Rick’s Picks

Today's 110-point drop can be a little intimidating, but an ABC pattern is an ABC pattern, and its magnitude should have no bearing on our ability to target the move. (Recall the scene in Hoosiers when Gene Hackman measured the distance from the basketball court floor to the rim and found it to be 10 feet, even though the court itself was in a 10,000 seat arena.) Anyway, we should look for the selloff to continue to at least p=2767.88, but a breach would portend more slippage to as low as 2733.50 over the near term.  'Mechanical' and countertrend trades will perforce be riskier than usual in dollar terms, but the rules for executing them are the same. _______ UPDATE (Aug 6, 10:06 p.m.): DaBoyz recouped a third of the futures' recent losses with the help of some urgent short-covering. Keep in mind that nothing has changed to mitigate the tariff war, only that China has finally placed a bid under the yuan, setting off a bear-squeeze panic in the dead of night. Shorts are the only buyers here, so we'll stand aside and let them shoot holes in their feet with semiautomatic weapons.

Monday's refreshing 767-point plunge in the Dow has put the Fed on the spot sooner rather than later. Investors, the spoiled little brats, lost no time pricing in a 100% chance of a rate cut next month, but they may be trapping themselves in a lose-lose situation. A lot could happen between now and the Open Market Committee's August meeting. Suppose stocks rally, recovering half or more of what they've lost over the last four days? That might generate a feel-good mood on the surface, but also the deeper worry that a rate cut would be less likely. Since stock-market bulls have become more dependent on rate cuts, or at least the promise of them, than on actual good economic news, the bounce in stocks from these levels or perhaps lower could become self-limiting. Alternatively, if stocks continue to fall and the Dow is trading 2,000 points lower when the FOMC next meets, the mood on Wall Street might be too glum to make hay with a dovish announcement. Selloff  Was Kinda Lame For the moment, however, stocks are getting the crap pounded out of them in after-hours trading Monday night. Perhaps bears are embarrassed about their failure earlier in the day to deliver the haymaker to the Dow with a satisfying 1000-point kayo. But 767 points? How lame is that? Anyway, with tonight's promising selloff, they appear to be making amends. Dow Mini-futures have been down as much as 518 points, which if added to the losses they racked up during the regular session comes to a fairly impressive 1,285 points. Apple shares are saying the bottom is still a ways off, however. For an explanation as to why, click here for a Facebook presentation I put out Monday afternoon. You can watch it on Facebook without joining, but

The weak bounce into Friday's closed triggered an unappetizing 'counterintuitive' buy signal at 2942.25. We might have taken the trade if it had occurred earlier in the day, but given the stock market's persistent weakness of late, it seemed like a poor time to act boldly. As  a practical matter, moving the point 'A' low to the 2958.00 bottom of last Wednesday's plunge would have generated a less risky entry signal at 2927.75, and a trade that would have been exited before the bell for a theoretical profit of $700 per contract. In any event, that rally may have depleted buyers for the time being, implying we'll be better off starting the new week as spectators.

Shifting to the December contract yields a 1515.60 target equivalent to one at 1504.00 we'd been using for the June. The rally has been labored, implying there can be no guarantees the target will be reached. Regardless, the 'mechanical' buy signal from two weeks ago, and then again last Wednesday, was valid, even if only a handful of Rick's Picks subscribers reported getting aboard. Yet another pullback to the green line would offer a third opportunity to profit, but I won't recommend the trade because it is taking the futures too long to complete the big pattern's C-D leg. Prospects for a successful belated entry would improve, however, if the futures were to pull back from the secondary pivot (shown in the chart as a pink line at 1486.00). Stay tuned to the chat room if you care. _______ UPDATE (Aug 5, 8:59 p.m.): Bulls have got the futures up nearly $10 tonight. This usually sets up gold for a smackdown before the regular-session opening. But if something has indeed changed, don't be surprised if the good guys hold onto tonight's gains and even add a little. _______ UPDATE (Aug 6, 10:15 p.m.): The smackdown did happen -- around 1:00 a.m. -- but bulls recouped the loss intraday and are bludgeoning the bad guys Tuesday night with a so-far 18-point gain. The rally targets a minimum 1506.00, or 1511.80 if any higher. Let's hope the bad guys get bloodied badly enough that they'll stop disrespecting gold at hours of the day when they imagine it defenseless. 

Stocks plunged Friday for a third straight day, supposedly because of some Trump tweets calculated to goad China into a face-saving trade deal. There was good news on the jobs front, but it apparently wasn't good enough to counteract investors' nascent zeal for dumping shares. Gurus who routinely tune out the headlines in order to pay closer attention to technical indicators know better. For it is not "the news" that drives the markets, but the opposite -- i.e., the cyclically ordained ups and downs of stocks color our interpretation of the news. Indeed, no one would have cared much about Trump's latest trade-war salvo on Twitter if stocks had been moving higher last week. But they weren't. The broad averages were falling hard after cresting an inch from some technically derived targets that had been well disseminated in the trading world. Cycles master Peter Eliades' target, for one. We published a chart from him weeks ago, and again last week, that has been magically calling important tops and bottoms in the New York Composite Index since the bull market began in 2009. Here's a year's worth if you're skeptical. We put out a corresponding target of our own on July 23 that came within three ticks of nailing the recent 3029.50 top of the E-Mini S&Ps' 115-point dive last week. Although no guru can claim to understand the mysterious forces that make these targets work, work they do, often with amazing accuracy. Babson's Break Now watch what happens in the weeks and months ahead as stocks continue to fall. This will not merely color the news, but impel it. Specifically, it will force the hand of the Open Market Committee, which has tried to mask its spinelessness with faint protests of reluctance. This clumsy kabuki -- a literal enactment of

