May 2009

I reported briefly on Bob Hoye’s address to the Committee for Monetary Research and Education (CMRE) two weeks ago in New York City.  Here is the full text – “Great Depressions Are So Methodical” -- distributed to Rick’s Picks subscriber’s with Bob’s kind permission.  RA

I've added some new features over the weekend: You can now access a list of Open Positions as well as specific issues for which there is Actionable Advice.  Thumbnail charts are now bigger in their expanded version, and you can also call up historical touts for any stock, index or futures contract that has appeared in Rick's Picks by using the "Select an issue" pulldown.  There are still a few bugs to work out, so my apologies in advance for any inconvenience this may cause.

We hold two June 43 calls with a cost basis of 1.75.  Since there are  no longer any front-month expirations that we can short against our position, let's try to spread off the time-decay risk by offering two June 45 calls for 1.20, good-till-canceled.  Upside potential over the near term is to as high as 43.92 My apologies for letting this position slip through the cracks, since we could have further reduced our risk by shorting some May 43 calls.  The addition over the weekend of an Open Positions/Actionable Advice listing for Rick's Picks should help you and me both keep track of recommendations. _______ UPDATE (3:19 p.m.):  The short sale was completed today at the suggested price, 1.20 --  a nickel off the intraday high. We now own the June 43-45 call spread for a 55-cent debit.  Since it has the potential to go to a $2.00 credit, our risk:reward ratio is now properly adjusted and quite attractive.

So far so, good, since the forecast seems not only to have caught the last gasp of the downtrend, but a potentially important low.  The low overshot the 80.04 forecast by 0.23, but that's not very significant when you consider the magnitude of the dollar's swings this year as well as the immediate potential for a major bullish turn. We'll be better able to judge the strength of this uptrend if and when it encounters a Hidden Pivot resistance at 80.48 That's my minimum upside target for the moment.

We hold four September 10 calls with a cost basis of 0.69. Wheaton is in a minor downtrend that could hit 8.96, but the larger trends all point higher. Continue to offer four June 10 calls short against our position for 0.70. _______ UPDATE (3:44 p.m.):  This one's getting very close to a fill, so be sure to have your offer in when stocks open Friday (May 29) morning. If the order doesn't fill in the first three minutes, lower the offer to 0.60.

If Gold is setting up for a big thrust, it shouldn't have to correct any further before taking on the 970.00 peak recorded on March 20. That means no prints below 952.80 today, since that would insert a b-c correction into the impulse leg begun from 915.20 on May 18. The impulse leg as it exists so far is fairly strong and should be able to push the June contract to $1000, but it is what happens after that that is our main concern.

Selling Sunday night was conspicuously gutless, suggesting DaBoyz were accumulating contracts in anticipation of taking them higher on Tuesday.  They've been playing this game for the last three sessions without much success, but the long weekend may have provided that extra dollop of nervousness they will need to get a short-squeeze going.  Night owls can try bottom-fishing at 883.00, a minor midpoint support, but if it gives way, expect more weakness down to at least 880.50 This is little stuff, but that is where our focus should be if we want to try to get aboard near a bottom with relatively little risk.  Alternatively, if the futures move higher without first dipping below 882.50, look for a rally to at least 893.25 a Hidden Pivot.

America paid tribute to its war veterans over the weekend with ceremonies, concerts and solemn gatherings across the nation. Washington D.C. was the scene of a particularly stirring tribute, the twentieth annual PBS National Memorial Day Concert held outside the Capitol rotunda.  Many in the audience were moved to tears by the incredible story of one veteran, Jose Pequeño, a New Hampshire National Guardsman and former Marine who was critically injured by a grenade tossed into his Humvee in Iraq.  The driver was killed, and Pequeño, brought to the hospital with a traumatic brain injury, was not expected to live. But he did, miraculously, and with the loving and dedicated care of his mother and sister, he began a years-long recuperation that has included 17 surgeries and a sometimes excruciating regimen of physical therapy. Initially, doctors predicted that Pequeño, who lost two lobes of his brain in the attack, would live out his life as a vegetable. But he astounded medical opinion and his family by uttering the single word, "Mom!" when his mother caressed him during an early bedside visit. We Must All Pitch In Actresses Diane Wiest and Katie Holmes told the dramatic story of Pequeño's long and difficult road back, and of how his mother and sister had dedicated their lives to his care. This is a responsibility in which all Americans can share, another speaker, Colin Powell, told the audience. The former Secretary of State and four-star general urged viewers and those in attendance to reach out to neighbors with sons or  daughters who require special care because of injuries sustained in war. The government cannot give caregivers all of the assistance they need, said Powell - "they need more help from people like us." The PBS show was one of the most moving and memorable

Gloomy forecasts have generally held sway at the Committee for Monetary Research and Education’s annual spring dinner, but this is the only time we can recall when there were no optimists on the dais bold enough to challenge a consensus now gloomier, probably, than at any time since the 1930s. Jim Grant’s off-the-cuff talk was about as sunny as the evening’s presentations got, and even he was unwilling to allow much more than a ray of hope that everything would somehow turn out all right. Bob Hoye, on the other hand, was unequivocally bearish:  “The chances of anyone fixing this mess,” he told the crowd, “are literally zero.” But the scariest talk of the night came from Bill Beach, director of the Heritage Foundation’s Center for Data Analysis.  If you find today’s economic news too depressing to imbibe, he said, “things are even darker than they seem.” Read the Rest of the Article | Comments *** The bear rally that wouldn’t die frolicked once again yesterday, leaving shorts badly bloodied and hanging from the ropes. The Dow Industrials, for one, opened sharply higher on a 100-point gap, then just kept going with only tepid pullbacks along the way.  The buying spree had been telegraphed the night before when the E-mini index futures appeared to struggle to reach a minor pullback target off Friday’s highs.  Because of this, around 1 a.m. Monday, with the June E-Mini S&Ps trading around 878, we warned subscribers with short positions to brace for more insanity: “Bears would be wise to run for the hills if the futures pop above 897.00 today,” we advised, “since that would turn the hourly chart unambiguously bullish. A subtler bullish signal would occur on the 15-minute chart at 885.00.”  Not long afterward, both of these Hidden Pivots gave way, overpowered by short-covering