Rick’s Picks

The 2706.50 target I put out Sunday night came within two ticks of nailing Monday's high, which gave way to a 104-point avalanche. In the chat room, I suggested covering half the position for a small profit before the move started to snowball, but at least a few subscribers took my further suggestion that they hold a contract or two for a swing at the fences.  This tactic didn't pay off until late in the day, when it finally dawned on bulls that the broad averages were not coming back.  The 2610.00 downside target I subsequently proffered near the end of the day gave way easily, suggesting the even though the futures subsequently bounced a whopping 43 points from an intraday low of 2603.00, they are likely to fall anew to the 2587.75 target shown before sellers are spent. I would reconsider this prediction if the December contract pushes above 2683.50 overnight or Tuesday morning. ______ UPDATE (Oct 31, 10:47): See my chat room posts for new rally targets that were disseminated in timely fashion earlier this morning.

After plummeting 96 points from Thursday's peak, the futures trampolined Friday off a low that lay just 2.25 points beneath the 2629.50 target I'd sent out to subscribers the night before. I heard from one who covered a winning short position near the low; however, because no one reported getting long down there I have not established a tracking position. The bounce carried 64 points, generating a quite-bullish impulse leg on the lesser charts that projects to  2706.50 (see inset). Consider it an odds-on bet if buyers blow past the 2673.75 midpoint resistance Sunday night or Monday. I'll update when appropriate, since, as you will have surmised, the stock market's wild volatility is capable of just about anything on a given day. It's even possible that bigger swings than the ones we've seen in October are coming. If we stay tuned to the lesser charts as we invariably do, however, we're not apt to be fooled._______UPDATE (Oct 29, 10:22 a.m.): The futures have rallied 37 points overnight, topping so far at 2707.00 -- two ticks above the 2706.50 target proffered above. Two subscribers reported getting short there, so I am establishing a tracking position of four contracts. Two have been covered per my 10:15 post in the chat room, and the remaining two are tied to a 2707.25 stop-loss. A third contract should be covered at 2697.00, with the last contract (or 25% of the position) held for the usual swing-at-the-fences.______ UPDATE (12:28 p.m.): Minutes ago in the chat room, I advised covering the position near 2668. This would have produced a gain of about $2500 for anyone who followed my instructions, which were explicit and timely. The sequence of updates is time-stamped so that you can verify the trade and determine for yourself whether you could have followed it.

I've presented this chart before, with a bull-market target at 27,251.  If the Dow had gotten within 5-10 points of this Hidden Pivot and begun to fall, I'd have treated the weakness as the almost certain beginning of a major bear market. What happened instead was that buyers sputtered out 300 points shy of the target. Initially, this led me to expect one last charge higher. But with the sharp decline we've seen in October, odds have grown that a bear market has indeed commenced.  Even so, you can see that a further fall to perhaps 20,000 would not alter the very bullish look of the big picture. Imagine a descending price bar reaching into the low 20,000s or high teens, and it would be easy to infer that such a move was not just corrective, but overdue. From a Hidden Pivot perspective it would not become bearishly impulsive on the monthly chart until such time as the tiny but still significant 'external' low at 20,379 is exceeded to the downside. Many market observers, especially permabears, would be saying at that point that the end of the world was nigh. But I am writing these words as much for you as for me, a reminder for later that if and when the Dow has fallen by 4,000-6,000 points, this could mark the completion of a correction within a bull market destined for much greater heights.

After the initial, exhilarating plunge on October 10, bears have struggled for every dime of additional gains. The herky-jerky downtrend since, far from being a collapse, has been a yawner that will have instilled precious little fear on Wall Street or elsewhere. The current mood of traders is nicely captured in a think-piece by my colleague Wolf Richter. As he notes, the buy-the-dip mentality and corporate share buybacks seem ample to keep stocks buoyant more or less indefinitely. When we start entertaining such thoughts seriously, it's  a good time to recall the observation for which Prof. Irving Fisher will always be remembered -- i.e., that stocks, in early September 1929, had reached "a permanently high plateau." Such thoughts will never go completely out of style, even if the treacherous currents of history have swept investors who believed them onto the rocks time and again.

Friday's wild swings only added to the clarity of the bearish pattern shown. It points to 1496.61, which would equate to an 8.6% decline from current levels. Because the downtrend penetrated the 1670.96 midpoint Hidden Pivot support with such force, we should infer that more downside to at least D is an odds-on bet. It also implies that a bounce over the next couple of days to the green line (1757.98) would offer an enticing opportunity to get short via a 'mechanical' signal at that price, stop 1845.01. Because the implied entry risk would be nearly $9000 per round lot, we'll look for alternative ways to get aboard.  Using a 'camouflage' set-up, for one, we might expect to cut the risk down to a theoretical $1500 or so -- or even less if we can substitute put options.

