April 24th, 2014
Published Daily
Topic of the Week

[Dr. Kurt Richebächer was one of the most visible and vocal proponents of Austrian School economics at the time of his death in 2007.  Eight years earlier, at the height of the dot-com bubble, we interviewed him for the Sunday San Francisco Examiner.  In retrospect, the economic problems that he believed threatened the global economy were small and relatively manageable back then. The same problems are of course still with us, and Richebächer undoubtedly would be appalled by the extent to which they have metastasized.

Although he spoke of a deflationary collapse in the interview, a close reading of his monthly newsletter from 1997-2002 reveals that he was conflicted on the subject. He used the word “deflation” only rarely during that period, and when he did, his logic became uncharacteristically muddy. Perhaps this is because, in the Austrian scheme of things, spectacular credit blowouts are not supposed to beget deflation, but rather, inflation. Arguably, if he were around today, he would still be uncertain as to which is likely to prevail when the economy finally collapses, as it must.  The interview below appeared in November 1999 under the flippant headline -- not my work, for sure -- “Economic Basics Predict Apocalypse”.  RA]

The dismal science will never be the same if Dr. Kurt Richebächer’s dire predictions for the global economy should come to pass. The former chief economist and managing partner at Germany’s Dresdner Bank says a deflationary collapse lies ahead that will ravage the world’s bourses and usher in a dark period of austerity and financial discipline.

Probably not one economist in 50 shares his views, at least not publicly. Richebächer, now living in France, says many of his American colleagues have been seduced into ignorance and complicity by Wall Street’s billions as well as by their love affair with mathematical models that shun fundamental laws of economics. Where they see a New Era of productivity growth and industrial efficiency, he sees duplicitous bookkeeping and manufacturing’s steep decline. They talk of a booming U.S. economy; he sees a profitless mirage. They worship capitalism’s bold risk-takers; he scorns them for recklessly piling leverage to the sky. Someone’s going to be wrong, but judge for yourself who. » Read the full article

TODAY'S ACTION for Wednesday

Sweetening the tedium

by Rick Ackerman on June 8, 2011 8:09 am GMT

More tedium was the prediction for bullion here a couple of days ago, and it seems to be coming true. Thrill-seekers might want to take a look at today’s tout for July Sugar, which, as a chat room denizen noted, appears to be taking off for a seasonal flight-of-fancy.

Rick's Picks for Wednesday
$ = Actionable Advice + = Open Position
Hidden Pivot Calculator   Education Page
All Picks By Issue:

June E-mini S&P (ESM11) price chart with targetsIt’s understandable if you’ve lost interest in the downside targets I gave here earlier at, respectively, 1273.50 and 1276.50, since I’ve practically lost interest myself. Getting there has been pure tedium, a downtrend punctuated each day by either a Whoopee Cushion rally or numerous feints higher.  Alas, there’s also an excess of enticing Hidden Pivot targets to bottom-fish at the moment.  One that I especially like that is perhaps best suited for Tuesday night owls lies at 1274.75, and it can be bid with a 1.00-point stop-loss.  At the time this recommendation was published, the futures had exceeded by a single tick the 1281.25 midpoint associated with that number.  Accordingly, you should be alert for a possible bounce that could be traded bullishly via camouflage on the three-minute chart.  If there is no rally, or not much of one, that would affirm the outlook for more slippage to as low as 1269.75.

Incidentally, if you don’t subscribe to Rick’s Picks but would like to know more about the proprietary camouflage trading technique that we use to keep entry risk to a bare minimum, click here for information about the Hidden Pivot Webinar in late June.  You could also take a free week’s trial subscription that will give you access not only to detailed trading recommendations each day, but to a 24/7 chat room that draws experienced traders from all over the world. ______ UPDATE (10:02 a.m. EDT):  The 1276.50 pivot we’d grown so bored with caught the overnight low within a single tick, so officially we did nothing.  As a practical matter, a camouflage long entry from the 6:48 a.m. (EDT) bottom would have been difficult to justify, even on the 3-minute chart.

SLW – Silver Wheaton (Last:33.70)

by Rick Ackerman on June 8, 2011 4:59 am GMT

Silver Wheaton (SLW) price chart with targetsThe stock is sitting at a precipice, since yesterday’s close was on a major trendline (see inset). The support is so obvious that we should be alert to a possible false breakdown that could afford us a bottom-fishing opportunity.  The nearest Hidden Pivot support lies at 31.91 (A=37.72 on May 10, daily chart), so that’s where it should be attempted.  Camouflaged entry is preferred, but if you don’t want to bother, or if you don’t know how, bid 31.93, stop 31.86, for 400 shares. Please note that if Wheaton should really fall apart it could fall all the way to 26.77, the ‘D’ target of a pattern shown in the chart.  We continue to hold 300 shares @ 42.01 against three June 40 puts with a 4.00 basis, but option expiration will soon put it out of its misery.

