Rick’s Picks

Stocks fell hard Thursday, supposedly because of  growing US-Saudi tensions over the gruesome murder of  Jamal Khashoggi, a journalist who has been tough on the monarchy and easy on the Muslim Brotherhood. If such tensions did in fact push stocks lower, as a headline in the Wall Street Journal tried to suggest, then why didn't oil prices rise? After all, the Saudis, pressed to admit the murder was officially sanctioned, have told inquisitors to back off -- either that, or risk a curtailment of crude supplies that would push prices into the danger zone in a world dependent on cheap oil. For better or worse, it is not tensions over the murder that have been worrying investors, but rather the upward skew of interest rates. This development has reached a menacing threshold where a global economy as dangerously dependent on cheap credit as it is on cheap energy could start to falter. Economic growth in Europe and Asia has already slowed significantly, although not yet appreciably in the U.S., where bull-market mania evinced nary a hint of concern until very recently. Gird for a Fearsome Friday Expect those concerns to snowball on Friday as traders wrap up another week by further discounting a darkening reality. The erstwhile Masters of the Universe couldn't bring stocks back even a third of the way Thursday after selling the Dow down 470 points. My hunch is that DaBoyz will apply a feather-light touch in the wee hours Friday, distributing what little stock they can to widows and pensioners; then, following a flurry of short-covering on the opening, they will pull the plug. Whatever the case, you can follow along in real time, with running commentary and the front-row vantage point afforded by the Rick's Picks chat room. Click here for a free trial that

The spectacular orgy of greed surrounding Uber's impending IPO shows how out-of-whack valuations have gotten. Wall Street thinks the ride-hailing company could fetch as much as $120 billion when it is retailed to the rubes early next year. That's nearly double the valuation of Uber's last fundraising round just two months ago, according to the Wall Street Journal, and more than the combined value of General Motors, Ford and Fiat Chrysler. For further comparison, the biggest-ever deal in the defense sector, a proposed merger between Harris and L3 Technologies, would be worth a measly $33.5 billion. Are  investors out of their minds? Uber, after all, has little physical substance and no profits. It exists in the form of a smartphone application, a few office buildings and a global network of freelance drivers who struggle to make a living at it. The fact that Uber hasn't booked any profits is no drawback for Wall Street's gifted pitch-men, who have always lived by P.T. Barnum's dictum that there's a sucker born every minute.  These shysters regard earnings for IPO companies as an abomination, since, once  a company starts making money, its shares can be marked-to-market to reflect a price/earnings ratio. The last thing in the world Uber insiders want is earnings, since they provide a reality check against whatever story deal-makers have concocted to hype the company's supposedly limitless potential. An Uber-Killing App Already Exists Investors clamoring to pay $120 billion for Uber had better consider that the company's future is just as vulnerable to disruptive new technologies as the taxi fleets Uber and Lyft have decimated. Are the yokels who will be bidding hand-over-fist for IPO shares aware there's a phone application that makes it possible for anyone to start a ride-hailing company practically overnight? That's right. The software handles every

Tuesday's maniacal short-squeeze suggest stocks can move higher as long as interest rates are not rising sharply on a given day. Bonds were slightly weak and yields were up commensurately, but that evidently did not deter the wilding spree that pushed the Dow 548 points higher. The hourly chart (see inset) suggests buyers will encounter relatively little resistance between here and a shelf of supply near 26,400 created a week ago. We'll make that our minimum upside objective for the near term, implying the rally could have another 600 points to go. This scenario pre-empts a bearish one I'd put out calling for a drop to 24,298, although I strongly doubt the rally will achieve new record highs. It depends mainly on interest rates, as I noted here yesterday, and the uptrend in yields looks like it has further to go. If so, that and the incipient collapse of the real estate market are likely to make buyers regret today's nutty spree.______ UPDATE (Oct 17, 5:45 p.m.): Today's gratuitous swoon changed little in my forecast, although it may have made it more difficult for DaBoyz to 'work' shorts to provide more buying power. Looking for some nasty whipsaws in the days ahead.

The burlesque over Sen. Elizabeth's Warren's dubious Cherokee ancestry is helping Republicans build a head of steam ahead of the November elections. On the increasingly indefensible side of the political divide are those who evidently believe that a slapdash DNA test showing Warren has perhaps 1/1024th Indian blood "proves" she is a Native American. Believers include most Democrats and the national media other than Fox News. And then there are the rest of  us -- i.e., those who see Warren's cadres as buffoons, willing to trumpet an absurd lie and embarrass themselves simply because her Marxist political views are companionable with their own. Those who are predicting a "blue wave" at the ballot box in November are way off the mark. They are saying in effect that most voters will stand by Warren even though Cherokee Nation has sternly rebuked her for making an issue of her supposed Native American pedigree.  A blue wave also supposes that a majority of Americans are okay with a new norm that would feature rioting in the streets of formerly peaceful cities like Portland, higher taxes, more Obamacare, the suppression of the U.S. Constitution, and leadership on Capitol Hill from shrieking hags like Nancy Pelosi and Maxine Waters, and sanctimonious political hacks like Charles Schumer. Strong Economy Favors Status Quo For a blue wave to happen, and the party of unctuous carny Michael Avenatti to win big, voters would also need not to have noticed that the economy and stock market are as strong as they've been for decades. Yeah, sure. Do the pollsters who are predicting a blue wave on MSNBC and CNN take us for idiots?  A genuine idiot is Bloomberg news' Jonathan Bernstein, who wrote a column the other day saying Warren, by sticking with her ridiculous story, is positioning herself

