The S&Ps didn't quite reach the 'D' target of the reverse pattern I used to establish a tracking position ahead of last week's stunning fall. The shortfall is bearish, since the way the downtrend obliterated the 3096.68 midpoint support on the way down gave the move a high probability of achieving D. We'll give bulls the benefit of the doubt for now, since short-covering on Friday appeared likely to goose the index even higher this week. We'll also set some alerts to trigger a 'mechanical' short at the red line or perhaps the green. Its purpose would be to give us a handle on trend strength as SPX works through Hidden Pivot levels of lesser degree. I'll consider the initial tracking position as having been closed out on Friday. The profit on 400 shares would have been around $80,000, assuming the last 25% of the position was covered on the close.
AAPL bounced a spectacular $22 off a low that occurred $2 from the 254 target we'd used to try and nail the bottom of the so-far mini-bear market. That wasn't quite close enough to get long with one of the trick-shot set-ups we use, although it may have helped timing an exit from any puts you held for the ride south. Looking just ahead, we can use the 281.37 target of the rABC pattern shown as a minimum upside objective, but the stock would need to push past 285.65 to generate a strong impulse leg on the hourly chart. The trick for us now will be to avoid underestimating the power of this short squeeze, which will feed on the tendency of fools to do exactly that. _______ UPDATE (Mar 2, 10:32 p.m. EST): The world's smartest money is up to its beady little eyeballs in Apple stock, so shorts don't have a prayer. It's going to be 'Take no prisoners!' all the way up, and the goal will be to jack the stock high enough so that it can attract a new crop of institutional suckers who will think they're getting a bargain on even mild weakness above $300.
Gold has traded as high as 1607.90 tonight, a tad shy of the 1613.30 level needed to recoup half of Friday's savage, $98 plunge. The futures were a risky 'mechanical' buy on Friday -- a matter of catching the falling piano. -- when they hit p=1594.90 (see inset) on the way down. We passed up the trade but may consider testing the water with another 'mechanical' set-up if gold falls anew to X=1526.70, the green line. The 1731.30 target remains viable despite the viciousness of last week's selloff, but we'll give bears wide berth until price action turns a little more subdued. ______ UPDATE (Mar 5, 4:20 p.m.): No change: I remain bullish, with a 1731.30 target. Stay tuned to the chat room, since trading this vehicle requires close attention to the one-minute chart. Here's one that is relevant at the moment. _______ UPDATE (11:18 p.m.): Minutes after I posted this pattern in the previous update, its 'd' target at 1669.40 caught the low of an $8 rally within two ticks. The trade could have been worth as much as $3200 to anyone who bought there. Not bad for three hours' work.
The March contract has opened 40 points lower tonight, suggesting the pros are confident they can re-energize Friday's short squeeze once the suckers who dumped market orders on the first bars are out of the way. Before this quasi-criminal operation gets under way in earnest, however, expect a retest below the 2889.25 opening bar. The 2884.00 downside target we used on Friday served us well, with many subscribers reporting big gains on the bounce, especially the initial one. For better or worse, this week will begin without the adamantine clarity of 2884.00. On Friday, sellers bashed that Hidden Pivot support four times, exceeding it by more than a few points only once. It took four days to get there, so we shouldn't be surprised if the pivot provides support for at least another day or two -- or perhaps even longer, since we can't rule out the possibility the low will prove to be an important one. I seriously doubt THE low is in, however, since grave uncertainties surrounding the pandemic and its effects on the global economy will remain for the foreseeable future. Even so, we should be careful not to underestimate the power and longevity of short-squeeze rallies, since they are explicitly engineered to fool cocky shorts who reaped big gains on the way down into getting short again, this time to crush them good. _______ UPDATE (Mar 2, 10:16 p.m. EST): None of today's three big rally legs exceeded an external peak (see it here), so in that respect the biggest single-day point gain in history was, well...unimpressive. That doesn't mean I'm going to try to intercept the stampede with short offers every inch of the way to Kingdom Come. But when the futures plummet to new lows at some point, remember this tout. For now, I'll
Gold took an unusually vicious hit on Friday. Presumably it was gratuitous, since the plunge left intact a 1731.30 target shown in the chart (slightly adjusted from the 1732.90 objective in play since December). Why the selloff? There was widespread suspicion that it was somehow related to the coronavirus pandemic, and although it undoubtedly was, the further details of this theory, at least to the extent they were aired in the mainstream media, were unpersuasive. My own theory is that gold, which tends to rise when shares are falling, simply couldn't keep pace inversely with last week's wholesale collapse in the stock market. Moreover, even before the avalanche, bullion prices had spiked to heights that begged for a rebuke. A Double Whammy The result was a double whammy -- a sharp but needed pullback, exacerbated by a dam of disappointment that gave way Friday morning. Despite this, April Gold's odds of achieving 1731.30 have not changed. They were around 70% before and remain so now. This implies that a pullback to the green line (1526.70) should be bought 'mechanically'. The $68 stop-loss is too big to abide, but if and when the futures hit our number, we can use 'camouflage' tactics to get on board on-the-cheap. Why aren't the odds even better? It has to do with the way buyers penetrated p=1594.90 the first time they hit it. It took a three-day pullback and a running start to get past it, then, following a correction, another six weeks to put it decisively behind.
