Rick’s Picks

Since the dollar bettered my moderately bullish expectations last week, I've deployed a bigger reverse pattern that will give the rally more running room. Even so, we'll be watching closely for a stall, possibly fatal, at p=104.65. That's a midpoint Hidden Pivot resistance, and the usual rule applies: If it is impaled on first contact, that would shorten the odds of a further run-up to the next HP level, p2=107.19. The Matterhorn is March 8's 105.88 print, and if it's decisively exceeded, the 109.72 target would be in play. That could not but reflect a sea change in the global financial picture, so we'll be keeping a close eye on the price benchmarks noted above. ______  UPDATE (Aug 23, 7:06 a.m. EDT): The dollar is headed for a crucial test of the 104.03 Hidden Pivot resistance shown in this chart. Remember, almost NO ONE wants a strong dollar, since it will increase the financial burden on EVERYONE who owes dollars. (Do you know anyone who doesn't?) That is the chief and most destructive symptom of deflation, and it is a vastly larger creature than the relatively puny inflation that Covid stimulus loosed on the economy.  The deflation juggernaut has been gathering irresistible force since long before Covid, and we may be about to find out whether its time has finally come. With mortgage rates above 7%, it is already enjoying a powerful tailwind.

Last week's sharp decline missed the minimum downside target at 4336 flagged here last Sunday by an inch, denying us an opportunity to play the bounce into Friday's close. This is no tragedy, however, since the futures are unlikely to go much higher before they resume their fall to the "D' target at 4237.75 shown in the chart. My confidence in this outcome is based on the decisive penetration of p=4436 on Wednesday. It is still more bearish that the futures never closed above the red line after breaching it for the first time. Getting short has grown more difficult as the downtrend has lengthened. However, if you aspire to catch a ride south, tune to the chat room, which has been well up to the task.

The update I put out Wednesday night nailed the week's low at 1914.20 within $1. However, because no one reported a trade, I haven't established a tracking position. I expect the downtrend to resume this week and to hit D=1897.90, a Hidden Pivot that can be traded with a tightly wrought rABC (i.e., reverse-pattern) trigger.  There  could also be a tradeable bounce from 1911.50, but it should be bottom-fished only by Pivoteers who know how to find this voodoo number. The 1897.90 pivot is obviously important, since a breach could send December Gold groping for traction below the Feb/Mar lows around 1883. _______ UPDATE (Aug 23, 10:23 a.m.): Gold is off to the races this morning, presumably on a track to nowhere that has come to resemble a Möbius strip.  Despite my skepticism, however, and because the rally is solidly impulsive on the intraday charts, I'll offer this bullish view as though I were a true believer. Like most fetching 'reverse' patterns, this one is all but guaranteed to work well no matter what your purpose.

What a mess! Even so, the pattern shown in the chart meets our criteria for accuracy and reliability in subtle ways, so let's assume the cycle of hard-selling begun from 25.47 a month ago is headed down to at least D=21.18. In the meantime, we should be alert to shorting opportunities if last week's so-far weak bounce gets legs. A run-up to p=23.33 would trigger a relatively risky 'mechanical' short, stop 24.04, but there may easier ways to do it, so stay tuned to the chat room for timely guidance. ______ UPDATE (Aug 21, 9:29 a.m.): A subscriber reported shorting silver based on the above. My response n the chat room, for your guidance, was as follows:  "My target missed the top of the nasty spike by 0.03, but I hadn't expected it to be reached so dramatically. Is your stop at 24.04, the number in the tout? That implies 72 cents of theoretical entry risk. However, you could have cut that to 11 cents using an rABC set-up that triggered at 23.25, with 23.15 as the threshold for partial-profit-taking (15m, a=23.07 on 8/17." D=22.93).  _______ UPDATE (2:49 p.m.): The futures bottomed an inch from the 22.93 target I provided in the chat room, generating a profit of as much as $2,000 per contract for shorts from 34.33. Shorts covered near 22.93, then reversed and turned into long positions, could have made an additional $2,000 per contract, since the bounce took Sep Silver all the way back up to the intraday high. All the swings were gratuitous and orchestrated by thieves, but as I hope as has been demonstrated, such movement is perfectly predictable and easily tradeable.

