ARCHIVED COMMENTARY
Is Dow Staging
For Moon Shot?
For edition of September 18, 2006
Considering the viciousness of the short-squeeze on September put options that bears just endured, we might well ask what lies in store for us in October? Logic suggests that if the pessimists were willing to bet heavily on a September crash, as they evidently were, then they will be betting even more aggressively on a crash in October, historically the worst month for stocks. If so, the stock-market downturn that so many of us have been expecting, particularly those of us who have closely tracked the ominous decline in real estate prices, could conceivably turn into a spectacular, last-gasp rally – the Mother of All Bear Traps, if you will.
I pondered this unsettling possibility after receiving a query from a friend of mine who runs a very popular, gold-oriented Web site. Is Dow 16500 possible, he asked, based on the inverted head-and-shoulders pattern shown below?
(Click on chart to enlarge)
Truth to tell, I’m not much for head-and-shoulders formations, since its is a pattern that pops up just about everywhere one looks for it. However, the inversion show in the chart does indeed “count” to somewhere above 16000, even if there is no corresponding Hidden Pivot target I can find that is much above 13,000. So what about 13000? asked my friend. Well, I replied, if I can contrive to ignore every instinctual bone in my body, and to curse logic itself as the enemy of successful investing, then there is indeed a case to be made for Dow 13000 – or to be more precise, Dow 13045, as shown in the chart below. While this may seem highly improbable to those of us who believe a deep recession has already begun, a purely mechanical reading of the available technical evidence suggests that a 1500-point rally in the Dow over the next several months is a prospect that cannot, and should not, be ruled out.
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What Do I Need to Know?
Registration forms for the October 28-29 Hidden Pivot seminar at the Fairmont Waterfront in Vancouver went out yesterday to those who earlier had said they plan to attend. Click here to receive the form if you were not on the list. If you are wavering, here is some possibly useful information that was elicited by the following query:
“I received the email with the registration form this weekend. I am seriously considering attending the weekend in San Fran and would like to ask a few questions which should help me make my decision easier.
“I have studied technical analysis and traded for a short while using various parameters to determine which stocks to trade and when. I have also studied options trading and traded options for a short while. My account was never funded at a high enough level to really do this full time and I then found an opportunity to work in the giant online gaming industry.
“That brings us back to this:
“What level of knowledge should I possess to be able to understand and learn the things you will be teaching? “
There are no prerequisites. The method I teach is unlike any other, and the concepts are more visual than mathematical. It is fundamentally simple, since price action is the only variable considered.
“Do you provide enough information and training that I can come back home and immediately begin applying the concepts and techniques in my direct access account?”
Yes, you will come home from the seminar with enough knowledge to try some easy trades. However, before students put more than mere pocket change on the line, I strongly urge them to solidify their learning, and to build their confidence, by visiting the free chat room that has been set up mainly for their benefit.
Just four months after the seminar, some of my grads are nearly as good as I am at identifying Hidden Pivot swing points. My goal is nothing less than to make every student as proficient at forecasting as top pros who do it for a living. With just a couple of months of free mentoring, I can promise you that you will never need to ask some “expert” what he thinks about this stock or that, or about “the market”.
“Will I need other subscriptions and paid access to various other services to put this knowledge to use? (I will gladly subscribe to your newsletter bulletin, but some programs require other subscriptions after they have collected the seminar fees with no mention of this before the conference. I do not mind additional monthly charges but they should make sense and not be there for the primary sake of creating an ongoing revenue stream without any real benefit to the subscriber!)”
Though not required, a Rick’s Picks subscription will give you access to the chat room; it should prove sufficiently useful to pay for itself. I encourage you to subscribe and warrant that you will find it well worth the price.
“What is the recommended minimum amount to have in my direct access account to trade using your Hidden Pivot method?”
Trading relatively cheap options in lots of four, $5,000 should be more than enough. I currently keep about $25,000 in my direct access account, since this allows me to hedge trades with stock, and to sell puts and calls naked-short. However, most of the trades I recommend, and most of the ones that I do myself, are relatively simple and involve buying stock, puts or calls, not naked-shorting.
“Are there any books that you recommend reading before attending the seminar?”
The 110-page classroom manual you will receive is complete in itself and adequate for self-teaching. For a good option primer, try Options Demystified by my friend Tom McCafferty.
“Anything else you would like to mention about the material covered during the weekend?”
You will not find an easier forecasting system that works as well as this one.
“Sorry for the long email – I am very serious about making a decision to fly down to San Fran so your thoughts are greatly appreciated.”
No trouble at all. I hope the information I’ve provided is helpful to you.
