Rick’s Picks

The dollar's retracement from a 94.74 high recorded two weeks ago seemed healthy and normal until Friday's dive. Just a little more weakness on Monday or Tuesday would generate a bearish impulse on the daily chart if it penetrates the 92.70 low shown in the chart.  Although this would not necessarily signal the start of a major new downtrend, it would imply that it could take time -- perhaps 6-10 weeks or even longer -- for the dollar to carve out a bottom capable of supporting the moon shot that eventually is coming. I see this as inevitable because a strong dollar is the one thing that almost no one wants. It would deaden stimulus, kill the profits of U.S. multinationals and catalyze the start of a ruinously deflationary squeeze on debtors. _______ UPDATE (Oct 13, 2:08 p.m.): Because the dollar has been falling for nearly three weeks, and because it has reversed from a too-obvious spot just above mid-September's consolidation lows, we'll be careful about turning bullish prematurely. Let's stipulate that the rally continue unpaused to at least 94.04 before we switch our bias. That would put p2=94.50 in play (60-minute, A=92.75 on 9/21), with additional potential to D=95.00 over the next 4-6 days. Here's the chart.

The two-day rally that ended the week had deceptive power, exceeding an 'internal' peak and two daunting 'externals' without drawing any deep breaths. It made our minimum upside target at p2=289.41 a shoe-in to be reached and shortened the odds of a further push to D=297.45. We're unlikely to see a pullback to p if DIA hits the secondary pivot at 289.41, but it would make for an enticing 'mechanical' buy if it occurs.  However, it should be noted that exceeding the midpoint pivot took a long running start to achieve, and that's why we'll need to be alert to a possible trend failure above p2. _______ UPDATE (Oct 12, 6:31): Today's top just a millimeter from the 289.41 target was worth shorting with a tight stop-loss, as I noted in the chat room an hour before the bell. I'll establishing a tracking position if I hear from at least two subscribers who jumped on this one. For now, though, with DIA dormant a full point below the target, use a break-even stop-loss. _______ UPDATE (Oct 14, 7:56 p.m.): Feedback on the short was sketchy, so I haven't established a tracking position. You're on your own if you did the trade, but it is sufficiently profitable that you should have taken a partial gain by now. _______ UPDATE (Oct 15, 6:00 p.m.): If the upward momentum of today's reversal continues and DIA closes strong, it would imply that the 297.45 billboarded above will be reached.

Bulls have plenty more work to do if they want to turn Friday's strong rally into something meaningful. They had a running start from a strong overnight rally in physical that allowed GDX's handlers to open this vehicle on a large gap, and to rack up a stupendous gain of 5% on the day. The move was impulsive on the hourly chart, and that's encouraging. But the presumption of a bull market with a shot at  51.54 will depend on whether buyers can push this rally, without a visually significant pause, above a midpoint resistance at 44.31, and thence past an external peak at 43.60 recorded in mid-September. Here's a graph that shows it all. _______ UPDATE (Oct 14, 8:03 p.m.): Today's pop through p=40.89 portends more upside to D=42.31, although it could entail a struggle. We'll want to see GDX close for two consecutive day's above that Hidden Pivot, however, before we infer that more upside is likely to the 43.60 benchmark noted above. Here's the chart. _______ UPDATE (Oct 15, 6:02 p.m.): A struggle indeed! Hardly seems worth the stress.

Thursday's rally was not nearly strong enough to achieve escape velocity from a consolidation pattern the futures had traced out over the last week.  If DaBoyz are unable to goose the stock higher as the week draws to a close, look for a pullback to start Sunday night.  AAPL's punk performance has kept the lunatic stocks relatively subdued, and the iPhone maker's shares looks like they are about to roll over. If so, that will bring the Nasdaq 100 down hard, perhaps to test support at C=11,197 of the bullish pattern shown in the chart. ______ UPDATE (Oct 12, 6:43 p.m.): The maniacs who power this hoax were so revved up yesterday, and the p2 rally target at 12,271 so obvious, that I can only counsel caution when the futures get there. Short the pivot if you are familiar with 'reverse ABC' set-ups and can handle one on the 3-minute chart, or if you've made a few bucks on the way up.  If bulls impale p2, and especially if they close above it for two straight days, consider D=12,808 a done deal. ______ UPDATE (Oct 13, 2:26 p.m.): The advice sent out last night proved prescient with respect to the rally's failure, but getting short as I'd suggested would have been challenging. Here's why: The futures missed touching p2 by a whisker, and although this would not have prevented one from initiating the trade with an rABC set-up, the entry trigger occurred more than two hours before the opening bell. Oh well. Here's the graph. The futures look like they have farther to fall. _______ UPDATE (Oct 14, 8:08 p.m.): Here's an 11,781 downside target you can use if sellers dominate for a third straight day. Your clue of more weakness to come would follow a decisive penetration of p=11,907.

