July 28th, 2014
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[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.


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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.

$NFLX – Netflix (Last:421.86)

by Rick Ackerman on July 28, 2014 4:32 am GMT

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$+SLW – Silver Wheaton (Last:26.71)

by Rick Ackerman on July 28, 2014 4:16 am GMT

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$GCQ14 – August Gold (Last:1303.80)

by Rick Ackerman on July 28, 2014 4:06 am GMT

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A major top?  It’s certainly conceivable, since the futures peaked last week within 1.25 points of a compelling rally target I’d spotlighted at 1984.50. Although this Hidden Pivot resistance looked very short-able, I have my doubts that it will stand for long as the all-time high. The target’s main value lay in its clarity, and in that respect it did not disappoint us.  As you can see (inset), bulls exceeded it by a mere inch before diving — so far — 22 points. Subscribers who used the target to get short should have covered at least half of any positions by Sunday night and deployed a generous trailing stop for what remains. If you prefer using a stop-loss based on impulse legs, put it at 1979.25, just above a small peak on the hourly chart that was recorded Friday on the way down.

As GDXJ was working its way south from around $43, my bearish forecast called for a washout low at exactly 40.42, a Hidden Pivot support of great clarity. I’d suggested buying down there ‘aggressively’ and with an ‘absurdly’ tight stop-loss.  This advice would have paid off handsomely for anyone who followed it, since the stock trampolined 64 cents yesterday off an actual low of 40.43, a penny from my target. Since a subscriber reported doing the trade as advised, I’m establishing a tracking position for the further guidance of all who may have gotten long. (He reported having bought 1000 shares off a 40.44 bid, but I’ll assume a more conservative 400 shares.)  Accordingly, I’ll recommend exiting half the position on Friday’s opening if you haven’t done so already.  We’ll impute any profits thereof to the cost basis of the 200 shares that will remain. _______ UPDATE (July 27, 9:48 p.m. ET): Exiting 200 shares on Friday’s 41.20 opening leaves us with a tracking position of 200 shares whose imputed cost basis is 39.66.  Exit another 100 shares on today’s opening and tie the rest to an impulse leg-based stop-loss on the 15-minute chart.  At the moment, that would imply bailing out on an uncorrected dive touching 41.73. ______ UPDATE (July 28, 11:46 a.m.):  We got sleazed when DaBoyz opened the stock on the so-far low  of the day, 42.40.  The good news is that such shakedowns usually occur because the smart money is trying to buy the stock.  We now hold 100 shares with an effective cost basis of 37.25.  For the time being we’ll let it run.

$+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 unable to buy the spread keep trying.  We’ll shoot for a partial profit if the stock rallies $40-$50 in the next few weeks but otherwise do 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.  To that end, a pop above the 1270.59 midpoint pivot would be most encouraging.

$+TLT – Lehman Bond ETF (Last:114.32)

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

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$EURUSD – Euro/USD (Last:1.34302)

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. _______ UPDATE (July 24, 5:35 p.m. EDT):  Yesterday’s short-squeeze feint topped precisely at a midpoint Hidden Pivot (see inset, a new chart) that was originally support but which is now resistance. This price action confirms the pattern we’ve chosen as well as its ‘D’ target at 1.34197. At least one subscriber has confirmed getting short in the chat room.  _______ UPDATE (July 27, 10:43 p.m.):  Friday’s low occurred at 1.34206 — 0.00009 above our 1.34197 target.  Shorts should have covered there, but if you were able to bottom-fish the low and catch a piece of the 144-tick rally that ensued, please let me know in the chat room and so that I can establish a tracking position for your further guidance.

September E-Mini Nasdaq (Last:3965.00

by Rick Ackerman on July 15, 2014 4:21 am GMT

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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.


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