Rick’s Picks

The futures would become an enticing 'mechanical' short if the sharp bounce off Tuesday's bombed-out low hits the green line (2777.31). The implied initial risk per contract would be around $2400, but there are alternative ways to get aboard with far less at stake. Stay tuned to the chat room for guidance on this, but keep in mind that the pattern we would short implies there's an odds-on chance that the rally is merely corrective and won't surpass the 2824.25 point 'C' high._______ UPDATE (Oct 24, 7:24 p.m.): The rally we were looking for to get short under optimal conditions failed to materialize, but the 2636.50 downside target shown remains viable.

Subscribers used a 115.70 target posted in the chat room Tuesday morning to get long eight cents from the bottom of CAT's hellish $13 plunge. A $7 rally ensued, affording everyone who bought the stock to lock in a profit and hold some shares for a risk-free swing at the fences. The target looked so appealing (see inset) that an hour before it was hit, your editor was able to assure traders that it "absolutely could not miss." Just so.  At the same time, a bear option spread that we'd given up for dead came roaring back as stocks plunged. The DIA Oct 26 245/242.50 vertical put spread doubled in price from the 0.34 (or less) subscribers had paid, providing an opportunity to take partial profits, sit back and enjoy the stock market's histrionics for the remainder of the week, come what may. Want to join in the fun? Click here for a free two-week trial and head for the chat room, where great traders from around the world swap actionable ideas 24/7.

Is the fat lady warming up her pipes?  It certainly seems that way. Setting the chaotic swirl of global drama to music would be worthy of Verdi's talents. Silhouetted behind a sheer curtain is the caravan, a radioactive caterpillar inching its way toward the U.S. border; leftist protestors are in high dudgeon, peeing on Senators who would risk walking their dogs; the Dodgers' bullpen could be about to meet its match; a $1.6 billion jackpot has coaxed nearly every able-bodied American to visit a convenience store during the last three days; Saudi Arabia continues to spin a murder story so that there's a unique version to fascinate each and every one of us; Democrats, Republicans and their respective coteries are all quite certain they're going to win big on November 6; Trump gets Trumpier by the day, impressive in his arrogance and scarily inured to doubts. And then, Act V, straight out of Wagner: Yellowstone's caldera erupts, bringing all of the mayhem to an ashen but utterly quiet end. The audience is too stunned to applaud.

The news media have gone off the deep end once again with their tone-deaf misjudgment of America's mood prior to a national election. Tune to MSNBC or CNN and you might think we are all clamoring to see the Central American 'caravan' double in size every few days until it reaches the Rio Grande; to have Trump and Kavanaugh impeached; to install Elizabeth Warren or Bernie Sanders in the White House; to take a knee ourselves whenever the national anthem is played; and to revive Obamacare. Let me say it again: If you're expecting a blue wave in November, you are not living in the real world. So much for politics. Regarding the stock market, it's still premature to conclude that the broad averages are incapable of being short-squeezed to new record highs. Shares have been unusually weak in October, to be sure, but we should never underestimate the ability of bears to snatch defeat from the jaws of victory with a short-covering panic. It's coming, as it always does, but the Dow may need to fall a further 1100 points before bears ride to the rescue.

Anyone hoping Treasury rates will ease, cutting stock-market bulls some slack, must first reckon with the chart shown (see inset). It implies that a significant rise in yields on the 30-Year Bond is coming, and that they will hit 3.59% before borrowers get any relief. If this occurs as appears likely, 30-year mortgages will be pushing above 5%, causing an already shaky housing sector to implode, along with the auto-leasing business. A key resistance to watch sits at 3.44%. That's a Hidden Pivot rally target of lesser degree than the one noted above, and if it gives way easily there should be little doubt that the long bond is on its way to at least 3.59%. Some may point out that the U.S. economy has survived much higher rates; however, that should come as scant comfort, since rates have never risen so sharply after having been artificially held so low for so long. As to Fed hubris that would have us believe the economy is strong enough to weather higher interest rates, the banksters will discover otherwise -- discover that most of the supposed 'strength' has come from stock-market and real-estate valuations pumped to the sky by easy-credit policies._______ UPDATE (Nov 3): TYX blew past 3.44% on Friday, further shortening the odds that the 3.59% target given above will be reached.

