Rick’s Picks

I'd drum-rolled a 3348.75 bull market target loud enough and long enough that last week's sharp reversal from a high that fell 11 points shy of it was more than a little disappointing.  It was also odd. The ABCD pattern from which the target was extrapolated is so clear and compelling that we might have expected a tradeable top to occur within no more than a point or two of 3348.75. But 11 points below it?  The miss amounted to just 0.3%, but that's as good as a mile for those who were planning to get short when the target was reached.  So how do we interpret the failure of buyers to reach this important price objective, one that has been nearly four months in coming? Very simply, as incipient weakness. Accordingly, we should watch for the downtrend to develop momentum in the week ahead and possibly longer.  This is a novel perspective, since the bull market has routinely been exceeding our rally targets for years. Each time this occurred, we assumed -- correctly, as it happened -- that still higher prices lay ahead.  So now what? A rally back up to the target early next week would negate the bearish implications just noted, but my gut feeling is that this is unlikely to occur. If the downtrend instead gets legs, this will be telegraphed by minor abc downtrends that start to exceed their midpoint supports and perhaps even their 'd' targets. Another way to say this is that down-legs may start acting impulsive rather than corrective. This hasn't happened in a long time, but we should be alert to its meaning if it starts happening now. _______ UPDATE (Jan 27, 9:54 p.m. EST): The pattern shown in this chart is gnarly but serviceable, implying you could bottom-fish p=3226.50 gingerly

It has taken GDX more than four months to carve out a saucer bottom to correct last summer's exuberant excesses. The bullishness of the chart shown is unmistakable, as is the 36.66 target. But first buyers will need to hit achieve 31.32, a midpoint resistance that can serve for now as our minimum upside objective. If it is decisively exceeded, especially on first contact, that would significantly shorten the odds of a continuation to at least p2=33.99, but more probably 36.66. As before, I am looking for help picking an entry spot, since this goal will be best served using an rABC entry set-up intraday.  If you are interested in this stock, don't just say so in the chat room; take a bold step forward and contribute to a common goal. _____ UPDATE (Jan 27, 10:01 a.m.): What gratuitous nastiness! Anyway, here's a small bullish pattern with a 30.50 target you can use to trade this vehicle. A pullback to x=28.39 would trigger a 'mechanical' buy, stop 27.67. _______ UPDATE (Jan 28, 8:53 p.m.): Although there were 60 people in the trading today, only one reported having gotten long according to the instruction above. If a second subscriber chimes in, I'll establish a tracking position of 400 shares; otherwise, GDX will come off the list for lack of interest. _______ UPDATE (Jan 29, 9:59 a.m.): The position is 'official'. For now, use a stop-loss at 27.67.  GDX has been swimming against a torrent of money flowing into the usual stocks, but it has been doing it well enough to suggest a gold rally is coming if bull-market mania ever takes a breather. _______ UPDATE (Jan 29, 9:28 p.m.): Offer 200 shares to close at 29.42, day order. _______ UPDATE (Jan 30, 4:35 p.m.): Even when it's in a bull market, gold

Friday's upswing reflexively mirrored the decline of stocks, triggering a theoretical buy signal at 1573.40 in February Gold. I say 'theoretical' because we seldom use this entry tactic due to its high-risk, low-performance track record. In this case, the implied stop-loss at 1536.30, just below the pattern's point 'C' low, would risk a whopping $3700 per contract. We'll trade the futures with a bullish bias nonetheless, predicated on an expected move to at least p=1610.30.  (A 1732.80 target tied to a bigger pattern is also in play, but we'll stick with the little stuff for the moment in order to manage risk most efficiently and precisely.) In practice, this will entail using mechanical and rABC set-ups as they become manifest each day. Stay tuned to the Trading Room and Coffee House if you care, since there are a dozen Pivoteers in these rooms at any time who can trade the bejeezus out of gold using patterns big, small and in-between to significantly limit risk. _______ UPDATE (Jan 28, 7:55 a.m. EST): The futures are diving ahead of the opening, evidently despairing over the insane strength of index futures overnight. My hunch is that it could conceivably get worse, but not much, since stocks may already be close to their daily limit for giddiness. _______ UPDATE (Jan 28, 8:58 p.m.):  Things did indeed get worse, but not much. Brace yourself for another grin-an-bear-it day if the stock market continues higher. ______ UPDATE (Jan 29, 9:48 p.m.): Gold benefited from an afternoon selloff in stocks and took a spirited upturn toward 1594.60, the D target of the pattern shown in this chart. (Note: The equivalent target for the just activated April contract is 1600.50, with p=1584.20.)

