Rick’s Picks

Shares of Apple, the most valuable company in the world, were getting hit hard Thursday night after the company predicted weak holiday sales. I'd spotlighted the stock here yesterday, noting that as long as AAPL continues to move higher, it would keep the U.S. bull market alive. At the time, it looked as though buyers were ready to push it at least $28 higher, or about 12%, over the near term. Now, even with relentless share buybacks and stalwart support from institutional sponsors, bulls will have to build a base for at least 2-3 weeks if they're going to make a run at new all-time highs. We shouldn't doubt that this is what DaBoyz intend, since they were caught flat-footed by the stock's dive after the close. Don't bet too heavily against them, since they are as clever as they are desperate. But considering the latest sales forecast, it's going to be a tough slog, even for the big-time carnys who manipulate this gas-bag.

Another brutal day for bears. Be sure to check out my latest tout for AAPL, since, more than any other stock on the planet, it will determine whether the bull market is in fact dead. I find it extremely difficult to imagine why this would not be the case, considering that the Wall of Worry has grown lately to surpass Mt. Everest in height. Read this insightful column from the Wall Street Journal's Walter Russell Mead if you want a big-picture perspective on why the party is over. Mead isn't concerned so much with earnings that have peaked, a strong dollar, rising interest rates or even an incipient real estate collapse as he is with a tectonic shift in geopolitics. "The world has entered a new, complicated and dangerous era of nationalist competition," he notes -- one that trumps market forces that have been ascendant over the last 30 years. This column is a must-read.

AAPL's canny sponsors began the day coaxing a manic leap from panicky bears. The short-covering gap tripped a theoretical buy signal at 217.19 that is predicated on a further rally to at least 228.39, the midpoint Hidden Pivot of the pattern shown.. Once decisively above it the stock would be an odds on bet to reach the 'D' target at 250.49.  We'll ignore the trading signal for the time being, but not the stock's feistiness, since AAPL is, as we know, is the most valuable company in the world, owned by nearly every portfolio manager on the planet. That is why it is not going to crash simply because the stock market has developed a case of October sniffles. We'll follow this dirigible closely, since, all by itself, it has the power to hold the U.S. stock market aloft for as long as the institutional chimps continue to buy-and-hold it, and Apple continues to buy back its own shares._______ UPDATE (Nov 1, 10:14 p.m. ET): The stock is getting whomped in after-ours trading Thursday following a punk earnings forecast for the holiday season. AAPL has fallen 7% so far and could go even lower if it achieves the 203.88 target shown.

Gold has once again fallen into a rut, dropping moderately for three consecutive days. This has occurred with the December contract having failed by $8 to achieve a $1254.10 rally target I'd flagged. The futures have since made a tentative bottom 0.60 above the $1212.80 correction target where I'd suggested bottom-fishing.  Thus did we narrowly miss catching the $5.40 rally that ensued. But will it get legs? I doubt it. Even so, lest we become depressed, consider today's chart (inset), which is quite bullish. Rick's Picks falls somewhere around the middle of the pack in letting gold's seemingly endless thrashing around, mostly southbound, discourage us. But we can still read a chart, and the one shown gives bulls the edge because of last week's upthrust to 1246.00. That slightly exceeded a July peak, creating a by-the-book impulse leg of intermediate degree.  To negate it, the December contract would have to fall beneath August's 1167.10 low. That's not out of the question, and we shouldn't be surprised if the futures do just that in order to jerk bulls' chains for the umpteenth time. Regardless, the uptrend begun in August deserves the benefit of the doubt, and any rally of $15 or more will kick it into mid-gear. _______ UPDATE (Nov 1, 9:43 p.m. ET): Use the 1242.20 midpoint resistance as a minimum upside objective for Friday. If the futures exceed it decisively intraday or close above it for two consecutive days, that would imply more upside to the 1279.09 target shown. _______ UPDATE (Nov 3): Zzzzzzz.  Let's give it another day or two to see how buyers fare at 1242.20._______ UPDATE (Nov 5, 5:54 p.m.): More waiting is what gold typically requires of us, followed by more frustration, then more disappointment. It has been in a correction for more than seven

I'll step back for a day, since Wednesday's price action provided no hooks for a hitting a bullseye. Even as to the question of whether the futures will close higher or lower on Thursday, I prefer not to hazard a guess. Suffice it to say, each of several upthrusts fell a hair shy of its respective, minor Hidden Pivot target posted in the chat room. In addition, the intraday high occurred a whopping nine points below some 'external' peaks recorded last week. A case of buyers turning chicken? Or were they simply fatigued after a night of relentless ratcheting higher in the usual way -- i.e., via a short-squeeze? For once in a blue moon, I'll avert my eyes and pretend not to care. ______ UPDATE (Nov 1, 9:50 p.m. ET): The pattern shown should work well for bullish trade set-ups, since the 2800.50 target lies nearly 70 points above. Consider it an odds-on bet if the futures trade 2760.00 or higher intraday or close for two consecutive sessions above the 2752.25 midpoint Hidden Pivot resistance.