GCQ11 – August Gold (Last:1539.90)

by Rick Ackerman on June 8, 2011 5:15 am GMT

August Gold (GCQ11) price chart with targetsA dip below 1536.30 would cede control to bears for the near term, sending the futures down to a likely test of support at 1531.10, a Hidden Pivot whose provenance is shown in the chart.  The one-off ‘A’ is so seductive here that I have ignored the fact that the point ‘B’ of the pattern is pure ’sausage’ (having failed to breach the 1536.30 low).  Accordingly, I’ll recommend bottom-fishing  at 1531.10 with a 1531.30 bid, stop 1530.70. ______ UPDATE (9:54 a.m. EDT): The futures fell $12 overnight to a low that was 0.70 points shy of our target, so officially we did nothing.  The subsequent $13 upthrust has taken the trade out-of-range, so cancel it.

SIN11 – July Silver (Last:36.720)

by Rick Ackerman on June 8, 2011 7:06 am GMT

July Silver (SIN11) price chart with targetsThe high of yesterday’s gratuitous thrust didn’t even come close to the 37.890 peak whose breach would have signaled a bullish resurgence, but it remains valid nonetheless as a trigger point to watch if you’re keen on buying a breakout. Meanwhile, in trading early Wednesday morning (EDT), a Hidden Pivot support at 36.770 resisted sellers for all of a half-hour, hinting of further slippage over the near-term to at least 36.290, its ‘d’ sibling. You can bottom-fish there with a stop-loss as tight as four ticks, but the appeal of this gambit will diminish as the night wears on and the c-d leg becomes increasingly labored. ______ UPDATE (10:18 a.m. EDT):  The futures took a 30-cent bounce overnight from 36.250, so if you used the four-tick stop-loss advised, you would have missed the tradable low by a tick, with a resulting, modest loss of $100.  The futures have subsequently surged anew, but the recovery high at 36.820 is nowheresville relative to the tedious range of the last five days.

SBN11 – July Sugar (Last:24.37)

by Rick Ackerman on June 8, 2011 7:48 am GMT

July Sugar (SBN11) price chart with targetsA chat room denizen suggested taking a look at sugar — “a nice set-up, and the seasonal low is in” — and so we shall.  Price action since early May’s low does indeed look bullish, since successive upthrusts on the daily chart seem to have had little trouble impulsingv above previous peaks. Dropping down to the hourly chart, the most recent such surge projects to 24.55, a Hidden Pivot that lies just six cents above yesterday’s high.  An easy push past the number would hint of yet more bullish action to come, and as you can see, the hourly chart is loaded with “external” peaks  that can be easily leveraged by the adroit Pivoteer.

JYM11 – June Yen (Last:1.2487)

by Rick Ackerman on June 8, 2011 8:01 am GMT

June Yen (JYM11) price chart with targetsAll the king’s horses seem unable to suppress the yen, much to the detriment of Japan’s increasingly desperate exporters. The nearest Hidden Pivot resistance lies at 1.2657, representing a 1.3 percent rise from current levels. That number is shortable with a stop-loss as tight as five ticks, but if it gives way easily, that would portend an even weightier exchange-rate burden on the nation’s already severely depressed economy. _______ UDPATE:  For the September contract, 1.2633 is equivalent to the target given above. It too is shortable. _______ FURTHER UPDATE (June 27): Bor-ing. We’ll put this one aside for now, since it has become a tiresome distraction.

$AAPL – Apple Computer (Last:524.65)