The Indoos have come down hard after rallying to within an inch of an important Hidden Pivot rally target at 28,463 three weeks ago.  There were two targets above it, but they should be put aside for now, until the correction -- assuming that's what it is -- has run its course. Elsewhere on the page, in The Morning Line, I've implied that the selloff could be the beginning of the end for the ten-year-old bull market. That is my gut feeling, but I will continue as always to let the charts speak for themselves.  For now, we'll need to see a rally and then a second leg down before we can draw useful conclusions about the health of the bull market.  A 0.618 correction of the massive rally leg begun in early June would bring the Dow down to 25,719. _______ UPDATE (Aug 5, 9:08 p.m.): Don't look now, but today's nasty plunge triggered a nice-looking 'mechanical' buy at 25,694, stop 24,680. You can spectate if you'd like, and that is what I am recommending. But if you interpolate the trade with real money using, say, DIA calls, be aware that the nominal theoretical risk for the cash index is a whopping 1038 points. A 'camouflage' set-up could provide a much cheaper way to get aboard, but you're on your own if that is the path you choose. _______ UPDATE (Aug 6, 9:52 p.m.): The mechanical trade worked exactly as it is supposed to work, getting us long at a time and price when most traders would have been frozen with fear. The position showed a theoretical profit of $1885 per contract at the intraday high and a current gain  of around $1500. No subscribers reported doing the trade, nor did I explicitly recommend it, so I am not

We'd been focused on a Hidden Pivot at 99.05 as a target for this phase of the dollar's long-term bull market, but when DXY sold off sharply without having reached it, I took a closer look at the daily chart. The slightly altered pattern yields a new target at 98.93 that turns out to have caught the exact top of last week's rally. The pullback so far has been moderate and has not diminished my bullish bias for the long-term. But given the decisive precision of the recent top, it would appear that bulls are spent for the time being. _______ UPDATE (Sep 23, 6:15 p.m.): Here's a chart with a new target at 99.94 that is starting to look better than the one given above. Use it with confidence, but don't expect the dollar to get there any time soon. A pullback to 97.76 would trigger a 'mechanical' buy signal. _____ UPDATE (Oct 20, 2:33 p.m.): The dollar's steep slide this month has caused whack-a-mole bears to surface in droves, but here's a chart to remind us that the dollar is still in a bull market and that it will become a buy at some point. At the moment, the rABC pattern shown implies the signal to do so would trigger at 97.49 provided the C low at 97.14 has not been breached.

I proffered a quite bullish target at 21,032 five weeks ago, but bitcoin seems in no hurry to get there. In fact, this CME vehicle, which reflects the best bid and offer in real time across many markets, tripped a 'mechanical' short at 10,081 on last week's run-up to 10,667. We passed up the trade as unappetizing, but if it gets stopped out at 10,795 as seem likely, that would imply the uptrend's three-week stall has ended. The weekly chart still says that a pullback to 7609 would offer an excellent, albeit increasingly unlikely, buying opportunity. More immediately, assuming the stop on the theoretical short is hit, BRTI should be presumed bound for at least 12,260, a midpoint resistance tracing back to the start of the bull cycle begun on June 9. _______ UPDATE (Aug 6, 10:00 p.m. ET):  BRTI plunged $1103 today after topping an inch from the 12260 target. Are there any bitcoin traders out there who are paying attention to these targets? _______ UPDATE (August 11, 2:10 p.m.): Bitcoin has held its own after buyers were repelled by the 12,260 pivot shown in this chart.  The rally did not make it to our sweet spot, but because the push was so robust, I'll recommend a 'mechanical' buy on a retracement to x=10,675, stopped just below C=9090. _______ UPDATE (Aug 14, 9:56 p.m.): The trade triggered and feels scary as hell at the moment. That is the way good mechanical trades are supposed to feel, since our bid is placed at a level where most bulls have already been brutally shaken out by a steep selloff. This is just such a set-up, but we'll hang with it nevertheless just to see how it goes. Bitcoin's reputation for being able to flout the concerns of the real word is

Going sharply against a bearish consensus, Rick's Picks has been enthusiastic about Treasury paper since late 2018. Going back a year or more, few except hardcore deflationists saw yields on the Ten-Year Note crashing 2%, especially with GDP hitting 3%.  Today's powerful rally pushed them down to 1.87%, precisely matching the forecast sent out to subscribers on July 2, a month ago.  So what next? If rates don't turn from right here, expect them to continue down to at least 1.81% over the near term. That is equal to a 'midpoint Hidden Pivot' support shown as a red line in the chart. A bounce from that number should be presumed not only likely but tradeable. However, if $TNX were to close below 1.81% for two consecutive weeks, or trade more than 50 basis points below it at any time, a 1.47% target would be in play. _______ UPDATE (Aug 15, 9:26 p.m. ET): Yields have rebounded after bottoming 0.02 points below the 1.47% target we've used for weeks as  a minimum downside objective. It has taken TNX four months to get there, so the bounce should take at least a week or two to play out, assuming it's just a bounce. However, if this vehicle relapses and heads lower within the next few days, breaching the low, that would imply rates are headed significantly lower.