Is it safe to go back in the water? Merely asking that question is to suggest that only an imbecile would dive fearlessly back in the drink. Even so, there are most surely enough imbeciles to keep stocks buoyant in the days or even weeks ahead. If they eventually are joined by panic-stricken bears as sometimes happens, we could see a rally capable of persuading otherwise sane folks on the sidelines that new record highs await. 'Trader Mike' caught a fascinating aspect of the game in the chat room today with this wry observation concerning market psychology:  "Markets require people to give up. Read the Turtle book. The Turtles got their brains bashed out trading coffee, then they decided to stop trading coffee, then it produced the largest single trade in the history of mankind. That's how it works. I exaggerated a little. I'm sure Bitcoin is the largest trade ever, but you get the idea."

I've been offering more high-leverage option trades lately, but the most difficult place to find them, paradoxically, is in ETFs like this one that track market volatility. On Tuesday, for instance, although a stock-market rally shaved nearly 8% from the value of VXX, anyone who had correctly anticipated the move buying put options would have been disappointed with the results. Out-of-the-money puts at the 38 strike went from  0.29 to 0.85, but even a nimble trader with a crystal ball would have found it difficult to get aboard for less than 0.56, or to exit for more than 0.75. This was hardly the quadrupler we look for when we trade options on this vehicle. We've done quite well on these trades in the past, but mainly by catching big multi-day moves rather than precipitous declines that play out over just a day or two. Bottom line: This is a terrible vehicle for scalping in and out of options. Better to wait for reversals from major Hidden Pivot targets that can deliver big price swings.

Monday's slow-motion selloff didn't generate much fear, but it likely exhausted sellers for a while. Although I've put out a somewhat lower target in the E-Mini S&Ps for Tuesday, the big moves in the FAANGs appear to be over, or very nearly so. Rick's Picks had been using a 1496 downside target in AMZN that came within a millimeter of catching the exact low of a so-far $68 bounce. (Click on the inset to see this graphically.) DaBoyz looked like they might want to revisit the low Monday evening, but they are going to have difficulty pushing the stock significantly beneath it, if even merely to it, since it's such a clear and compelling Hidden Pivot support. Similarly, AAPL hit a longstanding downside target at 208.04 before trampolining more than $6 from just beneath it. A relapse is unlikely to exceed the low by much, if at all, and that's why the issues I refer to as the 'lunatic stocks' -- i.e., the ones most heavily owned by portfolio-managing chimpanzees -- should be supportive of the broad averages over the near term.

AMZN has trampolined $68 so far from within a hair of the 1496 target we used to keep on the winning side of this brutal selloff.  A subscriber reported getting long a few dollars off the low, but because his was the only such report posted in the chat room, I have not established a tracking position. The stock was getting sold down hard in after-hours trading, hitting a so far low at 1515 after bouncing as high as 1563. However, the original target at 1496.61 was sufficiently clear and compelling that I would expect bears to have difficulty pushing this gas-bag much below it overnight or Tuesday morning. If they succeed at this anyway against the odds, a Hidden Pivot at 1479.60 is the best alternative I can offer, even if it is no technical beauty. _______ UPDATE (Oct 30, 8:45 p.m.): The 1479.60 target proffered Monday night caught Tuesday's low within less than $3. Here's the chart, if you want to see how close that was. The subsequent rally hit $1540.99, providing subscribers who trade this vehicle with a explicit way to earn a quick, easy profit. We'll back away for now, since there are no compelling targets immediately below, nor any good rally targets to infer from the day's choppy action._______ UPDATE (Oct 31, 5:48 p.m.) The pattern shown should keep us well on top of AMZN's gyrations on Thursday, but you may need to recalculate if the stock dips beneath the 1577 point 'C' low._______ UPDATE (Nov 1, 9:57 p.m.): The pattern shown in my 10.31 update and its 1717.32 target remain viable.