Rick’s Picks

Today's chart shows why it can be so difficult to make money in a bull market, even when one "knows" how high a stock is headed.  We've been confident that Facebook (click on inset) will eventually hit 190, a Hidden Pivot target first aired here more than three weeks ago when the stock was trading around 167.  We still think it'll get there, come hell or high water. But what an agony it has been to simply go with the flow! As the chart shows, the stock has made a series of marginal new highs, each followed by a relatively stiff pullback. If you'd been long the stock at April 3's 177.96 peak, you'd have needed to weather a $5 swing against you just to net a four-cent gain at the next peak.  The 179.19 peak that  followed that one, making you $119 richer on 100 shares, required sitting tight on a dive that at its low would have made you $373 poorer. Rewarding the Faithful Although Rick's Picks tries to keep risk/reward in a 1:3 ratio at all times, a buy-and hold strategy in Facebook, as you can see, subjects one to an effective risk:reward greater than 3:1. Risking $3 to make $1 is no way for a trader to make a living. Tesla shares, incidentally, come out far worse on the risk:reward scale. If you'd held a single share from the September 2017 record high at 389, you're out $118 at the moment and would need a 43% rally just to break even. Ultimately, it is only the enduringly faithful -- in this case, institutional geniuses who have held just a handful of one-decision FAANG stocks for years -- who can withstand such horrendous short-term odds.

A 2929.00 rally target disseminated here a while back remains in force despite Wednesday's plunge into an air pocket. The futures had climbed steadily overnight, only to give it all back and then some in less than an hour when health insurance stocks came under heavy selling pressure. The biggest of them, UnitedHealth Group, the second most heavily weighted stock in the Dow, plummeted 7% in a blink as Crazy Bernie talked up Medicare-for-All. Although he is certain to persist as an irritant, it's unlikely to affect the broad averages for more than a few days, if that long. Meanwhile, even though the 2929.00 target still looks like a lock-up, that doesn't make it any easier to profit by trading with the uptrend. The chart shows how a lesser target at 2924.50 was missed by an inch, denying Rick's Picks subscribers a chance to get short with risk tightly under control. Assuming the futures reverse and continue higher, it won't be much easier to get long for the ride.  Buy-and-hold positions are simply not possible when marginally higher daily peaks are separated by 20-point dives.

The stock market's masters have zeroed in on a few stocks to help foster the illusion that the aging bull is in excellent health. If you've been watching the shares of Boeing, AAPL and Tesla in particular you could get the impression buyers are unstoppable.  With cyclical forces powerfully supporting the uptrend at the moment, the Masters of the Universe are training much of their firepower on hard cases that have gotten bad publicity in recent months. Any gains in these stocks is effectively being banked against their next downturn, when investors will shed their amnesia and suddenly remember all of the bad news. If there is evidence the buying spree is near an end, however, it can be found most easily in the chart of VXXB, an S&P volatility index that is close to an important downside target at 24.50. If there's a sharp bounce from that number as we should expect, then an important top in the stock market is close.

Lyft is all but guaranteed to fall a further 5% to the 53.60 target shown if Hidden Pivot analysis has got it right. A telltale sign that more weakness was coming was the way sellers sliced through the 64.85 'midpoint support' last week. Scalpers can bottom-fish with a 53.62 bid, stop 53.54. Although there is not much price history on the stock, the pattern is still clear, clean and compelling, implying odds are good for a bounce from very near 53.60. The extent of it is unpredictable, but I would expect the stock eventually to continue down into the teens, since the company is unlikely in my opinion to make money. Ditto for Uber, which is hoping to go public at a $100 billion valuation equating to roughly $95/share. However, it seems probable that LYFT's discouraging performance will keep a lid on the Uber IPO.  If the stock performs similarly to LYFT, falling in the first week or two by 39.5%, that would yield a share price of 57.47.  You read it here first. ______ UPDATE (Apr 29, 11:23 p.m.): This dog has fallen a further 11% to a so-far low at 54.32 that missed my target by 0.72, or 1.3%. As a practical matter, shorts should have been covered with a 'dynamic' trailing stop at 54.56. The target remains theoretically viable, but all rallies in the years ahead should be treated as dead-cat bounces, since the company is unlikely to turn an honest profit.

When the S&Ps took a bold leap on December 26 after plummeting 500 points earlier in the month, few could have imagined what would happen next. It were as though, missing an arm and a leg, a soldier had vaulted from a trench in the heat of the Battle of the Somme and shouted "Vive la France!" In the movie, the soldier is dead before he stumbles and hits the ground. But on Wall Street, U.S. stocks were just beginning their most powerful rally ever. The S&P 500 Index has risen 600 points and is closing fast on the record 2941 recorded in September. The wilding spree has been duplicated in stock exchanges around the world even though global growth is slowing. This shows the irresistible power of central bank stimulus, but also the irrationality of the result. Something's got to give, and it seems unlikely that the necessary  adjustment will come via a huge surge in corporate earnings. Even so, easy credit, aggressive share buybacks and force of habit will continue to fuel stocks until the money runs out. Since no one can say any longer what, exactly, counts as money, it is impossible to estimate when this will occur. The charts are also silent on the question of how high. But gut instinct says we are close to an important top, even if ten years from now it turns out not to have been THE Top.