Expect the "other shoe" to drop this week, culminating in a tradeable bounce from within inches of the 24,997 midpoint Hidden Pivot shown. Even if not, we are bound to get a revealing picture soon of a bull market now in its tenth year and presumably tiring. If the weakness we saw last week was the start of a C-D leg of a bearish ABCD correction from October 3's all-time high (26,951), we might expect it to continue at least to the 24,997 "hidden" support noted above.  If the support gets crushed, we can assume that a further fall of 820 points to 24,177 is under way. Alternatively, there's a chance buyers could temporarily turn things around next week and push the Dow above C=25,817. But don't expect the effort to produce a new all-time high. More likely is that any such rally would set up a C-D plunge from a higher level. In the meantime, I will keep this tout publicly viewable so that you can follow whatever changes in the technical picture may be warranted._______ UPDATE (Oct 22, 5:47 p.m.): No change in my bearish outlook, but here's a chart you can use that shows two price points that would flash, respectively, a "yellow alert," and a "red alert" just ahead of a short-covering panic._______ UPDATE (Oct 23, 10:23 p.m.): The powerful bounce that ended the day did not negate the bearishness of the decisive breach of the 24,997 pivot mentioned above. In fact, a rally to x=25,407 would trigger a 'mechanical' short, stop 25,817. Click here for the chart -- and stay close to the chat room for real-time guidance, since there are good ways to get short in companionable vehicles with risk under very tight control._______ UPDATE (Oct 24, 7:30 p.m.): The Dow still looks bound

Although a fall to a 208.04 target I'd drum-rolled here Friday looked like a no-brainer, bulls had other designs. The result was a weak mechanical-short signal that we can ignore for trading purposes, even as we prepare for the drop to 208.04 that's implied. Let's also allow for a bullish reversal, but with the bar set high -- i.e., above the 227.27 peak corresponding to the point 'A' of the pattern shown in today's chart. Were that to occur, the only bullish pattern that makes sense to me would be this one, which implies minimum upside to p=233.86 (click here for chart). That's the first time I've broached that target, but we should take it seriously because Apple is the most valuable company on Earth._______ UPDATE (Oct 28, 5:10 p.m.): Lest AAPL's big but tedious swings put us in a trance that causes us to miss a bullish breakout if it comes, I've lowered the bar to 224.50.  This chart shows why. _______ UPDATE (Oct 29, 6:48 p.m.): After plummeting for most of the day, the stock trampolined from just beneath my longstanding target at 208.04.  My guess is that sellers are spent for the moment. However, the fact that they overshot such a clear and compelling Hidden Pivot support even slightly implies more weakness ahead. Here's a fresh chart. ______ UPDATE (Oct 30, 9:23 p.m.): Today's price action felt like accumulation, but if DaBoyz should surprise by feinting lower in the early going, hitting the 208.81 midpoint support shown in this chart, be prepared to buy some expiring 220 calls for a leveraged play. If you do buy them, offer half to close for twice what you've paid, g-t-c.

Existing-home sales continue to fall, increasing the odds that the aging stock-market bull has finally breathed its last. If so, the selloffs we've seen on Wall Street over the last few weeks have not been merely corrective, but the beginning of a bear market that promises to be as nasty as the bull has been giddy. Investors have shrugged off plenty of bad news since shares lifted from a deep trough in March 2009, but it's hard to imagine they will be able to finesse an already protracted housing slump that threatens to grow even worse. The deterioration has gone on for seven straight months -- the worst performance since 2014, when real estate was still recovering from the Great Financial Crash. With 30-year mortgages headed toward 5%, prospects of an upturn in housing in the coming months seem remote. The same factors are going to weigh heavily on the auto sector as well, since leases that effectively allow Americans to drive more car than they can afford are heavily dependent on easy credit and low rates. Incidentally, I foresee a dead-cat bounce in housing soon that could offer a high-leveraged play for traders. For explicit details, visit the Rick's Picks Facebook page.

The futures hung nervously aloft Friday after tripping a conventional 'sell' signal down to as low as 2637.50 a day earlier. They could always rally above C=2824.25 just to annoy bears, but that would be bucking an ABCD downtrend whose weight you can judge for yourself (see inset). I'll suggest using p=2730.88 as a minimum downside projection on Monday/Tuesday, but don't count on that Hidden Pivot for precise support, since it coincides with an obvious low at 2732.25 recorded on October 12 that the hoi-polloi will be counting on.______ UPDATE (Oct 22, 11:50 p.m.): How completely refreshing! Sellers have knee-capped the futures tonight, bludgeoning them down to within three ticks of the 2730.88 target I'd provided above as a minimum downside projection. If the fun continues, use 2636.50 (slightly adjusted from above) as a minimum price objective.