[This corrects the earlier version, which referred to yields on the 30-Year T-Bond.] Stock market bulls could catch a break if the retracement in Treasury yields continues for a while. The chart shows yields on the Ten-Year Note to have peaked last week at 3.25%.  The correction has since hit 3.12% and could conceivably go lower. Although my rally target at 3.32% lies significantly above, that target comes from the weekly chart, and charts of lesser degree look maxed out for the time being. If so, the bulls had better make hay while the sun shines, since a move in yields to new cyclical highs will weigh heavily on stocks and stifle their upward progress. Mortgage rates are already at their highest point in years, and it won't be long before the negative impact on home sales that has already occurred will spread into auto leases.

Last week's avalanche on Wall Street provided some opportunities for Rick's Picks subscribers to make easy profits, always with risk tightly under control. Although there was fear in the headlines, the 24/7 chat room was cool, calm and even jocular at times.  Click here to join in the fun for two free weeks. One reason some subscribers were feeling light-hearted while millions of investors got pulped is that they had taken my timely recommendation to buy call spreads in VXX, which tracks short-term volatility in the S&P 500. Because this trading vehicle rises when stocks fall, the spread doubled in value, then quadrupled as stocks began plummeting early last week. The original recommendation went out on September 28, airing on the Rick's Picks Facebook page the same day under the headline Leveraging an October Disaster with Cheap Calls.  Sound enticing? It was -- and easy, too. One need only have bought soon-to-expire October 30/35 call spreads in VXX at the recommended price of 0.50 or less. It traded down to 0.21 over the next several days before taking a powerful leap that increased its value more than twentyfold by week's end. Check out the Rick's Picks Facebook page if you don't believe it.  And see for yourself whether you could have done the trade based on the guidance I'd provided. Here's a Play for Next Week While your there, click on my latest video, which details a tactic using 'vertical' call-option spreads to leverage a further fall in the Dow Industrials next week. I've suggested that traders pay 0.35 or less for the spread, but it has the potential to hit 2.50. The Indoos would need to plunge by more than 800 points for you to hit a home run, but you stand to make as much as $860 for

The Dow looks primed to fall at least another 750 points, so it's no time to let your guard down. Thursday's obligatory bounce came from just inches beneath the 24,965 benchmark I'd proffered Wednesday night as a minimum downside objective, but it didn't get very far. By day's end the Indoos were falling anew, on track to hit the 24,298 target shown. That's a Hidden Pivot support of intermediate degree, and if it fails to contain the selling, expect more slippage to at least the 23,997 low recorded in June. We'll be looking for a 'counterintuitive' bounce from somewhere near there, so stay tuned to the chat room for real-time guidance if you're keen to bottom-fish. ______ UPDATE (Oct 14, 4:08 p.m.): The bounce off Friday's sold-out low generated a 'mechanical' short at 25,284 (i.e., the green line shown in the chart), stop 25,612. The trade is predicated on the 24,298 target given above. If and when the Indoos slip beneath Midpoint Pivot p=24,955, particularly if they close beneath it, that would imply more slippage straightaway to the target.

Rates on the 10-Year Note eased somewhat last week as investors fled to safety, but the chart shows that the rally is still well on-track to hit a minimum 3.59%. Because it took a long time for buyers to chew through the 3.11% midpoint Hidden Pivot -- a target we had correctly forecast six months earlier, we might expect them to take their time covering the distance between here and 3.59%. Regardless, even if the pullback continues for a couple of weeks, the stock market is likely to remain under pressure due to what the news media are calling 'interest rate jitters'. We've been warning about this for months, and the day has finally arrived.

AMZN has bounced moderately so far from a 1685. 10 low that was less than $2 from the lowest target I could have projected using the intraday chart (click here for graph).  The low sits roughly midway between two important lows made in June and July, respectively, at 1646 and 1739. This is an odd and uncomfortable place for the turn to have come, since we might have expected the buying to materialize close to the lower number, which would have been perceived as an important support. Under the circumstances, I would expect the stock to relapse and test the low, although we should give buyers wide berth as they bounce the stock who-knows-how-high. The lesser charts point toward a minimum 1866.38 (15-minute, a=1685.10 on 10/11), and a rally to that Hidden Pivot should be considered a done deal if AMZN can close above p=1804.46 or trade decisively above it intraday._______ UPDATE (Oct 15, 9:49 p.m.): Today's constipated price action slightly lowered AMZN's fly-or-die threshold to 1796.00. Here's the chart. _______ UPDATE (Oct 16, 7:41 p.m.): AMZN turned doubters into pudding with Tuesday's relentless rally. For now, use the 1858 Hidden Pivot shown in this chart as a minimum upside objective.______ UPDATE (Oct 18, 11:57 a.m.): The stock has sold off hard after falling $13 shy of the 1858 target. It's still valid, but it looks less compelling at the moment. A further fall to X=1765.19 would trip a weak 'mechanical' buy signal.