ARCHIVED COMMENTARY
No Blaming Ben
For Latest Spree
For edition of July 25, 2006
There’s no blaming Helicopter Ben for yesterday’s outbreak of irrational exuberance, but if not him, who? For perspective, recall the prediction made here in late May – that it would be a do-nothing summer for the stock market, with the Dow Industrials fluctuating meaninglessly between 10600 and 11200 until after Labor Day. If you look at the chart below you’ll see that that’s pretty close to what has happened so far:
We should keep this chart in mind as share prices continue to thrash violently in the weeks ahead. While these almost daily conniptions may contribute to the impression that “something” is happening on Wall Street, the opposite is true: stocks are simply marking time, unable to establish a significant trend.
How do I reconcile this fact with my prediction here the other day that a stock-market collapse lies just ahead? I don’t. There are a dozen solid reasons why stocks should be trading at less than half of today’s prices, and we need to be prepared for this eventuality no matter what happens from day to day. But at the same time, we also need to acknowledge that stocks are unlikely to plummet as long as there are hundreds of trillions of dollars of funny money in play in the global financial economy. That is the game these days, not trade in actual goods and services, and the dollar amounts dwarf the “real” economy to which stocks supposedly are tethered.
Shell-Game $Trillions
We know that the dollar sums that fuel the world’s smoke-and-mirrors economy aggregate into the hundreds of trillions of dollars because, according to the Bank for International Settlements, leveraged financial instruments alone currently amount to more than $300 trillion, or more than five time global GDP. Since it only takes a paltry few billion dollars worth of buying power to send U.S. shares sharply higher on a given day, we shouldn’t be surprised when an occasional, slight shift of shell-game money toward stocks makes shares go bonkers.
While it behooves those of us who remain skeptical to step out of the way when the herd comes thundering in, we needn’t feel guilty for inferring that nothing healthy or in any way positive has occurred. Someday, something is bound to occur that causes all of the world’s funny money to vanish in mere hours. Until it happens, though, it would seem that stocks have little choice but to continue hovering at a permanently high plateau.
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Vancouver Seminar
We’ve engaged the Pan Pacific Hotel for the Vancouver seminar in late October, promising an event that will be just as enjoyable for spouse and kids as for attendees. The facility is central to many of the amenities that make Vancouver such a great town. 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.
