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Global Middle Class Glimmers in Distance

by Rick Ackerman on September 8, 2009 2:53 am GMT · 8 comments

Recently, I told the story here of Louis Piro, a Mountain View barber who made millions by plowing every dollar he could save into the shares of growing companies that paid generous dividends. Following is another uncharacteristically bullish column that I wrote for the Sunday San Francisco Examiner around that time, in the late 1990s. It ran under the headline “New Global Middle Class Fuels Stocks,” and its thesis is that U.S. multinationals stood to benefit hugely from the rapid rise of an Asian middle class.

This scenario was delayed by the collapse of the Thai baht in 1997 and the severe Pacific Rim recession that followed. It now looks like it will be delayed even longer by a looming :

Second Great Depression in the U.S.  You can judge for yourself whether such optimism is still warranted

Petronas-small3

U.S. stocks have been in a scorching, vertical climb for months, confounding the bears and effortlessly vaulting the immediate expectations of the most ardent bulls. What factors might account for this powerful rally? Could there be forces at work besides the steady » Read the full article


TODAY'S ACTION for Tuesday

Night Baseball

by Rick Ackerman on September 8, 2009 4:26 am GMT

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Rick's Picks for Tuesday
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All Picks By Issue:

ESU09 – E-Mini S&P (Last:1019.25)

by Rick Ackerman on September 8, 2009 3:34 am GMT

The futures are off a couple of points Monday evening, but they’ve already divulged buying interest by trading a full point above the 1022.00 midpoint resistance show in the chart. If they should break decisively above it on Tuesday, that would signal upside potential over the near term to as high as 1053.00 – equivalent to a 250-point rally in the Dow.

GCZ09 – Comex December Gold (Last:998.00)

by Rick Ackerman on September 8, 2009 3:58 am GMT

With the G-20 meeting coming up in Pittsburgh at month’s end, a breakout by gold above $1000 right now would be about as welcome as an elephant stampede at a garden party. It should therefore be an interesting month, assuming the central-bank conspiracy to suppress gold prices is operating at full strength in the weeks ahead.  I’ll stick with the 1074.50 minimum upside target nonetheless, but I’m making no guarantees above that Hidden Pivot.

DXY – NYBOT Dollar Index (Last:77.99)

by Rick Ackerman on September 8, 2009 4:09 am GMT

Considering that the Dollar Index broke down decisively in early August by smashing the watershed low at 77.69 recorded nearly nine months earlier, the action recently has been pretty copacetic. It suggests that the dollar is being easily supported at these levels, but only because there are no sellers bold enough to challenge the central banks’ resolve. If and when that happens — signaled, perforce, by a two-day close beneath 77.54 – the futures will be on their way down to at least 75.57, the nearest Hidden Pivot of significance on the daily chart.  Otherwise, it’ll take a pop to 89.90 to turn this chart bullish for the first time since last February.

DIA – Diamonds (Last:94.50)

by Rick Ackerman on September 8, 2009 4:14 am GMT

We took a small speculative position on Friday’s close, buying four September 93 puts (DAVUO)  for 0.86 apiece. I’ll recommend closing them out at-the-market if the Diamonds are trading 94.60 or higher an hour into the session. Otherwise, you can offer two to close for 1.16, day order. _______ UPDATE (11:22 a.m.):  The post-Labor Day surprise we’d anticipated was not to be, so we exited our puts for 0.63, realizing a trading loss of $92 on the position.  The fact that the market passed up a perfect chance to  catch investors with their pants down and is headed higher on the first day of the new season suggests that it will continue in bullish mode for a while, at least.  If we are to look now for an ”October Surprise,” the trick will be to determine which would be the more surprising: a melt-up or a melt-down?

