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September 4, 2020 | Is This the Start of the Big One?

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.

If there is reason for bears to be hopeful that Thursday’s savage selling was the start of the Big One, it is AAPL’s dramatic trend failure from slightly above a 135.96 target on the long-term chart. Using the Hidden Pivot Method, that was the last rally target that could be extrapolated from the weekly chart. The clear implication is that even if the stock is going to come roaring back, it will take at least two to three weeks for it to base.  Any less would be surprising, if not to say shocking, but we should not in any case underestimate the bold madness that has driven the rally since March 23.

I’ve tracked AAPL very closely on the theory that if you get institutional shareholders’ most passionately beloved stock right, you get the market right.  However, I am shifting my focus to the U.S. dollar, which is in a so-far modest bounce from very major trendline support. If the dollar is changing direction following a nasty slide since March, then every other trend in motion since then is about to reverse as well. That would imply the broad stock averages and the FAANGs will fall along with crude oil quotes and bond prices.  For now, though, although Thursday’s slide was quite painful for many investors, we should not assume them incapable of a vigorous resurgence.  Arguably, Thursday’s selloff was caused, not by myriad factors cited by the usual ‘experts,’ but by widespread certitude that seasonality would keep stocks moving higher at least until Labor Day. So much for that theory. But if the weakness is meaningful, we should see it start to snowball next week, setting up a September crash that would have a good chance of being one for the record books.

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September 4th, 2020

Posted In: Rick's Picks

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