A longstanding rally target at 2929.00 has served  us well, keeping us confidently on the right side of the trend. It now looks extremely likely to be reached, but the question is whether it will be decisively exceeded. I expect the Hidden Pivot to show stopping power, probably tradeably so, but I would recommend going short there only if you have made at least 3-4 points of profit on the way up.  You'll need all of it to provide an ample stop-loss on entry. I say this because the C-D rally leg begun on March 25 provided no opportunities to get long 'mechanically'. This attests to the power of the move, and it raises the odds of a thrust to even higher levels regardless of whether a correction is needed first to get a running start. Even a slight breach of 2929.00 would make a run-up to new record highs all but inevitable. That would not negate my skepticism that the powerful move begun on December 26 has been a bear rally. Too many agree with this judgment, however, to make a move to new highs an easy short.

Investors have thrown caution to the wind as they bid up FAANG stocks to imprudent heights and provide overly generous bids for a few others that face serious jeopardy, including Tesla and Boeing. Even so, the herd evidently had second thoughts about one stock on Friday, pummeling the shares of Netflix when competitor Disney announced a new streaming service that will be bargain priced at $6.99 a month.  Apple was another story, however. After getting hit early in the session, the stock actually closed higher despite the fact that the company will soon be competing with Disney, Netflix and others in the well-saturated entertainment sector. AAPL (click on chart inset) is arguably the most overpriced of the bunch, since the shares had already undergone a ballistic rejuvenation weeks ago after the company announced it would produce and stream movies and TV shows. Investors who have bid up Apple stock 42% since January are betting the company will be able to offset weakening iPhone sales with such fare, but this is unrealistic, to put it mildly. There are already far too many deep-pocketed players in the game, producing many more shows than any of us has the time or interest to watch. And even if Apple were to create TV good enough to steal viewers from Netflix, Disney et al., profit margins would not come close to what they’ve been from selling pricey mobile phones to iCult buyers. Lotus-Eaters Love Uber Uber is another company that lotus-eating investors and the supposedly smart money have got all wrong. Although Wall Street recently lowered its sights by 16%, to $100 billion, for the upcoming IPO, this is still an insane valuation for a business that may never turn a profit. A Wall Street Journal story published last week suggested the dimensions of the

Even if  DaBoyz succeed in pneumatically hoisting this stock with ropes and pulleys above $400, a key psychological level, it looks like BA will need to go lower first to get a running start. Holding the stock aloft in order to distribute shares to widows and pensioners has taken enormous effort that has been aided by a heroic boost from Boeing's ignorant, lazy, ne'er-do-well lackeys in the news media.  Whatever you hear from them, however, this company has big problems.  Here's another link to that VOX.com investigative piece to refresh your memory as to how serious those problems are. From a technical standpoint, I must concede that BA has yet to generate a bearish impulse leg on the daily chart. That's because the 2019 rally was so steep that it left no 'external' lows on the chart that we might have used to qualify a true bearish impulse leg. As a practical matter, though, the 'ersatz' impulse leg we've got yields a pattern with a 356.42 midpoint and a 314.18 'D' target that are good enough for government work. For now, use the higher as a minimum downside target for the next 3-5 days. _______ UPDATE (Apr 16, 5:45 p.m.): This dog and pony show projects to 387.54, or perhaps 389.77 if any higher. However, the stock's clever handlers will need to goose shorts above the 402.67 'external' peak shown here to turn a stage-managed bounce into the real McCoy. That would imply a rally powerful enough to fill the gap between 402 and 415 created when a 737 Max crashed on March 11.

We've been using Hidden Pivot supports at, respectively, 205.72 and 212.77 as minimum rally targets, but I've shifted the perspective for today in order to suggest a bottom-fishing gambit. Specifically, I'll recommend bottom-fishing p=197.14 by using a 197.17 bid, stop 197.07. If you substitute near- or slightly out-of-the-money call options, give yourself a little more leeway on the stop-loss, but make sure you've got one in place. ______ UPDATE (Apr 15, 10:07 p.m.): A bull-trap spike  on the opening bar negated the trade suggested above, but the rally targets at 205.72, and thence 212.77, remain viable. _______ UPDATE (Apr 25, 9:59 p.m.): Sellers cracked a minor midpoint support at 205.34, implying that AAPL will now fall to at least d=203.91 in search of traction. Notice that this is a penny higher than Tuesday's low, which could serve as a point 'A' for a counterintuitive buy. We can track it in the chat room if it triggers, so stay tuned if you're interested. _____ UPDATE (Apr 28, 12:03 a.m.): Sellers trashed the 203.91 'hidden' support flagged above, opening a path over the near term to as low as 200.35. Here's the chart, which shows a secondary pivot at 202.68 where we might look for a bounce. If 200.35 fails as support, use 199.18, which looks well suited for bottom-fishing.