Friday, February 24               Published daily Receive a free trade each day
The Morning Line

Ready for a Housing ‘Surprise’?

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Genuinely meaningful economic data from mainstream news sources is as rare as a transparent pronouncement from the wizards and charlatans at the Fed. Friday will provide an exception, however, since very meaningful new-home-sales figures for January are slated for release. The consensus expects a strong rebound from December’s miserable 536,000 (annualized); a 7.5% increase to 576,000 is anticipated. This strikes me as just a tad optimistic, since home prices and mortgage rates have risen significantly in recent months. If I am right and the numbers elicit disappointment or even shock on Wall Street, just remember that those doing the estimating live to please masters who get paid princely sums for throwing Other People’s Money at stocks. Most of these geniuses couldn’t hold down CETA jobs if it were honest work that were required of them.

Rick's Picks for Friday
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$DIA – Dow Industrials ETF (Last:2.53)

EST

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$ESH17 – March E-Mini S&P (Last:2360.60)

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DXY – NYBOT Dollar Index (Last:101.18)

EST

I’ve included the Dollar Index in today’s list of touts not just because the U.S. dollar’s ups and downs affect the economic world more than any other trading vehicle, but also because the greenback is moved by market forces far bigger than the eggheads, navel-gazers and charlatans at the Fed could pretend to control. The long-term chart is unambiguously bullish, notwithstanding the stall since December. This interval of stagnation presumably is corrective, since the Nov/Dec peak exceeded a prior high at 102.15 recorded back in 2003.  That makes the rally itself, from last May’s 91.92 low to the recent high at 103.82, bullishly impulsive — an analytical distinction whose significance would not be lost on our Elliot-Wave colleagues. While I would not hazard a prediction about how long it will take for the dollar to consolidate in order to achieve the 113.40 target shown, when the move finally happens, as I very strongly expect it will, bullion prices, U.S. manufacturers’ overseas profit margins and all who owe dollars will come under renewed pressure.

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$AMZN – Amazon (Last:855.60)

EST

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$GLD – SPDR Gold Trust (Last:117.92)

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$+GCJ17 – April Gold (Last:1248.30)

EST

With Thursday’s balky rally, April Gold remains on track to hit the 1255.80 target shown. Traders who are not already on board can use a ‘camouflage’ or ‘counterintuitive’ entry trigger fashioned at the red line, but I wouldn’t advise a ‘mechanical’ one there because gold’s gratuitous swoons have been pretty nasty lately.  That said, you could still try a ‘mechanical’ entry at the green line (1227.10), stop 1217.40, although your bid would of course go unfilled if the futures simply head higher on Friday. If you’re unfamiliar with ‘camo’ and ‘CI’ entry tactics, stay tuned to the chat room discussion, since there are a number of Hidden Pivot Method experts (aka ‘Pivoteers’) who have been actively trading this vehicle. ______ UPDATE (Feb 20, 8:34 p.m. EST): The futures were weak on Friday, but that has not altered my trading guidance (see above). _______
UPDATE (Feb 21, 3:54 p.m.): The trade instruction detailed above worked perfectly when the futures swooned gratuitously this morning to an intraday low at 1226.80. That means anyone who followed my advice caught the $13.10 trampoline bounce that has so far ensued. In the chat room, with a post at 12:45 p.m., I further advised taking off half of the four-contract position with the futures trading near 1239.10. For purpose of providing tracking guidance in the days ahead, I will assume two contracts still held, with a cost basis of 1215.10. We’ll swing for the fences on this trade — meaning for at least 1255.80 — but you should still place an ‘impulsive’ stop-loss at 1225.00 for the time being. As is my practice, I am providing this guidance because several subscribers reported having done the trade in the chat room.  _______ UPDATE (Feb 23, 11:38 a.m.): The little sonofabitch is once again moving our way. Offer a third contract to close at 1254.80, but use a dynamic trailing stop once 1253.00 is reached. (Unfortunately, I missed the opportunity to suggest this ahead of this morning’s pop to 1252.20.) If the offer is filled we’ll have a theoretical profit on $8000 in the trade, with one contract left to truly swing for the fences. A decisive push PAST 1255.80 is needed to reconfirm the bullish trend.

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$+SIH17 – March Silver (Last:18.165)

EST

Expect swift progressThe gnarly rally pattern shown in the chart is a very good one that meets all of our criteria, meaning its 18.055 target has the potential to provide us with valuable intelligence if and when it’s hit. If the futures bulldoze their way past it on first contact, that would strongly imply that buyers have the moxie to shoot for the cluster of highs near $19 recorded on election night. Many bulls would have gotten badly trapped up there, and that’s why the specific level should be regarded as crucially important resistance.  There is not much supply between $18 and $19, so expect a relatively quick move through that range if and when the futures bust past 18.055.  _______ UPDATE (Feb 13, 10:29 p.m. EST):  No change. Please note that there is an open trade on The Scoreboard that is currently showing an $11,000 paper gain. The wide-stop-loss just added to the post is intended to let subscribers who still hold the position swing for the fences. _______ UPDATE (Feb 14, 7:11 p.m.): The peak of today’s gyrations hit 18.090, just a hair shy of an old target at 18.115. If buyers can push above it on Wednesday, bulls can take encouragement. _______ UPDATE (Feb 15, 9:14 p.m.): Bulls continued to lollygag just beneath the 18.115 target. The good news is that the so-far shallow retracement probably has the bad guys — i.e., short sellers — on the ropes. _______ UPDATE (Feb 16, 8:46 p.m.): Another day of lollygagging, although the futures finally touched 18.115 for the first time in this recovery cycle. _______ UPDATE (Feb 22, 10:40 p.m.): Zzzzzzzz. No change.  ________ UPDATE (Feb 23, 4:00): 18.320 is the highest target I can project for the rally begun just before Xmas. I will now recommend exiting the position — a single contract remains — at a current level of around 18.160. We may be leaving some money on the table — perhaps $800 — but with a chance to cash out of the position for a $12,600 profit, it’s time to take the money and run.

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$DJIA – Dow Industrial Average (Last:20624)

EST

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$JYH17 – March Yen (Last:0.88050)

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