by Rick Ackerman on April 24, 2014 7:46 am GMT

Although the 525.27 midpoint support of the pattern shown evinced no discernible support, the pattern itself offers an attractive bottom-fishing opportunity that experienced Pivoteers will appreciate (see inset).  Without going into detail, I’ll suggest simply that you acquire a bullish stake near 522.91 in whatever way suits your style.  In this case, ‘near’ 522.91 means within four cents, since this set-up looks like it will work that precisely.  Stop yourself out if the stock touches 522.82, and don’t pass up an opportunity to take a partial profit if the bounce expected from 522.91 hits 523.24.  Thereafter, you’ll be on your own. (Note: If you buy options at the predicted low, stick with calls priced under $2, and plan on holding them for no longer than an hour, since they will be melting away quickly because of time decay. Ideally, you should try to spread them off by shorting calls of a higher strike against them for at least as much as you paid.)  ______ UPDATE (10:19 a.m. ET):  Boy, did I ever pick the wrong day to try stealing a few shares of this stock on-the-cheap! Apple took a psychotic, short-squeeze leap on the opening bar to $569 (!), goosed by news of the following: 1) a $30 billion increase in its stock buy-back plan; 2) an 8% boost in its dividend; 3) and a 7:1 stock split. Those who bought into this morning’s effusion should be asking themselves, Why is Apple being so nice to me? My guess is that it’s because the company knows that in the months ahead, especially with wireless carriers weaning customers off phone subsidies, price competition is about to impact Apple’s bottom line more than before.  FYI, the rally projects to exactly 626.60, where p=560.59 on the weekly chart, and A=447.22 on 9/20.

$+CLM14 – June Crude (Last:101.91)

by Rick Ackerman on April 23, 2014 4:41 pm GMT

The midpoint pivot at 101.28 that I’d flagged yesterday in the chat room as a place to try bottom-fishing appears to have served subscribers well. Several subscribers have reported getting long at that price ahead of the so-far 88-cent rally that has ensued. This morning’s low never exceeded the pivot by more than eight cents, and the rally since could have produced a gain of as much as $800 per contract for anyone who was aboard.  Because of the fills that were reported, I’m going to establish a tracking position for your further guidance. Assuming four contracts were entered initially, you should take partial profits on half now if you haven’t done so already. For tracking purposes, I’ll assume an exit at 101.80, a dime below where the futures are currently trading.

I’ll further suggest using an impulse leg-based stop on the 30-minute chart. This implies that a swoon now to 101.19 would take one out of the position. The stop-out price will rise to 101.45 if the current bar’s low, 101.72, becomes a point C low (where A=101.46 at 9:00 a.m. ET). _______ UPDATE (10:40 a.m. ET):  A very nasty downdraft has erased most of the rally in a single bar on the 30-minute chart.  Stick to the 101.19 stop for now, but use a breakeven stop if you held only one contract. _______ UPDATE (April 24, 1:06 a.m.): There were four swings in excess of 70 cents yesterday — not quite violent enough to dislodge us from our position.  For tracking purposes I am assuming that two contracts remain, with a profit adjusted cost basis of 100.48.  Exit one of the contracts now for around 101.70 (or catch-as-catch-can when you wake up, assuming you slept on the position); then, use an impulse leg-based stop-loss on the hourly chart to create a stop-loss for the last contract.  At this moment, that would imply stopping yourself out on an uncorrected plunge exceeding Wednesday’s 101.20 low.  _______ UPDATE (1:33 p.m.): Profit taking has lowered the costs basis on the remaining contract to 99.26.  As of this moment, using an ‘impulsive’ stop based on the hourly chart, the stop-loss for the remaining contract (or 25% of the original position) lies at 101.39.

ESM14 – June E-Mini S&P (Last:1878.50)

by Rick Ackerman on April 23, 2014 3:24 am GMT

The leaps have been opportunistic, powered by short-covering whenever the mood is right. Most of the time these days, however, the futures are taking mincing steps in both directions, creating a challenging environment for profit-seekers in the middle hours of the day. One thing to notice, however, is that the rallies, particularly in this vehicle, and whether weak or powerful, seldom proceed from the first signaled entry point.  Instead, the ‘money trades’ launch from a second or third point-C lows of ABCD patterns, and they do it with such repetitious reliability that one can practically discard the first signaled entry opportunities routinely. This is the kind of price action we might expect when ‘everyone’ thinks that stocks will move higher on a given day. ‘Everyone’ can be right, but that doesn’t necessarily mean they can make money easily. For your interest today, I am including a chart that shows a modest rally target at 1895.00. I’m guessing it will be easier to get short there with a tight stop than to get long for the ride to it. However, because the futures will be in record territory at that point, we shouldn’t want to impede their progress too aggressively. _______ UPDATE (April 24, 12:50 a.m.):  With yesterday’s rally — nearly all of it achieved in a single, short-squeeze bar toward the end of the session — bears are now trapped between the all-time high and a lesser peak just below it. Their acute, growing discomfort will likely be tradable, but not by way of any specific guidance I am able to provide nine hours before the opening bell.  New record highs are coming, but for most traders, the process of getting there promises to be more pain than pleasure.