Today's inverted swoon portends more downside to at least 3071.00, where an important low was recorded in early December. Too many bulls are counting on it for support, and that's why it will be exceeded at least marginally. At that point the bearish pattern shown in this chart would become not just dominant but predictable, meaning we should expect a bounce, possibly tradeable, from p2=3053.84; and an even more likely one from D=3011.44 exactly. The pattern is a little gnarly because its point 'A' is not obvious, and that's why I expect it to work for our usual purposes, particularly trading from either side of the market on the way down. _______ UPDATE (Feb 27, 8:22 a.m. EST): Tradestation's sometimes twitchy tool set appears to have done me out of an overnight opportunity. Although I was very careful drawing the pattern that yielded downside targets at, respectively, 3053.84 and 3011.84 (see above), I apparently wasn't careful enough. Here's a corrected chart that shows a p2 at 3055.63 that came a crucial inch closer to nailing the overnight low: https://bit.ly/396fSth The ostensibly small difference was enough to put the rABC I would have used (a=3091.00 at 5:00 am yesterday) to set up the trade just out of reach. Anyway, the corrected levels are: p2=3055.63 and D=3013.50. Prepare to be front-run at the latter -- yes, the algo chimpanzees seem to have learned one of my tricks -- when (not if) ES falls to it.______ UPDATE (Feb 27, 8:31 p.m.): Judging from reports in the trading Room today, many subscribers kicked butt as stocks plunged, visiting disaster on most investors. I've linked charts in The Morning Line with possible bottoming numbers in AAPL, T-Bond Yields and the Dow. Here's another for the E-Mini S&Ps, with a promising target at 2884.00.
Pay no mind to reports that a big player unloaded $3 billion worth of gold contracts into Monday's tidal surge in bullion, knocking quotes down by $37 before the session ended. In the first place, we were ready for this 'surprise', since the intraday high at 1691.70 occurred less than a dollar from an important rally target I'd begun drum-rolling several weeks ago. More significant is that at its peak, the upthrust slightly exceeded a midpoint Hidden Pivot resistance associated with a D target at 2285.90. This is shown in the chart, and although it will take a more decisive penetration of p=1666 to put D solidly in play, gold's strength over the near term is likely to feed off a stock-market selloff that has farther to go. If and when the futures blow past 1666, institutional whales like Monday's big seller in gold will be powerless to stop it. _______ UPDATE (Feb 25, 6:35 p.m. EST): Although gold has given up $60 of its recent gains in the last two days, sellers have had to work hard to pull it down to bargain levels. This feels bullish, as does the tentative bounce the April contact took from the 1629.50 Hidden Pivot support shown in the chart. Let's see how well the good guys perform today. If they can push the futures above the 1666.70 point 'c' of the pattern shown in the chart, they'll be back in the driver's seat. _____ UPDATE (Feb 26, 8:28 a.m.): Gold is timid today, down $15 at the moment and acting spooked by a patently phony, feeble rally overnight in index futures. It will turn around only if and when stocks dive anew. The good news is that they have MUCH further to fall before they achieve the 20% correction 'required' to qualify
AAPL's spectacular swan dive has created a very powerful impulse leg on the daily chart -- one that bulls are unlikely to recoup quickly via the usual, raucous short-squeeze. There will be vicious squeezes nonetheless, but the more violent they are, the more effectively we can use Hidden Pivot levels to get in and out of trades. This was a salient feature of the dot-com crash two decades ago, and I doubt it has fundamentally changed. Looking just ahead, you can use this chart to get a handle on the stock's behavior, however erratic. We'll pay particular attention to 'mechanical' set-ups -- not necessarily to trade them, but to give us an additional edge over other market forecasters. _______ UPDATE (Feb 25, 6:43 p.m. EST): After selling off steeply, the stock bounced from within an inch of the 