ARCHIVED COMMENTARY
Suckers Buy
Mideast Lull
For edition of July 19, 2006
I got distracted after lunch yesterday and was somewhat surprised to see, in calling up some charts after the close, that stocks had gone all silly in the final two hours. My first reaction to the 116-point rally was to check a Google news page to see if world peace had perhaps broken out while I was on the phone. No such thing. In fact, Hezbollah was sticking to its guns, literally, giving rise to the following headline: “Iran’s Hezbollah Set for World War III.” But this is hardly the kind of thing that rattles Wall Street any more. In fact, the monster box office receipts from the “Pirates of the Caribbean” were getting bigger play at the moment by some news outlets.
Such anomalies don’t usually endure for long, of course. But it was nonetheless clear that, to get some respect, Hezbollah may need to re-word its statement so that at least the oil traders – geopolitical world’s mine canary – get the message. Here is the story, as reported by news24.com:
Targets Worldwide
“Iran's Hezbollah, which claims links to the Lebanese group of the same name, said on Tuesday it stood ready to attack Israeli and U.S. interests worldwide. ‘We have 2000 volunteers who have registered since last year,’ said Iranian Hezbollah's spokesperson Mojtaba Bigdeli, speaking by telephone from the central seminary city of Qom.
‘They have been trained and they can become fully armed. We are ready to dispatch them to every corner of the world to jeopardise Israel and America's interests. We are only waiting. If America wants to ignite World War Three ... we welcome it,’ he said.”
Much Lower
Welcome to Wall Street, Mr. Bigdeli. (“Bigdeli”? What kind of name is that, anyway?) Looking for attention, the guy might as well have fired a water pistol at the lens of a CNN camera. Anyway, the Dow Industrials finished up nearly 52 points on the day, running the ol’ spear up shorts’ butts while a deceptive state of calm prevailed in the Middle East. Crude oil did its bit to sustain the illusion, falling $1.65 beneath Monday’s lows.
Maybe investors have it right, and we’ve seen the worst of the war already. But in case you hadn’t noticed, Da Boyz are not exactly giving away put options. Puts are in fact relatively pricey, especially on stocks like Apple, Dell, Beazer, Citi and two hundred others whose horrific declines appear to have been temporarily arrested. It may be a great opportunity for smart money to unload shares on the mindless multitudes, widows, orphans and pensioners, but we are not buying into the con-game. Stocks are going MUCH lower, and soon.
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Vancouver Seminar
We’ve engaged the Pan Pacific Hotel for the Vancouver seminar the last weekend in 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 early December is now the most likely date. The class is filling up, so do let me know soon if you’d like to attend.
