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June 12, 2017 | Steep Plunge Quickly Recouped Is Hallmark of a Late-Stage Bull

Rick Ackerman

Rick Ackerman is the editor of Rick’s Picks, an online service geared to traders of stocks, options, index futures and commodities. His detailed trading strategies have appeared since the early 1990s in Black Box Forecasts, a newsletter he founded that originally was geared to professional option traders. Barron’s once labeled him an “intrepid trader” in a headline that alluded to his key role in solving a notorious pill-tampering case. He received a $200,000 reward when a conviction resulted, and the story was retold on TV’s FBI: The Untold Story. His professional background includes 12 years as a market maker in the pits of the Pacific Coast Exchange, three as an investigator with renowned San Francisco private eye Hal Lipset, seven as a reporter and newspaper editor, three as a columnist for the Sunday San Francisco Examiner, and two decades as a contributor to publications ranging from Barron’s to The Antiquarian Bookman to Fleet Street Letter and Utne Reader.

The hallmark of a bull market in its final throes is hellish swoons-out-of-nowhere that are quickly recouped. Let’s see if DaBoyz play it by the book this time. They pulled the rug out from under the FAGMA stocks on Friday — Facebook, Apple, Google, Microsoft and Amazon — sending them down between 2.2% and 4% in a matter of hours. Remarkably, the broad averages still managed to close at record highs, a brazen display that hints at the way the divergence will be resolved. Even so, our most important stock market bellwether, AMZN, may struggle for perhaps 2-3 days before bears let their guard down again so that stocks can be short-squeezed to new record highs for the umpteenth time. I still have a $1083 target outstanding for the stock, which topped last week almost exactly at a lesser Hidden Pivot resistance I’d noted at 1018 before rolling over. Friday’s weakness was easy to foresee; indeed, the last two headlines here atop The Morning Line were High Flyers Show Fatigue and The Yellow Flag Is Out. If AMZN turns around and makes a new record high as soon as Tuesday, a day earlier than ‘scheduled,’ bears had better scramble for cover, since the stock will be on its way to 1083, presumably dragging the entire stock market higher in its prop wash. All of this doesn’t negate the fact that AMZN’s most recent top occurred in a dangerous place — i.e., at the ‘secondary Hidden Pivot’ of a fairly important ABC pattern. According to the informal chat-room rule of ‘Matt’s Curse,’ this could prove fatal for the stock, telegraphing a drop to below the 884.49 point ‘C’ of the bullish pattern shown (see inset). We’ll let AMZN tell us what’s on its fevered mind, so stay close to the chat room if you want ringside commentary.

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June 12th, 2017

Posted In: Rick's Picks

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