April 24th, 2014
Published Daily
Topic of the Week

If DaBoyz can squeeze a 500-point Dow rally out of yesterday’s administered easing of dollar “swap” rates, just imagine what they can do with a little Santa seasonality and a dollop of year-end window-dressing.  Let’s be straight about a couple of things. First, no one expects the latest easing of global credit lines to resolve Europe’s debt crisis. And second, the 800 points the Dow has tacked on this week represent little more than trading machines masturbating each other amidst a short-covering panic. Some observers merely yawned, noting that the swap arrangements that make it easy and cheap – and now even easier and cheaper, if such a thing were imaginable — for foreign banks to borrow dollars have been in place since 2007.  However, others saw the announcement by the central banks as nothing less than a bold step by the Federal Reserve to begin monetizing the debt of Spain, Italy, Greece, France et al.

It’s a moot point whether the U.S. has begun bailing out Euro-deadbeats, however, since the U.S. is a deadbeat itself, albeit one in sole possession of the world’s reserve currency and therefore of the ability to gin up unlimited quantities of the stuff at will. Meanwhile, there’s little point in pretending that the U.S. is somehow not immersed in the bubbling cauldron of toxic global finance. U.S. banks had stopped lending to their European counterparts, and that’s why the Fed stepped in to pretend it has the situation under control. This may work for another week or so, if that long, but it’ll be interesting to see whether reducing swap rates to near-zero will help suppress sovereign borrowing rates that recently topped the 7% “red zone” for Italy. Would you lend the Italian government hundreds of billions of dollars at 7%? That’s what we thought. But if you live in Europe or the U.S., you’ll be doing it anyway – and for a lot less than 7% –courtesy of the bankers.

A Hyperinflationary Step?

Not to spoil the party, but we’d suggest keeping a close eye on T-Bond futures rather than on a criminally insane Dow Industrial Average that has obviously run amok.  U.S. Bonds and Notes have been in a sharp correction, with the former closing on a key Hidden Pivot target of ours at 140^14.  The target is so clear and compelling that its breach would offer strong evidence that the Fed’s increasingly desperate attempts to hold deflation at bay are about to finish the dollar’s destruction since the Fed was created nearly 100 years ago.  We’re planning on bottom-fishing near the target (click here to join us – at no cost to you), but if it the “hidden support” is exceeded even slightly, it could be signaling a significant global increase in inflationary pressures.

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TODAY'S ACTION for Thursday

Bankers’ Best-Laid Plans

by Rick Ackerman on December 1, 2011 5:29 am GMT

The markets were suspiciously subdued Wednesday night, but don’t be surprised if buyers are back on Thursday to pursue their bliss.  It ishardly implausible that those who planned yesterday’s liquidity announcement did so on a Wednesday because they believed it might be too ambitious to get a short-squeeze going as early in the week as Tuesday.


Rick's Picks for Thursday
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ECZ11 – December Euro (Last:1.3460)

by Rick Ackerman on December 1, 2011 3:14 am GMT

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ESZ11 – December Mini S&P (Last:1244.25)

by Rick Ackerman on December 1, 2011 3:25 am GMT

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GCG12 – February Gold (Last:1749.60)

by Rick Ackerman on December 1, 2011 3:38 am GMT

February Gold (GCG12) price chart with targetsWe’re long  two contracts, from an initial position of four, with an effective cost basis of 1733.00. Look to exit one of those contracts at 1758.00, a few ticks below the ‘D’ target of the ‘camo’ pattern we used to get on board. (Note: Initial entry was via the December contract, but we rolled the position intraday into February.) Since we’re swinging for the fence on this trade, I’ll suggest a 1733.30 stop-loss for now, one-cancels-the-other with the closing offer of one contract at 1758.00.  Upside potential is to 1869.80, the ‘D’ target of the big pattern shown. Its sibling p midpoint lies at 1770.20, so we’ll make that our minimum upside objective for the near term. A two-day close above it would make 1869.80 an odds-on shot. _______ UPDATE (6:28a.m. EST):  We exited on the overnight high, 1758.00, before the futures dropped back by $10.  This leaves us with a single contract whose cost basis is 1708.00. A 1704.20 stop-loss is suggested for now.

SIH11 – March Silver (Last:32.735)

by Rick Ackerman on December 1, 2011 3:46 am GMT

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Small Details of a Monster Rally

by Rick Ackerman on December 1, 2011 2:40 pm GMT

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$AAPL – Apple Computer (Last:524.65)

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

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$+CLM14 – June Crude (Last:101.73)

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.

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

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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

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$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.


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