ARCHIVED COMMENTARY
Stocks Fell
Because...
For edition of August 10, 2006
The stock market appeared, finally, to have taken notice yesterday of world events. Or did it? The Dow Industrials fell nearly 100 points, prompted, according to some observers, by news that Israel’s ground war in Lebanon had entered a new and greatly expanded phase. “Startling developments!” was how Fox sold this breaking story. But if the markets were truly rattled by it, then why did crude oil prices – an even more reliable mine-canary than gold when it comes to detecting global jitters – give up their entire gains for the day in less than an hour? And why should investors care about what’s happening in Lebanon at this moment if they haven’t shown any concern about it up till now?
Was it perhaps Nasrallah’s threat to turn Southern Lebanon into a graveyard for Israeli soldiers if Israel steps up the battle? Assuredly not, for the Fully Bearded One has already made far worse threats than that, and so has his fellow jihadist, Ahmadinejad. Clearly there must be another explanation for yesterday’s weakness in shares, and I will go out on a limb to put my finger on it: The decline was caused by…Nothing In Particular. As far as I’m concerned, it represented no more than the completion of a minor bearish impulse leg that began last Friday. If I’m right about this, the Dow should turn from – well, check out the Current Touts section of Rick’s Picks if you really must know and want an exact swing point.
Regular readers of Rick’s Picks will have sensed by now that I have to hold my nose, close my eyes, and resist the intrusion of all logic in order to choke out a bullish forecast. That said, and for the record, I still think that last Friday’s spike in the Indoos created the kind of bullish impulse leg on the daily chart that does not die quietly. Difficult as it is for me to imagine just what might be responsible for pushing stocks higher in the coming weeks, my outlook for the near term remains moderately bullish nonetheless. That could change if the averages start overshooting their minor-cycle supports, including the one I’ve alluded to in the Dow Industrials.
Deep down, I have never been more bearish on stocks than I am now – not even at the depths of the 1973-74 crash. But that is all the more reason why I must follow my technical indicators with as much detachment as I can bring to the task. As far as my technical runes are concerned, it might as well be the dawning of an era of world peace.
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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.