285.53 midpoint Hidden Pivot support shown in the chart. I doubt the rally will get legs, but we'll have to wait and see. If it relapses and takes out the pivot, the 267.82 'D' target with which it is associated would be in play. _____ UPDATE (Feb 27, 8:47 p.m.): Here's how that 267.82 target looks on a chart. I like it even more now than I did two days ago. _______ UPDATE (Feb 28, 7:05 a.m.): AAPL has overshot the 267.82 target by a whopping $4 so far. At first I though this might be because the company is more exposed than most to coronavirus, which is true. That explanation won't wash, however, since I've always maintained here that stocks drive the news rather than the other way around. When I redrew AAPL's bearish ABC pattern so that it follows the coordinates I used to nail the overnight lows in the Mini-Dow and the E-Mini S&Ps precisely, however, I come up
Monday's so-far feeble bounce came from a place too obvious to trust. The low was very close to an important bottom at 3226 recorded on January 31. Expect the futures to dip anew on Tuesday, stopping out bulls in order to make another run at recovery. I expect the attempt to fail, and therefore to be shortable before the relapse gets going in earnest. In the meantime, the most promising trade I can discern on the hourly chart would be a buy originating in the 'nowhere zone' between the two important lows shown. This is for rABC specialists only, but I will provide guidance if I'm in the Trading Room at a moment of opportunity. One additional note: Although I am not a fan of head-and-shoulder formations, a rally to around 3340 would be 'interesting' in an H&S kind of way. _______ UPDATE (Feb 25, 6:59 p.m. EST): In the Trading Room today, I referred to this chart numerous times to warn that the selling begun around mid-morning was likely to turn ugly as the day wore on. In fact, the futures fell an additional 73 points after I posted. A second alert 55 minutes after the initial warning noted that the plunge yet to come could shave an additional 900 points from the Dow. As of the close we were two thirds of the way there but looking for a bounce -- potentially tradeable -- from the 3098.25 target shown in the chart. Although a tightly stopped bid could work, my recommendation is that you attempt this only if you've profited on the way down. ______ UPDATE (Feb 26, 8:00 a.m.): The futures trampolined 53 points (!) after bottoming at 3091.00 at a ridiculous time of day (5:00 a.m.). Despite this inconvenience, numerous subscribers -- night owls, it would
The S&P 500 triggered a major sell signal today on a 112-point decline, putting in play the 3096.36 midpoint Hidden Pivot support (p) shown in the chart as a minimum downside target. This is the third such signal in the last 14 months, but it should be presumed more likely to pan out because it occurred on a gap down through the green-line trigger price. Although this should temper our enthusiasm for buying the dips, it has not negated the possibility of using a 'counterintuitive' setup to get long over the next three or four days. Here's a piece of the chart taken from its right-hand edge that shows the relevant pattern. Today's low occurred so close to some important bottoms recorded in December and January, that we can assume most traders and investors are very worried about a possible breakdown. Such fears are exactly what the 'CI' trade was designed to exploit and leverage. The details of this tactic are proprietary, but I will be sharing them in the Trading Room, so stay tuned if you're interested. Regardless of whether the buy signal is triggered, the way the pattern plays out can give us a confident read on whether fear is about to supplant greed as the main force driving U.S. stocks. _______ UPDATE (Feb 25, 7:15 p.m. EST): Today's steep selloff brought the S&Ps to within easy distance of the 3096.36 threshold where we would take at least a partial profit if the trade had been done with real money. Our interest is more on the analytical and predictive side, but I am hereby establishing a tracking position and will book a hypothetical gain if the 3096.26 pivot is hit. This will allow us to assess trend strength as we normally would in any vehicle. Accordingly, if SPX