Three months after bottoming an inch from a well-advertised Hidden Pivot target at 96.40, the Dollar Index has generated its first bullish impulse leg on the 240-minute chart. This was accomplished with great subtlety, since DXY exceeded the requisite external peak I'd identified by just a penny. That's all it took, though, to transform the balky rally of the last three weeks into a promising new start for the greenback. Now, any retracement that stays above 96.36 will be presumed corrective and therefore a buy. It remains to be seen how much pressure a waxing dollar will put on bullion, but as a chat room denizen noted, gold more than held its own when the dollar rallied sharply in the June-October period. _______ UPDATE (Jan 27, 10:05 p.m.): A Hidden Pivot resistance at 98.13 is a logical place for a short-term top. ________ UPDATE (Jan 28, 9:04 p.m. EST): DXY dropped 0.22 points after peaking at 98.16, just three cents above my target. Let's see how long the top holds. _______ UPDATE (Feb 1, 10:49 p.m.): The selloff from within pennies of the 98.13 target I'd flagged continues to lengthen, but support should come in around 97.10. Let's see how it fares. _______ UPDATE (Feb 4, 9:57 p.m.): The dollar got traction at 97.37, well above the support I'd flagged above. This is mildly bullish, but DXY will needed to take out the old high at 98.19 to generate some excitement. _______ UPDATE (Feb 5, 9:56 p.m.): The dollar easily cracked  the 98.19 resistance. Now, if it blows past the 98.47 target shown in this chart, it would imply bulls are still rarin' to go. ______ UPDATE (Feb 6, 9:00 p.m.): DXY easily pierced the 98.47 'hidden' resistance, implying that still higher prices are coming. ________ UPDATE (Feb 10, 9:37

Friday's punitive reversal occurred from a high recorded several days earlier that missed a crystal-clear target I'd flagged at 295.62 by a mile. Although the target remains valid in theory, it seems more likely that the selloff will gain momentum this week, generating an impulse leg on the daily chart. That would require a print below 287.84, a threshold that will probably be achieved on Monday's opening if index futures have opened weak Sunday night.  The bearish impulse leg would be no more powerful than the one in early December that gave rise to a powerful rally, but this time it would be occurring in a more critical place --- i.e.,  visibly short of an important target that had the potential to cap the bull cycle begun in October. Regardless, bulls should brace for a fall to at least p=284.62 before they venture forth again.  That would trigger a long-shot 'mechanical' buy in theory, but we would take the trade only with risk very tightly controlled, if at all. ______ UPDATE (Jan 27, 10:07 p.m. EST): Sellers overshot p=284.62 (see above) by  0.76 points, implying they are not spent. The impulse leg would grow in power if further weakness on Tuesday exceeds 283.56. _______ UPDATE (Jan 28, 9:08 p.m.): DIA leapt higher at the bell and never looked back. In retrospect, p=284.62 now looks like a 'mechanical' buying opportunity foregone. Bulls have a tough climb ahead nonetheless if they are going to reach the 295.62 target that was missed by a foot on January 17, when the Dow notched a record high. _______ UPDATE (Feb 1, 10:57 p.m.): A tough climb indeed!  DIA reversed sharply from well shy of the 295.62 target identified above and now appears headed down to at least 280.08. Bottom-fish there with a small-pattern rABC pattern,

