Do investors smell a 50-basis-point rate hike coming later this week? I wrote here yesterday that a “double-bagger” would be quite bullish for stocks, marking a decisive end to a tightening cycle that has pushed administered rates from one percent exactly two years ago to a current five percent.  Traders apparently are expecting just 25 basis points, just like the last 16 tightenings, and they've priced fed-funds futures to imply that the odds of anything greater than that are no more than 12 percent.

But what else could have caused equity investors to become so giddy yesterday? The Dow finished up 56 points on the day, and although at first glance that might seem like a modest rally, it occurred as crude oil prices were pushing sharply higher (toward a hidden-pivot target, incidentally, whose precise – and short-able – location I have identified in the Current Touts section of Rick’s Picks).

Bucking Oil

Typically, share prices have eased on days when oil quotes rose as sharply as they did yesterday. Also, in recent months, the first day of the week has been pretty punk for equities. Yesterday, however, the Dow Industrials shrugged off Monday Morning blues to embark on a 75-point rally just as oil prices were starting to take off. With nothing obvious in the news that might have triggered the spate of buying, it’s reasonable to infer that some other factor, not yet apparent, is breathing life into stocks.

Whatever the case, we’ll have a much better idea by Thursday, when the Fed goes public with its most recent decision regarding short-term rates. Meanwhile, via the bulletin launcher, I disseminated a bearish target for gold intraday over the near-  to intermediate-term. Although Comex futures recovered somewhat from their lows after oil took off, they did not rally quite high enough to negate the bearish outlook that I had detailed. I’ve provided a specific threshold to monitor, but unless it’s achieved soon we must assume that the correction begun on May 11 has farther to go.

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Vancouver Seminar Set

The Hidden Pivot Seminar in Vancouver is a definite “go” for the last weekend in October, so please let me know via-email  if you’re interested in attending. The event is being produced by a long-time Rick’s Picks reader who wants to introduce his investment clients to my technical methods.

The two-day class is geared to teaching traders of all skill levels the rudiments of my proprietary Hidden Pivot System. Post-grad mentoring in a chat-room is included so that students can master the techniques learned in the classroom in a real-time setting.

Dates are not yet firm for seminars to be held in San Francisco and Sydney, Australia, but it looks like they will take place either in November 2006 or February 2007. Both classes are filling up, so let me know soon if you’d like to attend.