Rick’s Picks

Facebook's crazed leap last week died within a hair of the 171.25 target (see inset) disseminated to subscribers when the stock was $20 lower. Although we followed through on a plan to buy put options when FB kissed the target, the anticipated pullback was so labored and weak that we were happy just to scratch the trade and wait for the next juicy shorting opportunity.  And it will surely come, since the company's troubles are not going away simply because earnings are still robust. The WSJ and other ray-rah news outlets tripped on themselves effusing over the record revenues announced last Thursday. But the Journal and its cheerleading cohort have a habit of focusing so intently on quarterly earnings that they often fail to see a bigger picture that in this instance portends increasingly difficult times ahead for Facebook. In case they hadn't noticed, Facebook CEO Zuckerberg is at the top of the hit-list of a growing number of critics who see social media as a bad deal for everyone but its purveyors. As one of them astutely noted, if the service is free, you are the product. Deft Evasions Zuckerberg's smarmy condescension toward critics, most memorably on Capitol Hill and in front of EU regulators, has become legendary, as have his deftly worded evasions.  The pols are so used to getting stonewalled that his bamboozling brand of doublespeak comes across as refreshing and ingenuous in comparison. He got prime space in the WSJ last week to go on the offensive with more bullshit: "We need your information for operation and security, but you control whether we use it for advertising." Yeah, sure. An apology it wasn't. Zuckerberg only apologizes when security has been breached in a big way, or when Facebook has embarrassed itself in sundry other, appalling ways.

I flagged a rally target at 1810.47 last week that put AMZN on a 'mechanical' buy signal at 1646, stop 1591. The new chart shows a somewhat higher target at 1845.99 with a buy trigger at 1654.54. The latter trade was signaled on Friday and slipped well beneath the water line before the close, but the signal itself is no less impressive for this. We can paper-trade here or use 'camouflage' to get aboard using real money. However, if the gambit works out like so many other mechanical trades we've done in the past, it will demonstrate yet again that fearsome, violent price action is where the mechanical entry performs best.  The ostensible reason AMZN sold off was a Q4 earnings report with a few dark spots, but they seemed calculated to part widows and pensioners from their shares at fire-sale prices. I've been bearish on the stock market and AMZN but am less so at the moment because of the contrived viciousness of Friday's selloff in this stock._______ UPDATE Feb 6, 5:43 p.m. ET): Liftoff is taking way too long, making the mechanical trade more labor-intensive than we should prefer. If it pans out anyway, we can file it under "Mechanical Miracles," but let's not devote much more attention to it in the meantime.

AAPL looked quite impressive last week. Buyers pushed above a shelf-like 'external' peak from mid-December, refreshing the bullish energy of the hourly chart. And now, how high would the stock have to go to make this short squeeze look capable of achieving new all-time highs above $233? My gut feeling is that it would take a push exceeding the 184.94 peak shown (see inset) to do the trick. That would plant a seed of fatalism in the minds of bears, your editor among them, who expect the rally to fizzle out any day now. I won't pretend to have a crystal ball, and can only suggesting monitoring AAPL's progress, or perhaps lack of it, relative to the peaks shown in the chart. _______ UPDATE (Feb 7, 10:45 p.m. ET): The stock rolled down hard after a rally in the first hour failed to exceed any prior peaks. The weakness would not threaten the still-bullish look of the hourly chart, however, unless it takes the 165.93 low recorded on Feb 1..

The 2728.25 rally target we've been using remains viable and has kept us on the right side of the move -- which is to say, in a profitable groove and out of trouble. Buyers stalled very precisely Friday at a lesser Hidden Pivot at 2715.50 (see chart inset), but the subsequent pullback has been shallow and implies they'll be back at it when the new week begins. Although I'd suggested earlier that you consider shorting 2728.25 with a tight stop if you've made at least $1000 on the way up, I have no great enthusiasm for the trade. Moreover, I'll suggest raising your sights to 2759.00, the 'D' target of this pattern, which was created by sliding the point 'A' low down a level. I am confident the target will be reached because the point 'B' high of the pattern decisively exceeded the imposing 'external' peak at 2592.00 recorded in mid-December, as a good impulse leg should.

Gold exploded last week after spending three weeks in a tedious consolidation. The April contract is bound most immediately for the 1336.00 target shown, but if it gives way easily expect the rally to continue to the next, 1345.50. It has required great patience to stay with the trend, but don't be surprised if it fools the herd by accelerating, since that is what few expect. I don't ordinarily recommend placing 'mechanical' bids at the red line (p=1313.50), but if it's touched on a pullback, we can use the signal to set-up a camouflage trade with risk tightly managed. Playing it by-the-book, a mechanical entry at 1313.50 would require a stop-loss at 1302.80. Alternatively, if the futures were to swoon violently down to the green line (1297.50), that would generate an even more attractive mechanical buying opportunity. _______ UPDATE (Feb 6, 5:17 p.m.): Gold has an annoying habit of testing two key Hidden Pivot assumptions: 1) that good trades seldom originate in one's psychological comfort zone; and that 2) the more vicious the price swings, the better mechanical set-ups work. And so it goes with the April futures at the moment, as they plummet toward the 1297.50 'x' level where an ostensibly appealing 'mechanical buy' would be signaled, stop 1281.40. Here's the chart. Let's see how it goes._______ UPDATE (Feb 10): The 1345.50 target remains viable, but I am no longer recommending entry via a mechanical bid because the pattern has strayed too far from 'textbook'.