$+PCLN – Priceline (Last:1238.98)

by Rick Ackerman on July 24, 2014 12:54 am GMT

A subscriber reported success yesterday legging into the 1340/50/60 August 16 call butterfly that I’d advised. He did so 32 times at no cost, as suggested, but it took a $10 move in the stock between legs to get filled so advantageously. His maximum profit would be $32,000  with the stock trading at 1350 come August 16.  Since he owns the position without cost, no loss is possible, even if PCLN should all to zero or rally to $1000. We’ll do nothing further for now, but I’d suggest that those of you who were unsuccessful keep trying.  We’ll shoot for a partial profit if the stock rallies $40-$50 in the next few weeks, but otherwise we’ll doing nothing further. I’ve reproduced a chart that shows why our expectation of a $120 rally from current levels, to a 1358.18 Hidden Pivot target, is not exactly farfetched.  Toward that end, a pop above the 1270.59 midpoint pivot would be most encouraging.

$+ESU14 – Sep E-Mini S&P (Last:1981.00)

by Rick Ackerman on July 24, 2014 12:29 am GMT

I’m tracking a single contract short from 1982.50, based on the following post by me in the chat room at 1:45 p.m. EDT: “Aw, screw it. Just for the hell of it, let’s offer a single contract short at 1982.50, stop 1985.25, risking a theoretical $137.50 plus commissions. I’d hate myself if we actually missed a great short up here.”  Actually, it looked like we had missed the short, since I’d suggested initiating it at a longstanding Hidden Pivot target at 1984.25 that was missed by three ticks when this vehicle topped for the day at 1983.50 in the first hour.

The futures subsequently crept back up to 1982.75 later in the session, and it was then that I advised getting short for the hell of it. We remained short at the bell, but anyone who did the trade is advised to monitor it overnight, and to use the 1985.25 stop-loss suggested. That implies that were are risking a theoretical 2.75 points to stay in the trade.  If we use the fixed risk:reward of 1:3 that I always advise, we need a move our way of at least 8.25 points, to 1974.25, before we implement a trailing stop. (Had we initiated the trade with multiple contracts, we would take a partial profit there on half the position.)  I may suggest an impulse leg-based stop-loss if ESU falls straightaway to 1974.25, so stay tuned to the chat room if you’re unclear on how to do this. It is my intention to come out of this trade with at least a small profit even if ESU blows higher, as is likely. That will be possible if we get the pullback to 1974.25, since a 1981.25 stop-loss would become automatic at that point, subject to the substitution of a trailing stop. Meanwhile, I’ve reproduced an hourly chart (see inset) that shows the sinewy perfection of the pattern we’ve used to get short just beneath its 1984.25 Hidden Pivot.

$TLT – Lehman Bond ETF (Last:115.18)

by Rick Ackerman on July 23, 2014 5:36 am GMT

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$EURUSD – Euro/USD (Last:1.34647)

by Rick Ackerman on July 23, 2014 12:01 am GMT

I haven’t tracked currencies that closely, but because they tend to move very precisely to Hidden Pivot targets, traders should consider exploiting them whenever possible. Notice how EUR/USD has broken beneath a midpoint Hidden Pivot at 1.34841 after noodling around near that pivot for a few hours on Thursday. This suggests that it is bound for D=1.34197, at least.  You can bottom-fish there with a stop-loss as tight as 3-4 ticks.  Notice as well that there are two slightly higher possibilities for point ‘A’.  The correction targets they yield lie, respectively, at 1.34114 and, worst case, 1.33992.  I expect these numbers to work very precisely, so use them in whatever way suits you best.  Note as well that a last-gasp rally to p=1.34738 after EUR/USD has fallen a bit would be short-able.

$GCQ14 – August Gold (Last:1311.60)

