failed to clear an 'external' peak at 97.37 recorded on August 8. The subsequent relapse on Friday generated enough momentum that bulls will have their work cut out for them if they should attempt to slow the fall. Otherwise, look for this vehicle to continue its long dirge down to at least p2=88.05, the secondary Hidden Pivot support of a pattern projecting to as low as 80.84. Presumably, that would square with my projection of a 5.53% rate on the Ten-Year, which settled last week at 4.17%. [ Note: The chart and downside targets have been corrected to replace earlier data that appears to have come from the Twilight Zone.}
The bullish pattern shown, with a 4573.25 rally target, will likely control price movement as the new week begins . It has already produced a profitable 'mechanical' buy on the pullback to the green line (x=4405.81), and we could see an equally opportune short materialize when the target is reached. This looks very likely, given the way buyers stabbed through p=4461.63 at the start of last week. The move accounted for most of the week's gains, illustrating yet again how volumeless gaps and short-covering are responsible for most of the bull market's orchestrated rise. Since the short would require a 30-point trigger interval, we'll look for our opportunity on the lesser charts when the time comes. For now, though, your bias should be bullish and allow for the possibility of a drop to p=4461.63 to trigger a 'mechanical' buy, stop 4424.25. The earlier in the week this occurs, if it does, the more attractive the trade. ______ UPDATE (Sep 6, 6:30 p.m.): We'll need to remind ourselves when ES plummets to the green line (x=4405.81), leaving many traders terror-stricken, that we are being gifted with a fairly attractive 'mechanical' buying opportunity. It won't be a back-up-the-truck event, since the relatively long B-C leg will have dissipated some of the bullish energy of the nicely impulsive A-B. But I do expect a one-level gain at least, implying a bounce to the red line (p=4461.63). A trend failure at that point could be fatal, so we'll be on our guard.
The bullish pattern we used last week to leverage a 1995.00 rally target is still viable, even if there haven't been any pullbacks sufficient to trigger a 'mechanical' buy on the daily chart. That could still occur on a swoon to the green line (x=1934.00), or to the red line, where a somewhat riskier trade would be signaled. More upside to the 1995.00 target is not in doubt, however, given the way the futures punched through p=1954.30 last Monday. We'll look at other ways to get aboard, so stay tuned to the chat room if you care.