One step higher, three steps back. At this rate, it could take most of the week for December Gold to reach our aging target at 1254.10. Alternatively, if that Hidden Pivot resistance is brushed aside, look for a continuation of the three-week-old bull cycle to at least 1260.80. Expect a tradeable pullback from that number if it's reached.  Even if it were certain the rally will achieve 1254.10 or higher, it is not tradeable if risk:reward is held constant at the 1:3 ratio I always advise. That's because the $2-or-so additional theoretical profit possible at each new high is followed by a $15 swoon, effectively generating a risk:reward of 7:1._______ UPDATE (Oct 29, 6:36 p.m.): The 1226.00 downside target I posted in the Banter Room Monday afternoon caught the bottom of a so-far $6.60 rally within a single tick. Subscribers reported using the target to get long in the futures, but also in GLD, an ETF-based alternative. I will be spending more time in the Banter Room in order to pick up the tempo there. All subscribers are invited, but I have requested that anyone who visits the room -- as opposed to the chat room, which is attracting mainly lurkers -- post at least once per hour, or once per session if the post is actionable._______ UPDATE (Oct 30, 9:01): Gold is once again doing what it does best, disemboweling the faithful. The futures tripped a 'mechanical' short from 1227.70 that is doing nicely. Half should have been covered at p=1222.80, predicated on a 1212.80 target. Cover another 25% at p2=1217.80 against a 1232.80 stop-loss for the two contracts that remain._______ UPDATE (Oct 31, 9:07 a.m.): Because I have reverted enthusiastically to my gold-is-garbage mantra, it is a perfect time to be on alert to the possibility of a

Bears were hanging on the ropes and bleeding badly at the closing bell. Seconds later, their prayers were answered when AMZN released a downbeat earnings forecast for the holiday season. The futures fell 40 points over the next two hours -- less steeply than AMZN, to be sure, but still sufficient to activate the bearish pattern shown. It points significantly lower, to 2629.50, a 1.6% fall from current levels. Judging from the way sellers shredded the Hidden Pivot midpoint support at 2676.63, the futures look like a good bet to reach the target. Traders please note: A corrective rally touching the green line (2700.19) would trip a 'mechanical' short, stop 2723.75. _______UPDATE (Oct 26, 8:23 a.m.): The signal is valid only if the rally comes from our proprietary 'sweet spot'.  In this case it did not.

Easy come, easy go. AMZN stunned traders with a 135-point gain Thursday from the bombed-out depths of Wednesday's selloff. Then, after the close, the stock reversed steeply, shedding 180 points and sucking tens of billions of dollars from stock markets in the U.S. and around the world in mere minutes. A disappointing forecast for the holiday season triggered the avalanche, which has abated somewhat this evening, although presumably not for long. Analysts were left guessing about the reasons for the downbeat forecast, but higher pay for warehouse workers was cited by some. Google parent Alphabet (GOOGL) also missed estimates, crashing the stock 118 points, or 11 %, at the same time. The devastation in these two stocks will put the kibosh on the wilding spree that recouped nearly all of the previous day's huge losses. Evidence continues to mount that the bull market begun in March 2009 is over. If so, the transition from bull market to bear is going to produce some of the wildest price swings traders have ever seen. If what we've witnessed lately is just a warm-up for even more-extreme swings as seems likely, we're in for bumpy ride over the next couple of years._______ UPDATE (Oct 26, 8:16 a.m.): The 1584.66 target shown in the chart I sent out last night caught AMZN's low within less than $1.  The stock has since bounced $54. So much for the random walk theory.

It may have felt like stocks were free-falling Wednesday, but for many of us who were short, making 'easy' money was like pulling teeth for most of the day. The broad averages jerked around for hours after falling hard in the early going. As the morning wore on, it felt at times as though DaBoyz were going to muscle shares back to unchanged. They failed at this, however, because shorts hung tough, resisting being spooked into a doing the heavy lifting for bulls. But the fun part of the day didn't come until the final hour, when the Dow doubled its losses from earlier lows. Some Ricks Picks subscribers still held a bearish put spread I'd recommend on October 12. It was a longshot bet at the time, but we were getting 8-to-1 odds. The bet was on a 700-point decline in the Dow, and it has paid off nicely even if it took a week for it to snowball. 8000-Point Dow Selloff 'About Right' To determine whether you could have done the spread yourself, check out the Rick's Picks Facebook page by clicking here. The video is dated October 12 and appears under the headline Stocks Have Further to Fall -- Here's a Cheap Bet to Play It.  My gut feeling is that the so-far mini-crash needs a washout before the stock market can launch into a sustained uptrend. That would be in the context of a likely bear market, however, and although we mght go profitably with the bullish flow for a while, we would not want to be on board when stocks turn lower with renewed vengeance. Bear rallies are supposed to scare the hell out of shorts, so be prepared for some spectacular ones in the months ahead. Concerning the washout needed to create a temporary