The bull-market pattern shown is so gnarly that it seems likely to work. By 'work', I mean come close to calling the top in AAPL's lunatic-powered bull market.  The 319.92 target was missed by just $1.12 earlier this week, and it remains to be seen whether the stock will be short-squeezed into a head-fake that comes even closer to the target before wild-eyed bulls get their comeuppance. In the meantime, I will provide tracking guidance, although not an official position, for at least one subscriber who managed to get short near the top. He goes by the handle 'TraderMike' in the chat room, and he has always lived up to that nickname. He owns 20 June 250 puts for 3.05. For now, offer 20 June 245 puts short against them for 3.55, good-till-canceled. ______ UPDATE (Jan 22, 5:02 p.m.): AAPL has been playing toe-sies with my target since January 13 and today inched slightly above yesterday's high, hitting 319.99.  I'll avert my eyes for now, but if and when it blows higher use this pattern, with a 336.35 target, to tame the beast and make some money at it.

I've redrawn the chart to produce a 295.62 target that looks promising for a shortable top. Your trading bias should be bullish until it is reached, but you can short there aggressively if you've made money on the way up. I'd suggest using puts priced under 0.70 with 7-12 days left on them. We do not need to go further out in time because our strategy is predicated on catching a bearish reversal precisely when it begins. The new target replaces one at 291.78 that has looked less enticing as DIA's ascent has progressed, It uses a point 'A' low that was made in off-hours trading, as occurred several times during the rally begun in mid-October.  The target roughly corresponds to a revised 'D' that I have proffered for the E-Mini S&Ps. Like that tout, this one will not be publicly viewable.

Identifying Hidden Pivot targets that work precisely can sometimes be as much art as science, but the one shown, at 3348.75, promises to put a top on the historical bull run launched from 2882 in October. Two other rally targets that I broached here earlier will still be in play: 3326.25, and 3373.50. I have taken them out of boldface to make clear that you should favor 3348.75 as a place to get short, presumably with an rABC set-up on a chart of lesser degree. Until the target is reached, however, you should trade with a bullish bias, albeit a cautious one, as 3326.25 is closely approached. I seldom recommend 'mechanical' buys on pullbacks to p2, which in this case lies at 3279.31. However, I will green-light the trade, stop 3256.00, for those of you who are familiar with the old-style mechanical set-up. Recall that activating the bid in this gambit requires a series of bars with white space between the low of the bars and p2. The gist of it is a lazy, sideways drift above p2 before the trade triggers. I am suggesting this alternative, or even a mechanical bid at the red line (p), stop 3163.50, because the rally has seemed too strong to favor us with a pullback to the green line (x) where we typically do mechanical trades. To avoid queering the target by advertising it too aggressively, I've made this tout viewable only to paying subscribers. ______ UPDATE (Jan 24, 10:29 p.m. EST): The 3373.50 target noted above looks too good to be treated cavalierly. Here's the chart, which shows why you can count on it if 3348.75 gives way easily. Pivoteers may notice that I've passed up a nice-looking one-off 'A', but I am not unmindful of it. It corresponds to a 'D'

The 314.28 target drum-rolled here earlier looks like a logical spot for the rally to fail. However, if buyers should exceed it intraday by more than 0.30 or so -- or better yet, close above it -- use the 319.92 target shown in the monthly chart (inset) as a minimum price objective. Both of these hidden Pivot resistances are sufficiently clear and compelling that I'll be surprised if AAPL ignores them. A small speculative position in sub-$1 puts with 7-12 days left on them would be appropriate at either number, but don't risk more than you can afford to lose painlessly. If they double in value, cash out half and save the rest. _______ UPDATE (Jan 13, 2:36 p.m. EST):  With a high so far today at 314.90, AAPL has traded sufficiently above the 314.28 target that I'm shifting my focus -- and the possibility of getting short -- to the 319.92 target.  [Late-breaking note: AAPL eventually traded as high as 317.07. Plan B remains viable.] _______ UPDATE (Jan 14, 9:59 p.m.): The stock climbed to 318.80 overnight but fell too sharply by the opening to allow us to squeeze off a shot. The off-hours high may turn out to have been the important top we'd anticipated, but since the trade was nearly impossible to have executed satisfactorily, I am not establishing a tracking position.