Monday, December 15, 2014

Don’t Count Bulls Out Yet

– Posted in: Free Rick's Picks

I missed an easy call on Friday when I projected 17389 as a worst-case low for the Dow Industrials that day. In fact, there was a clear Hidden Pivot support at 17275 that would have nailed the actual low of the 305-point plunge within a hair.  The implication is that the broad averages have bottomed, at least for the time being.  If so, this would go mildly against my suspicion Sunday night that DaDirtballs were gingerly manipulating index futures higher in order to pull out the rug. My gut feeling is that a rally is doomed, but we'll let purely technical factors dictate our strategy, since too many others probably agree with me.

ESZ14 – December E-Mini S&P (Last:2003.50)

– Posted in: Current Touts Rick's Picks

DaBoyz, aka DaSleazeballs, are nudging the futures higher on non-existent volume Sunday night, but my hunch is that this hoax won't get very far. Regardless, tonight's so-far low has already breached -- by three ticks! -- a key 'external' low at 1995.25 recorded on November 4, generating a potent, bearish impulse leg on the daily chart.  Under the circumstances, we'll look to short whatever rally unfolds from here -- presumably at a midpoint Hidden Pivot or a D target. We'll be especially careful and disciplined about this, however, since the weightiness of the downtrend since December 5 will likely have given rise to widespread expectations that the rally is doomed. If events prove otherwise and the futures rally to new record highs, the most logical spot for such a rally to begin would be from the 1964.25 midpoint Hidden Pivot shown. Upside potential therefrom would be to the 2115.50 target that has kept us properly bullish for some time.

GCG15 – February Gold (Last:1209.50)

– Posted in: Current Touts Rick's Picks

I suggested exiting a long position on Friday for a theoretical gain of about $2800 per contract, but not for reasons of bearishness. We were simply sticking with our discipline, which called for a stop-loss if a bearish impulse leg formed on the 15-minute chart. That was a yellow flag, to be sure, but strictly speaking, the rally begun from 1141.70 on November 30 is intact and looks healthy. Moreover, gold's resilience in the face of collapsing oil prices is encouraging. To get back aboard, I'll now recommend bottom-fishing at the 1208.90 target shown.  You can use a stop-loss as tight as four ticks, but be alert to a possible turn from above this Hidden Pivot. The first logical place where this might occur is from 1212.00, and thence 1211.10 . A very tight stop-loss could be used below a bid placed just beneath the higher number, but 'camouflage' is recommended.  _______ UPDATE (8:32 a.m.): Sellers pounded gold through every Hidden Pivot support identified above, so the bull no longer deserves the benefit of the doubt for the near-term. The closest downside target at the moment is 1204.40, but it would take a 1215.00 print to the upside negate it and perhaps turn things a round. _______ UPDATE (11:23 p.m.): The futures have rallied $8 from an 1191.80 Hidden Pivot target that came from a pattern that I characterized as "gnarly" in the chat room Monday.  We should be faintly encouraged by this, but the February contract would need to push above 1221.30 by Thursday before we could confidently infer that a sustainable rally is under way.

CLF15 – January Crude (Last:48.04)

– Posted in: Current Touts Free Rick's Picks

Crude is getting kicked again Sunday night, although the January NYMEX contract is trading 85 cents off its low at the moment. The so-far low is 56.25, but I would expect the futures to get closer to my 55.43 target (see inset) before they attempt to rally in earnest. Night owls can try bottom-fishing using 'camouflage' nevertheless, but if you want to use a simpler, albeit riskier, strategy, you can bid 55.43, stop 55.34 for a single contract. I have difficulty imagining significantly more sinkage without a bounce from somewhere near here, but if the stop gets schmeissed, the next logical stop on the way down would be at 53.45, or 50.69 if any lower. However robust the bounce, assuming one comes, my bear-market target is still $31. The economic world would be a very different place at that point, and I don't mean in a good way. _______ UPDATE (December 15, 10:39 p.m.): The 55.43 pivot is holding so far on a closing basis, having been exceeded intraday by 0.41 points. That's more than I would have expected, but I still think we'll see a strong rally from here, or from very near these levels, since the target is so clear and compelling. If not, and the futures continue their relentless plunge, the targets given above, 53.45 and thence 50,69, will obtain. Traders with no position, or those who are managing the risk of a short position, should note that the January contract was in an uptrend late Monday night that projected to exactly 56.13. You can find this target on the 15-minute chart using the following coordinates: a=55.17 (12/15 at 4:45 p.m. EST); b= 55.85 (6:45 p.m.); and c=55.45 (8:10 p.m.). This pattern looks reliable enough that we should infer more upside to come if 56.13 is exceeded

Deflation Risk Too High for Fed to Tighten

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

When will the Fed raise interest rates?  My stock answer has been “never,” and the record shows that this prediction has held up pretty well. The last time the Fed actually raised rates was in June 2006, so my “read” on Fed policy has been essentially correct for the better part of a decade. This is notwithstanding the fact that whenever the Fed is not tightening, it drives eggheads, economists and op-ed hacks nuts. Lately, they appear to have been emboldened by the prospect of finally being right. Some of their newfound bravado has undoubtedly been inspired by emanations from the Fed itself. Just last week, the central bank, trying to sound hawkish, leaked that it’s considering changing the wording of its monthly hint about when tightening will come. For years, they’ve been saying over and over again that credit would be kept loose more or less indefinitely. Despite this, the markets have never failed to react like a headless chicken to each and every mote of dogs-bites-man “news”.  Now, the nervous Nellies may have to stoke their angst with a new policy that would translate thus: Don’t expect money to stay loose forever. This is the sort of claptrap that an ignorant, self-absorbed and habitually lazy news media have seized on to unwittingly help the Fed manage our expectations. Yellen and the banksters would have us believe the economy is sufficiently robust to stand on its own, and that inflation could break out at any moment. In reality, more than half of U.S. workers polled think the Great Recession never ended. And they would know. Wages have fallen in real terms since the recession officially ended in 2009, and the economy has failed miserably to create the kind of jobs that might help raise the standard of living for