AAPL has spent the last six days meandering below an external peak at 118.20 that it has yet to exceed. A fleeting pop above it would negate the bearish implications, but until that happens the sideways price action should be regarded as distributive.  That means the midpoint pivot at 110.18 is still our minimum downside objective if the stock turns weak, and that it can be bottom-fished with a tight stop-loss if the opportunity arises. A further implication is that with no legitimate, bullish impulse legs on the hourly chart, no upside target can be projected with confidence or precision.

The December contract is all but certain to achieve the 3481.75 target (see inset), but it remains to be seen whether it can blow past it. You can try shorting there with a tight stop if you've made a few bucks on the way up or if you know how to use an rABC set-up to trigger the trade. 'Mechanical' set-ups have been working consistently, as you may have noticed, although the one that caught the low tied to Trump's recent flip-flop on a stimulus package was a bit hairier than we'd have preferred. If the futures settle above 3481.75 for two consecutive days or achieve 3488 intraday, they'll be signaling more upside to the p2 and D pivots of a larger pattern shown here.  The respective resistances lie at 3488.44 and 3585.25.

Trump's decision to table stimulus talk knocked stocks for a loop and will likely keep pressure on the market at a time when seasonality would be working against it to begin with.  We'll have a better idea of whether the insanely ebullient mood on Wall Street has dimmed once we've seen how the pattern shown in the chart plays out. It is a pretty good specimen of 'mechanical' buy, meaning anyone who got long at the green line on Tuesday afternoon should make money via a snap-back rally to at least p=3369.50.  If the trade instead gets stopped out at 3291.25, that would imply the structure of The Rally That Wouldn't Die may have been compromised. If so, the futures will soon find themselves groping for traction all the way down to 3200, where important lows were carved out two weeks ago.

It's been more than a month since AAPL got on the ropes, but if support at p=110.18 fails, the stock could soon be headed down to as low as 102.63 (see inset) over the near term.  You can use that midpoint Hidden Pivot support as a minimum downside target in the meantime, and bottom-fish there with a stop-loss as tight as a dime. If it's hit, and especially if it's exceeded on a closing  basis, brace for more slippage to at least p2=106.40. We continue to hold a bull call spread sixteen times -- 140/150/160 butterflies @ 0.36 that expire on Nov 20.

We hold sixteen Nov 20 140/150/160 call butterflies for an average 0.36, based on an idea posted in the trading room a week ago. The stock turned mushy at the end of last week, causing the bull spread to fill for as little as 0.32. However, I am using a higher cost basis because several subscribers reported paying more.  Do nothing further for now and cancel any orders that were not filled. The most we can lose on this trade is $36 per four-option spread, but it has the potential in theory to produce a profit of as much as $1,000 per. That would occur if the stock were to rally to 150 between now and November 20, when the options expire. We are getting 20-to-1 odds on this, and you can judge for yourself if you'd lay that bet. Practically speaking, we would  be doing well to exit for $700 if everything goes right, but we'll still have opportunities to cash out for a profit on the way up if AAPL rallies. For now, as is customary, I'll suggest offering half of your spreads to close to 0.72, twice what we paid, good till canceled. If the order fills, the remainder of our position will effectively have cost us nothing. Our actual rally target, a Hidden Pivot, lies at 151.94. _______ UPDATE (Pct 5, 4:04 p.m.):  With AAPL trading for 116.47 at the closing bell, the spread settled at 0.39 and carried a delta value of 3. This implies the spread will increase in value by 3 cents for every $1 increase in the price of the underlying shares. The spread is 'positive-gamma', meaning we will automatically pick up deltas and get 'longer' as AAPL moves toward 150. Above 150, we'll lose deltas and become 'delta neutral' near and