Wednesday, February 23, 2011

A Glimpse of a Baby Bear?

– Posted in: Tutorials

Although we were minutes behind some excellent opportunitites to get short in the Mini-S&P and the Mini-Dow, their respective downtrends played out in ways that validated our bearish outlook in real time. The weakness in these vehicles represented an ostensible follow-through to the previous day’s sharp selloff, and so we were especially interested in determining whether the decline was strong enough to imply a resumption of the secular bear market. The jury is still out on that question, but there were nonetheless encouraging signs that this was the case.

DJIA – Dow Industrial Average (Last:12213)

– Posted in: Current Touts Rick's Picks

Yesterday's selloff needed to back up for another running start before it could achieve impulsiveness on the lowly 15-minute chart. What this implies is that the biggest single-day decline of 2011 may have been more bark than bite. We shall see, but sellers will need at the very least to extend the decline past the two "external" lows (numbers 4 and 5) highlighted in the chart if we are to take them seriously.  The worst that can happen if the usual maniacs take this market still higher is that we'll have another opportunity or two to short at great prices.

GCJ11 – April Gold (Last:1398.70)

– Posted in: Current Touts Free Rick's Picks

A pullback into the range 1374-1390 would set up a C-D thrust to as high as 1450.10 (see inset).  The move would be telegraphed by a booster-stage rally of 15 points beginning from anywhere between those two numbers. More immediately, minor corrective selling below a 1397.90 midpoint support implies more slippage to its 'd' sibling, 1388.80.  If the futures swoon to that number, you can bottom-fish with a stop-loss as tight as five ticks. Camouflage-seekers should look for the turn beginning from around 1389.60.

CLH11 – March Crude (Last:93.57)

– Posted in: Current Touts Free Rick's Picks

I've provided two precise Hidden Pivot targets at, respectively, 95.90 (100.17, basis the April contract) and 99.26 (107.01, basis April) where we might expect a tradable pause, but there is no reason to think that $100 crude represents more than a fleeting obstacle to a mounting geopolitical maelstrom that could push quotes $50 higher in mere hours.  Ponder the target shown in the inset and you'll see what an easy romp it will be to 110.90 (111.32, basis April).

Don’t turn your back…

– Posted in: Rick's Picks

Yeah, okay, so I'm smacking my lips because yesterday's selloff has come from a high that lay within 13 points of a major, major Hidden Pivot target. Even so, I've warned in today's E-Mini S&P tout not to turn our backs for even a minute, since the nastiest bear rally of them all may have yet a trick or two to play on anyone who thinks it will be easy to make money if the S&Ps are about to fall by half.

ESH11 – March E-Mini S&P (Last:1318.25)

– Posted in: Current Touts Rick's Picks

Putting aside the exhilarating possibility that the Mother of All Bear Rallies has finally breathed its last, we'll want to verify the progress of this selloff one delightful day at a time. For starters, it is a healthy sign (for  bears, that is) that the initial downthrust slightly exceeded a 1312.00 'd' target that comes from the five-minute chart (see inset). Also, because a decline that is impulsive on the hourly chart has begun from a high that narrowly failed to achieve a clear rally target, we should infer that the selling will continue, at least for a while.  That said, the 1356.00 rally target itself remains viable in theory, and we should never turn our backs on history's stupidest, if most pernicious, rally.  Our clue that bulls have may at least one more gasp left would come today on a print exceeding 1339.75, a look-to-the-left peak made Monday on the way down.

The Real Reasons Why Oil Rose and Stocks Fell

– Posted in: Commentary for the Week of March 8 Free

The news media went zero-for-two yesterday trying to explain on the one hand why stocks fell, and on the other why oil prices rose.  Stocks fell not because of fears over the spread of violence in the Middle East, as the pundits asserted, but because it was time for the Mother of All Bear Rallies, now almost two years old, to keel over and die.  As for the surge in oil prices, although it was blamed on turmoil in Libya, the country exports only a paltry 1.6 million barrels a day. Moreover, our good friends the Saudis promised to make up for any Libyan shortfall by increasing their own output.  Our guess is that oil prices are headed toward $100 a barrel, and then higher, because Saudi Arabian output itself is perceived to be less than absolutely secure.   It’s hard to imagine that the anti-government protestors who have rocked the Arab world will not eventually descend on the House of Saud. If so, what would the monarchy do if peaceful demonstrators ask them to step aside? It would be difficult enough for King Abdullah to put down a violent revolt with superior violence. But to refuse the demands of placard-waving thousands, who eventually would grow into placard-waving hundreds of thousands?  That would pose quite a dilemma, since the country’s rulers could hardly tell the crowds to go home, get a good night’s sleep and see how they felt in the morning. If and when the demonstrators’ elected representatives wrest power from their desert princes, it seems unlikely that a nominally democratic Saudi Arabia would be so favorably disposed as King Abdullah on the matter of selling practically limitless quantities of oil to the benefit of Great Satan.  A Laughable Explanation  Concerning the stock market’s decline on Tuesday, the biggest drop of 2011,