The rally has been too steep for mechanical entries, with opening bar gaps that make it difficult to get aboard even using alternative strategies. There should be little doubt that HUI will achieve the 176.65 target (see inset) by week's end if not sooner. It would take a bit more than that, however -- specifically, a thrust touching 177.73 -- to put a 317.56 target on the weekly chart in play. At that point, p=224.34 would become our minimum upside objective. This suggests we'll be able to calendar-spread distant strikes profitably, so stay tuned for guidance as things develop.

The stock market’s masters have been working AMZN and AAPL like a tag team, pressing one into service when the other lacks the energy to goad stocks higher. That surely describes the current dynamic. DaBoyz short-squeezed AAPL for a third straight day, more than offsetting the drubbing AMZN is getting tonight on a downbeat earnings report that has sent the stock plummeting $100 after-hours. The selloff is a brazen shakedown, to judge from the news that caused it. Here, supposedly, is what is ailing Amazon: “Concerns include slowing unit and NA Online growth, slowing subscription/advertising segment growth, gross margin miss, and guidance (likely reflects India issues, lower 3P fees).” What a load of crap! As bearish as my outlook for the stock market is, and has been, this is the kind of ginned-up news that would make me want to buy the stock, not dump it. (In fact, and for your information, AMZN became a “mechanical” buy, in Hidden Pivot parlance, this evening at 1646.15, stop 1591.37.) When Bears Throw in the Towel The way DaBoyz are able to work the two stocks reminds me of how slot-machine “mechanics” in the old days used to “rhythm” two machines simultaneously to extract the maximum payoff from the house. That’s what’s going on with this bear rally, as leadership passes constantly between AMZN, AAPL and a few other institutional workhorses. No one can predict exactly how high the rally will go, but we already know its purpose: to fool the riff-raff into thinking it’s capable of achieving new all-time highs. The Dow and S&Ps aren’t quite there yet, but they will be soon if the wiseguys can get AMZN and AAPL to rise simultaneously. Bulls aren’t the only ones Mr. Market is intent on fooling: Inveterate skeptics like your editor fall in

This tracking vehicle for junior gold miners handled a clear Hidden Pivot resistance with such easy aplomb today that I've hauled out a long-term chart for the first time in a long while. GDXJ has yet to hit the green line at 34.82 that would put the 61.54 target in play theoretically, but perhaps it's time to go out on a limb and assume that this will soon occur. That would make the 43.73 'midpoint pivot' our minimum objective while bolstering the case that gold stocks are finally getting off the launching pad after languishing for most of the last eight years . Actually, they did so in 2016 with an impulsive rally that while strong, left something to be desired. Specifically, the thrust failed to surpass a key 'external' peak at 54.56 recorded on the way down in 2013. No matter. We'll give the good guys and the very patient the benefit of the doubt here, especially since stocks may have entered a bear market, signaling a major tone change in the realm of investable assets. _______ UPDATE (Feb 21, 1:31 p.m.): A thrust to 35.04 has tripped the theoretical 'buy' signal noted above, warranting a moderate increase in our already-bullish trading bias.

DaBoyz have harnessed panic-stricken bears to do in minutes what bulls might not have accomplished in a month -- i.e., push a beleaguered Facebook $25 higher without wasting a dime of their own money. I doubt whether even urgent short-covering can spike the stock past the 171.25 target, but we can use it as a minimum upside target for the very near-term nonetheless. Depending on how things open, we might look at expiring puts, tightly stopped, to leverage the target.______ UPDATE (Jan 31, 11:45 a.m.): I bought expiring 165 puts for 0.35, a nickel off their low, when FB topped this morning at 171.68. Several subscribers did likewise when I flagged the opportunity in the chat room. At least one subscriber has already cashed out for a 50% gain on FB's drop to 168.56. I'm holding onto the puts myself for a swing at the fences. _______ UPDATE (Jan 31, 4:41 p.m.): As posted in the chat room at the time, I doubled out on half of the puts when FB sank minutes before the closing bell. The 0.70 I received for the puts will effectively give me a free short position when trading commences Friday morning.  In the meantime, just in case the stock unexpectedly swoons overnight, I've entered a distress bid for stock at 163.70 to lock in a profit on my options. If the order fills I'll be able to short 165 calls risklessly for good measure on the opening, leaving me with a three-sided "conversion."  Every subscriber who bought the puts reported making money on them, although it was not possible to tell how many were still holding a position overnight. If you remained short, consider the stock gambit detailed above.