ARCHIVED COMMENTARY
Making Book
On Armageddon
For edition of August 09, 2006
My friend Chuck traded pork bellies for a while on the Merc, until the day he showed up in the pits tripping on LSD. He claims to have made money that day, but not before drug-induced flights of fantasy led him to think long and hard about the slaughterhouses that would actually take delivery on hog contracts he was buying and selling with the wave of the hand. By day’s end he’d resolved to leave the pits for good, if not to atone for his karmic sins by never again eating meat.
I bring this up because of the difficulties I’ve been experiencing trying to keep my commentary and trading advice from decoupling from the “real world”. Traders are of course obliged to pay attention to current events simply because headlines often move the markets. Yesterday, for instance, word of the Fed’s decision not to tighten caused spasms in stocks and bonds that made their charts look briefly like a bad liar’s polygraph.
(Click on photo to enlarge)
When Silliness Reigns
On such days do we come to recognize that stupidity and silliness often drive shares. Indeed, seasoned observers will take the “silly factor” into account whenever mass hysteria has caused stocks or bonds to go temporarily crazy.
But what are we to think when the opposite obtains – that is, when investors disinterestedly shrug off news and events that verge on cataclysmic? Granted, we shouldn’t expect the markets to freeze with fear each time Iran’s over-the-top president, Ahmadinejad, threatens to annihilate Israel and send billions of infidels to hell. But shouldn’t we be taking his threats just a little more seriously – seriously enough, that is, to quiet the hubris just a bit? With the geopolitical world threatening to tilt off its axis, I for one am finding it increasingly difficult to get lathered up about such things as inform bullish banter on the talks shows – things like soft landings, moderating deficits, cease-fire proposals, etc.
Outweighing all such trivia, at least in my mind, is the apocalyptic op-ed essay by Bernard Lewis in The Wall Street Journal the other day. Lewis, a scholar not known for alarmism, laid to rest the notion that the threat of Mutually Assured Destruction would in any way constrain Iran from deploying nuclear weapons. To the contrary, he asserted, the thought of mushroom clouds covering the earth (much as they did at the end of Dr. Strangelove) is cause for rejoicing among Islam’s fanatics, since it will only hasten their ascent to heaven as well as the total and final defeat of the infidels.
Polite Pessimist
Lewis was too genteel to suggest that civilization is likely to end in this way. But if you read between the lines, you can see that he is not entirely optimistic about civilization’s chances for survival: “In the long term,” he wrote, “it would seem that the best, perhaps the only hope is to appeal to those Muslims, Iranians, Arabs and others who do not share these apocalyptic perceptions and aspirations, and feel as much threatened, indeed even more threatened, than we are. There must be many such, probably even a majority in the lands of Islam. Now is the time for them to save their countries, their societies and their religion from the madness of MAD.”
In the meantime, do we dare ignore the widely touted significance to Muslims of August 22, or the fact that Ahmadinejad postponed Iran’s response to civilization’s nuclear “cease-and-desist order” until that day? According to Islamic tradition, that is the day after Muhammad made his nighttime journey to Jerusalem and then flew to heaven from the Temple Mount, lighting up the skies over the holy city in his wake. August 22 may pass without event, and some will breathe a sigh of relief if it does. But please pardon me, dear readers, if I am unable to work up much of an appetite between now and then for playing a quick pop in Citi shares, or a head-fake in Beazer Homes. Such silly games seem rather beside the point right now, a distraction from real-world events that are probably too terrifying for most of us to contemplate.
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San Francisco Seminar
I was scouting locations in San Francisco over the weekend for the upcoming Hidden Pivot Seminar. A specific date has not yet been set, but it now looks like the two-day class will be held in February, 2007. If you’re interested and haven’t contacted me yet, please let me know via-email . Is this seminar for you? Here’s a prospectus so that you can decide for yourself:
Trust Yourself,
Not Some Guru
Would you like to be able to forecast trends and price swings so accurately that you’ll never again have to seek advice from the supposed experts? That is the goal of the Hidden-Pivot Seminar: to teach you to read the markets so confidently that you will come to trust your own judgment over that of gurus who forecast for a living.