I've drawn a bullish reverse pattern, but only to highlight a target failure that is bearish. GDXJ's decline since mid-July's peak at 39.70 'should have' turned from the pattern's 'D' target at 34.70. It did, but so feebly that a trader would need to have been nimble to extract even a small profit. The subsequent relapse took this symbol to marginal new lows, where buyers and sellers spent most of the week mucking around. This is sloppy price action, and although I am not going to write off the possibility of a resolution to the  upside, my expectation is for lower prices in the weeks ahead. ______ UPDATE (Aug 16, 7:38 p.m.): This glue horse and its sleazy handlers have eyes for the 32.25 low recorded in March, and they will not rest until stop-losses below it have been triggered like land mines on the Ukrainian front. That price, by the way, is a major point 'C' low associated with a 45.56 rally target that was missed by $1.50 in April. 

The midpoint Hidden Pivot support at 93.15 shown in the chart provided a so-far weak bounce to 94.19, but it's too early to tell whether the reversal  is the start of something big. My hunch is that it is the start of something small and that a 'mechanical' short from x=95.26 will be a winner. That's assuming TLT gets there, which is somewhat optimistic considering the relentlessness of the selling.

[The following was sent out to clients in late July by my friend Doug Behnfield, a wealth manager and senior vice president at Morgan Stanley Wealth Management in Boulder, CO. Long-time followers of Rick's Picks will be familiar with Doug's work, since his thoughts have appeared here many times. I have always considered him not only one of the smartest investors I know, but also one of the smartest guys. I am grateful to him for allowing me to share the insightful report with you.  RA] On July 12, the Bureau of Labor Statistics reported that the Consumer Price Index (CPI) for the 12 months ending in June came in at 3% inflation. This annualized inflation rate represents a drop from 9.1% in June of last year, which was the peak in this cycle. The interest rate on long-term bonds correlates very closely with CPI, so it is unusual that bond yields have not followed inflation down in a meaningful way so far. [Editor's note: At this point the report displayed a chart showing bond yields increasing into late October and then going sideways. However, just after the report went out in late July, yields exploded upward in a manner unforeseen herein. Here is a chart that shows this. If it has changed Doug's outloook, we will share his thoughts with you at a later date.]  One contributing factor to this sideways action is that long-term bond yields also correlate very closely with the Fed’s interest rate policy and the Fed has continually raised the Fed Funds (overnight) Rate since inflation peaked last summer. In June 2022, the Fed was still at 1.5% on Fed Funds, but since then they have hiked rates by 4%. The Fed has also hiked rates by 2.25% since October, even as long bond rates

The simple picture shown is similar to the one accompanying the current AAPL tout, and I am confident it won't let us down. That means, for starters, that the correction begun from late July's 4634.50 high will come down to at least p=4436.00 before sellers ease up, perhaps only temporarily. The tradeable bounce I expect from p will provide an excellent opportunity to bottom-fish with a tight stop-loss, but if the bounce sputters out, that would be warning of more slippage to as low as D=4237.75. I broached this number earlier, and it would equate to an 8.5% correction from the top.  The pattern also has the potential to deliver an epic 'mechanical' short, but I will pinpoint it for you behind closed doors if and when the opportunity develops.

Expect AAPL's correction to continue down to the red line at 172.24, at least. That's a major Hidden Pivot support of weekly-chart degree. If and when it is reached, the correction from July's all-time high at 198.23 would be about 13%%. Earlier, I predicted that pullbacks in this stock and some others in the institutionally beloved 'lunatic sector' would ultimately reach their respective 'D' targets roughly 27% below. I'm holding to that prediction for now but it could change depending on how bulls and bears fare when they duke it out at p=172.24. And they will. Bottom-fishing there can be attempted using a reverse pattern with a trigger interval of 2.90. Stay tuned to the chat room if you care, since I may be able to hone this guidance in real time as the stock gets closer. My confidence in the pattern to deliver everything we require is high. ______ UPDATE (Aug 18): A two-day selloff brought AAPL down to within an inch of the 172.24 target billboarded above. The subsequent, strong bounce hit 175.10, triggering the trade I'd recommended at 174.86. If you bought stock or used options to get aboard, please let me know so that I can determine whether to establish a tracking position. I don't expect the rally to get very far, so tight risk management could be crucial to booking a profit. _______ UPDATE (Aug 22, 5:56 p.m.): AAPL swam against the   tide today, but I doubt the stock can keep it up for long. That's why I suggested covering at least half of any long positions held from 174.86. One subscriber reported booking a $2,600 profit on exiting his entire position, and so I will end my guidance here unless there are additional reports.  A run-up to x=185.24 would tempt us with a juicy 'mechanical'