by Rick Ackerman on July 22, 2014 1:29 am GMT

The futures looked like they could go either way as Monday’s session drew to a close. However, the stall within 0.70 of the 1318.30 midpoint resistance I’d flagged implies that a decisive move past it would reach its D-target sibling at 1331.60. Alternatively, my worst-case target for the near term would be the 1278.20 Hidden Pivot support in the lower-right quadrant of the chart — or possibly even 1271.70 if any lower.  The accuracy of this target would be affirmed by a bounce, possibly tradable, from within two or three ticks of the 1302.00 midpoint support. ________ UPDATE (9:57 a.m. EDT):  Gold has bounced $14 this morning from a low just two ticks (0.20) from the 1302.00 midpoint pivot flagged above. Now, if the futures breach the support, we’ll know EXACTLY where they are headed. _______ UPDATE (July 23, 12:01 a.m.): Someone in the chat room said that because everyone seems to be bearish on gold right now, perhaps we should take the other side of the bet.  I’m a bit bearish myself, and thus this response: “Rather than take chances and let gold disappoint us for the zillionth time, we should simply stipulate that the August contract close above 1318.90 before we get excited. That’s the midpoint resistance, on the 180-minute chart, of a=1292.60 on 7/15; b= 1325.90 on 7/27; and c=13-02.20 on 7/22. At that point, I’d lay even odds of a move to at least 1335.50; above 1337.00, the futures would be a good bet to hit 1381.40.  Whatever happens, bulls will have to prove their case. _______ UPDATE (July 24, 1:20 a.m.):  Sellers paused for a relatively blissful nine hours yesterday just inches above the 1302.00 ‘hidden’ support I’d flagged, presumably to sniff the flowers before going back on the attack.

$SLW – Silver Wheaton (Last:26.43)

by Rick Ackerman on July 17, 2014 12:05 am GMT

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$NFLX – Netflix (Last:452.00)

by Rick Ackerman on July 9, 2014 3:25 am GMT

Netflix’s so-far $37 selloff has followed a peak last week at 475.87 that slightly overshot a Hidden Pivot at 474.50 I’d characterized as ‘a big-picture target where an important top is even more likely.’ A chat-roomer who evidently took this prediction to heart reported buying puts last Thursday for 1.24 that he cashed out for 8.90 yesterday. This could be just the start of NFLX’s comeuppance for all those who inflated this gas-bag to undeserved heights. If you took a position and are still holding it, please let me know in the chat room and I will update guidance. For now, though, let me suggest that you take profits on half of any short position entered near the recent top. _______ UPDATE (July 10, 10:23 p.m.): Bears failed to achieve a Hidden Pivot target yesterday, presumably because DaBoyz shook the stock down so hard on the opening bar that it exhausted sellers prematurely. The missed target suggests that traders will enjoy decent odds bottom-fishing the midpoint pivot shown at 433.62 (see inset, a new chart) with a stop-loss as tight as 8 cents. If it’s hit, expect the selling to continue down to at least 423.05, a Hidden Pivot that can be bottom-fished with as tight a stop-loss as you can abide. _______ UPDATE (July 14, 11:07 p.m. EDT): A turn from 428.20, precisely between the two pivots flagged above, left our bid high and  dry.  The bull leg that has followed could be the start of a rally cycle with the potential to reach 486.86. First, though, let’s see whether buyers can tackle a midpoint pivot at 457.53 that is associated with the target. _______ UPDATE (July 16 at 6:47 p.m.): Let’s not overlook the downside — specifically, the 433.69 midpoint pivot and its D sibling at 411.67.  Bears can short the break for a move to either, and both can be bottom-fished with the tight stop-loss you can abide. ______ UPDATE (July 22, 12:15 a.m.): The stock turned higher from $2 above the midpoint support, implying that bulls are about to dominate once again.  Call prices are on the moon, however — way too expensive for a straight directional bet. Instead, I’ll suggest buying the August 2 – July 25 calendar spread eight times for 1.50, day order, contingent on the stock trading 451.00 or higher. Please report any fills in the chat room. _______ UPDATE (July 22, 12:05 p.m.):  With today’s huge air pocket, the stock obviously remains in the grip of DaBoyz. My assumption will always be that steep declines in NFLX are brazen shakeouts, engineered by strong hands to steal stock at fire-sale prices from weak hands. In this instance, the downdraft appears likely to hit 413.00 before DaBoyz run it up again. If and when that number is hit, you can bottom-fish there with the tightest stop-loss imaginable. (Note: I’ve revised the target downward by 0.96 since the original update. Also 435.25 is the midpoint pivot and therefore worth a tightly stopped short on a rally to it.)


SIDE BETS for Tuesday

UNG – U.S. Natural Gas Fund (Last: 9.59)

by Rick Ackerman on September 8, 2009 4:20 am GMT

Look at Friday’s rally on a daily chart before you get too excited.  This glue horse would need to print 10.76 today to give bears reason to be nervous. Upside potential for the moment looks to be only 9.74, but bulls would get a recharge if they can push that Hidden pivot resistance aside.


