July 23rd, 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.

$TLT – Lehman Bond ETF (Last:115.36)

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

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$PCLN – Priceline (Last:1229.21)

by Rick Ackerman on July 22, 2014 5:10 am GMT

The stock’s stall two weeks ago near a 1268.66 midpoint resistance shown suggests it could get to 1354.32 on a breakout.  Although we cannot predict with confidence if or when this will happen because PCLN has been meandering sideways for the last five weeks, as a riskless play I’ll suggest buying the August 16 1340-1350-1360 call butterfly spread for ‘even’ 32 times. This means you would short two 1350 calls, buy one 1340 call and one 1360 call for no debit or credit.  In practice the easiest way to do this will be to buy the 1340/1350 call spread 1:1 at targeted swing lows, and to sell the 1350/1360 call spread 1:1 at targeted highs. If you do either and then get a move your way of as little as perhaps $2.50, legging into the ‘fly for free (or even a small credit) would be relatively easy. The maximum profit on this position would be 32 x $1000 = $32,000, although in practice we’d be doing well to come away with half that much if the stock were to rally to 1350 by August 16. ______ UPDATE (7:50 p.m.): Another way to leg into the spread would be to sell the 1240/1250 ratio 1:2 when PCLN is making a short-term top, then to buy a 1260 later, at a swing low.

$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.

$+CLQ14 – August Crude (Last:104.78)

by Rick Ackerman on July 21, 2014 12:03 am GMT

Crude futures have been pretty whacky lately, but not so whacky as to fool us if we are monitoring the lesser charts. Notice that the recent high fell within 23 cents of the 103.71 target. Although we usually allow 21 cents of leeway, this is still close enough to affirm that price action in this vehicle is both predictable and tradable. Accordingly, traders can use the downtrending abc shown to bottom-fish at either the p=102.71, or at D=102.09.  If the bull trend begun from last Tuesday’s low is going to continue, we should see the upward reversal occur from p or very near it. Please note that despite crude’s recent plunge, I still have significantly higher targets outstanding, the first of which is 109.21, basis the August futures. _______ UPDATE (4:12 p.m. EDT): Wowie! The futures trampolined $2.22 from within 6 cents of the 102.71 correction target flagged above.  If you caught a ride from near the low and still hold contacts, please let me know in the chat room so that I can establish a tracking position for your further guidance.

$ESU14 – Sep E-Mini S&P (Last:1974.50)

by Rick Ackerman on July 21, 2014 12:01 am GMT

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$SLW – Silver Wheaton (Last:26.72)

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.)

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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