$PCLN – Priceline (Last:1230.18)

by Rick Ackerman on April 22, 2014 4:00 am GMT

 Member-only content. Please Login or get a free trial of Rick's Picks to view.

Since March 20, when GDXJ was trading for around $40, I have been looking for a potentially important low at 34.00.  More recently, I revised that target to exactly 33.76, a ‘Hidden Pivot support’. Yesterday it came within a single penny of nailing the exact low of a vicious swoon. The low may or may not prove to be the last gasp of a correction that has been in progress for the last five weeks, but it stood to be an opportune place to try bottom-fishing.  In that regard, quite a few subscribers reported getting aboard at or near the low, and so I’ve established a tracking position for their further guidance. It consists of 200 shares with a cost basis of 33.58. The price takes into account an initial purchase of 400 shares for 33.79, then the taking of a partial profit on half the position at 34.00.  The bounce so far has hit 34.90, meaning GDXJ has trampolined $1.14 cents since hitting my three-week-old target.  For now, traders should stop themselves out of the position if GDXJ breaches two prior lows on the 5-minute chart without an upward correction.  As of this moment, that would imply placing the stop at 34.37 (and remember: it must be exceeded by an unbroken, downtrending leg).  You should also offer a round lot (or half of the remaining position, whichever is greater) to close for 36.80, good-till-canceled. _______ UPDATE (11:38 p.m. ET): The herky-jerky spasms in the first 90 minutes altered our stop-loss so that it would have taken a 34.07 print to stop us out — 23 cents beneath the actual low. I’ll now suggest raising the bar by using an impulse leg-based stop-loss on the 30-minute chart. That would imply a fall today touching 34.29.  Please note, however, that the stop could change if zig-zag action early in the session creates any distinctive new lows on the intraday charts. Our target for the next profit-taking interval is still 36.80. _______ UPDATE (April 23, 1:38 p.m. ET): A powerful surge today has hit a so-far high of 36.89, allowing anyone who was long to take a partial profit at 36.80 as suggested.  For tracking purposes I’ll assume 100 shares with a profit-adjusted cost basis of 30.36.  In practice, you should still be holding 25% of whatever position you acquired initially, with a 30.36 cost basis. For now, use no stop-loss. _______ UPDATE (April 24, 1:20 a.m.): For each round lot you hold, short one May 2 38 call if GDXJ gets within about 15 cents of 38.00.  At that price, the calls should fetch around 1.10-1.20.

$DXY – NYBOT Dollar Index (Last:79.89)

by Rick Ackerman on April 21, 2014 5:25 am GMT

 Member-only content. Please Login or get a free trial of Rick's Picks to view.

$USM14 – June T-Bond (Last:134^01)

by Rick Ackerman on April 2, 2014 3:21 am GMT

We don’t pay much attention to this vehicle other than at key turning points, but the short-term pattern shown looks like a lay-up for traders who see futures contracts as no more than bouncing dots on a chart, waiting to be exploited. There are actually two trade possibilities here: 1) a ‘camouflage’ short as USM slips below the 132^13 midpoint; 2) and a very tightly stopped long from within a tick or two of the 131^17 target. Good luck!  Please report any fills in the chat room so that I can establish a tracking position for your further guidance. ______ UPDATE (3:17 p.m. ET): The short was tricky to initiate, but once aboard, your reward came quickly with a drop to a so-far low at  131^26. As noted above, the short should be covered and reversed near 131^17. ______ UPDATE (April 6, 3:57 p.m.): The low of Friday’s violent price swings was 131^21 — not quite close enough to have gotten you long easily. Although this could prove to be an important low for the short- to intermediate term, under the circumstances I’ll assume no subscribers were filled. _______ UPDATE (April 11, 1:03 a.m.): Next important stop on the way higher: 135^17. _______ UPDATE (April 20, 11:10 p.m. ET): Last week’s fleeting stab to 135^10 came within less than a quarter-point of my target — close enough for us to consider it fulfilled. It took the futures more than a month to get there, so we should expect this correction-or-worse to last for at least a week or so before bulls attempt to push T-Bonds to new recovery highs.

This Just In... for Wednesday

Read here the confessions of a University of Illinois professor who at age 64 recently retired to fat city, courtesy of the state’s taxpayers. He’ll receive 80 percent of his salary for life, plus a three percent annual cost of living increase, but you  won’t believe some of the other perks that came with the job.

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 May 21-22, 2014. For more information, or to register, click here.