This Just In... for Tuesday

The One Trading Myth You Should Know…

by Rick Ackerman on September 8, 2009 8:45 pm GMT

From one Brian Heyliger, editor of Market Trigger Alert, I received a promotional letter — “The One Myth About Trading You Should Know” — that deserves to be widely shared. It offers some very useful tips on how to get your mind right for trading regardless of what system you use :

I want to tell you something about trading you won’t hear often…

Trading has nothing to do with indicators and everything to do with you.

Let me explain…

The easiest things to learn are indicators and setups, but they have nothing to do with trading. You can memorize them, you can buy them, you can even program your computer to alert you when they occur. But the Achilles Heel of trading is this: YOU!

There are numerous sites and gurus touting their products as the “Holy Grail” of making money in the markets. “Just buy my trading system and you’ll make a million.” Well, that’s not actually true, because winning, stand-alone trading system won’t work if you are broken…

To trade a system successfully – whether it’s something you’ve purchased or developed yourself – you need to have the correct mindset.

The Paradox of 
’Holy Grail’ Systems

This may surprise you, but you can learn a perfectly good trading system, trade it, and lose money, while someone else trading the very same system makes a fortune.

The only difference is between the winner the loser is the person trading – that’s it! The traders who lose simply aren’t following the rules of the trading system they designed (or purchased), unlike the winners.

The key to making a system work is developing the discipline to follow the instructions. This is the hardest part about trading. Let’s illustrate this with an example …

You just lost $1,000 on the last trade and you’re unhappy. That loss is bothering you and you’ve begun to doubt yourself (and the system you’re using). Is the system really effective any more? Have the market conditions changed so this system no longer works? Do I need a new system? These and other thoughts will be running through your mind just as…

Your system tells you it’s time to buy. Guess what — losing traders won’t buy! Their emotions are so drained from losing $1,000, they just don’t have the emotional capital left to enter the next trade – which very well might be a big winner.

The winning traders remain confident even after a loss. They only doubts are to evaluate whether or not they truly followed the system during that loss, and (if not) how they must be more disciplined to ensure more accurate – and profitable – trading. If they did follow the system and lost, they chalk it up to ‘the law of averages’ and look forward to the next trade which has a high probability of being a winner.

You see, a winning trading system is a profit generating business. The more business you can do, the more profit you can generate. Sure, you have some ‘overhead’ (i.e. losses) but in a profit generating business the more ‘customers’ (i.e. valid trade signals) the better.

Three Rules For 
Better Trading

Here are few things you can do to help you manage your trades better, and not succumb to the emotional drain that will keep you from taking the next trade:

Don’t look at daily profits, look at them over time. Who cares if you lose $1,000 today, you could make $2,000 tomorrow. That’s still $500 a day over the two days!
Plan for losses. They will come, but know they’re only temporary.
Plan your trades and trade your plan. This is the most important part of trading. If you start the day with a plan, but don’t follow it, you might as well throw darts at the Wall Street Journal.

When trading a system, constantly remind yourself you’re playing the odds. That means you’re going to lose some days, but if the system you’re trading is profitable, you’ll win more often than you lose and make a killing along the way.

A Cautionary Note

That said, there are a lot of systems out there that just plain don’t work.

And I’ll tell you, the majority of them don’t. I know because I’ve tried them.

So here’s the pattern: find a system that seems to work, backtest it, and become comfortable that it actually does work before you put a single dollar on the table. If you want to study one thing about a system, study the losers, not the winners. Then everything else will fall into place.

I have a system I’ve designed specifically for this purpose – to help new traders make it to six-figure status very quickly. It’s designed to make you the most amount of money and offer the smallest learning curve of any trading system out there. The rules are very black and white, and very easy to learn.


Hidden Pivot Webinar & Tutorials
The Hidden Pivot Webinar is two-day event is designed to teach you the risk-averse trading strategies Rick has taken to his seminars around the world. Once you have learned his proprietary secrets, you will approach trading and investing with enough confidence to make your own decisions without having to rely on the advice of others. The next Webinar will take place on August 13-14, 2014. For more information, or to register, click here.