We assume that each hysterical rally is just another doomed short squeeze, since it’s hard to imagine anyone, even Larry Kudlow, buying stocks at these levels because they represent good value. Yesterday’s wilding spree racked up 630 Dow points by mid-morning, measured from the low recorded Sunday night by the electronic futures contract. Sounds pretty impressive, huh? But as we noted in a bulletin posted midway into yesterday’s session, the rally screamed “fraud” at the top, having failed to create a Hidden Pivot impulse leg on any charts above 15-minute degree. Incidentally, if you’ve never seen what the paid-subscriber page at Rick’s Picks looks like, updates and all, click here for a look at yesterday’s scandal sheet. We modify our targets on-the-fly, sometimes with input from the chat room, where technicians and traders from all over the world hang out more or less round-the-clock. Subscribe to our free, daily e-mail commentary by clicking here. (Click on chart to enlarge) Yesterday’s commentary explained why an abjectly worthless dollar has been rising steeply in comparison to every major currency except the even more steeply rising yen. The reason is simple enough: All who owe dollars are being forced to settle up in cash, since it’s gotten much harder to keep rolling the loans. The result is a global short-squeeze on the dollar, and although this should be obvious to anyone who understands how markets work, the concept is not exactly sound bite material for the evening news. However, we are encouraged to think the truth will out nonetheless, since the newsletter world is starting to pick up on it -- most recently, Clive Maund, who writes on gold, silver and oil shares; and Bill Buckler, editor of the Australia-based Privateer. The latter, now squarely in the deflationist camp, explains the dollar’s strength
Tuesday, October 28, 2008
December Gold (733.50)
– Posted in: Current Touts Free Rick's PicksEven though the futures closed beneath a hidden midpoint resistance at 741.70 yesterday, their initial move through it was so effortless as to suggest that buyers will be back today with gusto. If so, there's immediate upside potential to as high as 776.40, a Hidden Pivot. However, it would take a little bit more than that -- specifically, a print at 782.30 -- to rout sellers this week.
Silver December Silver (9.135)
– Posted in: Current Touts Free Rick's PicksWe set a bullish benchmark for December Silver at 10.325 last week, but the futures are not exactly rising to the challenge -- at least not so far. Even so, one could attempt to get long using a 9.550 buy-stop limit, since a print at that price would create a bullish impulse leg without exceeding a more obvious peak at 9.620 made on the way down last Friday. Alternatively, if the futures go into a dive, plan on bidding aggressively at 8.300, a Hidden Pivot support that looks good for a tradable bounce. _______ UPDATE: The futures, coy as ever, swooned to take their tradable bounce from 8.400, a dime above our bid. Cancel it for now.
QQQQ Nasdaq 100 Trust (31.70)
– Posted in: Current Touts Free Rick's PicksI still like the Hidden Pivot down at 26.75 as a place to try bottom-fishing, but because it lies a potentially hellish 7% below these levels, I cannot offer it as a Pick of the Day, at least not yet. However, if the Cubes should close within 0.30 or so points of it, I'll provide detailed advice on how to get long with relatively little risk on an opportune swoon. I've included a chart that shows how the target was derived. A crucial factor in favor of this pattern is that point 'B' surpassed the prior low, 29.38. _______ UPDATE: Our bid languished, well below the insane heights achieved by the Cubes yesterday. Cancel the order.
November Crude (70.58)
– Posted in: Current Touts Free Rick's PicksNovember Crude's next dive looks it will find traction at 67.99, a Hidden Pivot midpoint. But if the futures should close beneath that number for two consecutive days, look out below, since it would indicate further slippage is likely to as low as 59.86.
C Citigroup (11.72)
– Posted in: Current Touts Free Rick's PicksCiti, our favorite stock in the Walking Dead category, has slipped beneath a decade low at $12 with nary a bounce. This suggests that the stock's beleaguered institutional sponsors may have opted to dig in their heels at a lower level. Even though they know nothing of Hidden Pivots, we're betting they will step in at exactly 10.16, our projected low for the near term. Accordingly, you should plan on buying December 10 calls (CLB) for about 1.64 if and when the stock gets there. I've included a snapshot of an option calculator that shows how I arrived at a fair price for the calls. The 100 volatility I've plugged in is a little lower than current implieds as indicated by TradeStation. _______ UPDATE: Citi rallied sharply off an 11.54 low, mooting out bid, which should now be canceled.
