ARCHIVED COMMENTARY
Stocks, Bonds
Just a Sideshow
For edition of July 17, 2006
Hezbollah’s vow of “open war” on Israel in retaliation for the attempted killing of its leader is all but certain to escalate the Middle East crisis, roiling the world’s financial markets even more in the days and weeks ahead. Stocks and bonds seem almost like a side show at the moment, since it is the steady rise in the price of oil that will most greatly impact the global economy as well as the geopolitical stability of the world. It is therefore inexplicable to me why the equity averages should have held up as well as they did on Friday. The Dow Industrial Average fell a little more than a hundred points, ending the day about 25 percent above its intraday low. Could some investors actually expect a quick resolution to the war? Do they perhaps think that tensions that have been building since the 1993 Oslo Accords will somehow peter out?
That bullish habits die hard has never seemed more obvious. U.S. stocks have been shrugging off bad news since March of 2003, when the Dow made an important bottom at 7416 before embarking on a climb to 11670 that culminated in May – a 57% gain. The fact that the last two years of the rally bucked a credit-tightening cycle that saw administered rates rise from 1% to a recent 5.25% testifies to the boundless zeal that was driving buyers. Even mounting statistical evidence this year of a housing bust was not enough to cool their ardor. But the sight of Beirut in flames evidently is causing bulls to have second thoughts, if not to trigger a selling panic, at least not yet.
My bullish price targets for crude oil would seem to promise little relief over the near term. August futures backed off slightly on Friday after making an all-time high at 78.40, but they still have a ways to go before reaching $82.03, my minimum objective. In the meantime, the price of gas at the pump is all but certain to push decisively above $3.00 in the days ahead – a nagging reminder that these times in which we live are all too interesting.
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Sydney Seminar
The Hidden Pivot Seminar in Sydney, Australia is a “go,” with only a firm date remaining to be set. As of now, it looks like it will be held in either this fall or in early February, so please let me know via-email if you’re interested in attending.
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.
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.