My proprietary Hidden-Pivot Method derives from a few simple principles that I’ve developed and honed over the last twelve years. It is the simplest and most powerful method I have ever found for predicting trends and price swings accurately and with complete confidence. Moreover, it works in any time frame and for virtually all types of securities, including stocks, indexes, commodities and options.
Inhale…Exhale
The system is based on the theory that stocks and commodities are constantly trying to balance yin and yang energy as they move around. Their ups and downs are analogous to breathing in and breathing out, and in the end these complementary actions must offset each other precisely. The trick to understanding how the process works in the securities markets is to visually match up trend segments that are part of ABCD patterns on charts.
Consider as an example the chart of eBay below. The key number is 28.89, the presumptive D target of a pattern defined by points A, B and C. The target is what I call a “hidden pivot,” and it is calculated by subtracting the length of the A-B segment (3.90) from point C. In the example, the resulting value is 28.89, a mere two cents from where eBay actually turned. In retrospect, we see that this would have been an excellent spot to buy the stock using a stop-loss as tight as a nickel. It also would have provided a precise target to enable disciplined short-covering.
A Simple Trick
The visual trick to identifying these patterns is really no trick at all. You simply find the B-C leg first, then move backwards to locate A. Those three price points are all you will need to calculate a D target. Note that the B-C leg is simply any countertrend move that looks like it might eventually be the axis of symmetry dividing an AB impulse leg from a CD follow-through leg.
That’s all there is to it. Since the system is based entirely on price action, you won’t ever have to consider trading volume, oscillators, channels, MACDs, trendlines or any of the other conventional indicators that most technicians use. And with just one more trick, you will be capable of forecasting as accurately as those who do it for a living. You need only locate the exact midpoint of the B-C segment’s second leg. Once you are able to find this specially endowed hidden pivot – a simple task for the trained eye – you will never again need an “expert” to tell you what a stock, index or commodity is likely to do next.
The Hidden Pivot Seminar is held over two days, during which time you will learn how to spot the most promising ABCD patterns. You will also learn, in under 20 minutes, a surprisingly easy way to use stochastic indicators and other oscillators to enhance your timing. Finally, you will learn how to use hidden pivots to manage risk so that you will always know exactly when to cut losses and when to let profits run.
Free Mentoring
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An important feature of the seminar, at no extra cost, is post-grad mentoring in a hidden-pivot chat room set up by some of my students. Here is what one of them, Hunter Reynolds, recently had to say: "We have all come a long way. I think everyone here is making a little $$, or we would be doing something else by now. I can honestly say I am up about ten percent, maybe a little more, since your class. I am pretty conservative. I just trade from the long side, but I'm getting really good at picking the hidden-pivot reversal points for the uptrend!"
I should tell you that seminar grads who frequent the chat room are coming to understand my method as well as I do. Indeed, some have adapted what they learned in highly effective ways that I could not have foreseen. Buttressed by the continuing lessons of the chat-room, the Hidden Pivot Seminar offers an opportunity to acquire powerful analytical tools that will serve you for a lifetime.
A Student’s Experience
Here is what one of my grads, Hunter Reynolds, had to say recently about the chat room:
"We have all come a long way. I think everyone here is making a little $$, or we would be doing something else by now. I can honestly say I am up about ten percent, maybe a little more, since your class. I am pretty conservative. I just trade from the long side, but I'm getting really good at picking the hidden-pivot reversal points for the uptrend!"
Dates are not yet firm for a fourth seminar to be held in Sydney, Australia, but it looks like it will take place either in November 2006 or February 2007. The class is filling up, so do let me know soon if you’d like to attend.
