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Paying Up To Get Short

June 20 2006
I’m a real tightwad when it comes to buying puts and calls, since the odds are so heavily stacked against retail option players that one cannot afford to give up even a dime of edge when entering or exiting a position. That said, it is becoming increasingly obvious that put options are no longer available in quantity at bargain prices, if at all, and that we may have to pay...
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Housekeeping On a Quiet Day

June 19 2006
Friday proved to be a triple-witching dud, the broad averages having shown no pluck at all following their whoopee cushion rally a day earlier. Still, by next Wednesday it could look like a one-day pause in a short-squeeze that has yet to play out. Fortunately, even without much price movement we were able able to make some position adjustments that have pared risk in some of...
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As Citi Goes, So Goes Economy

June 16 2006
Another bear-squeeze like yesterday’s and some key stocks will be back up to levels worth shorting. Citigroup, for one. It soared like a condor yesterday, powered by bears who evidently stayed one day too long at the party. Here’s what the day’s action looked like 30 minute before the...
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Weasels At Work

June 15 2006
I have nothing but envy and admiration for the weasels who manipulate shares for a living, especially those of Citigroup, a stock whose seemingly helter-skelter movement on a chart can be as subtly purposeful as the queen’s peek-a-boo antics in a game of three-card monte. Concerning the “weasels,” I use the term affectionately, since I was one of them myself for twelve years,...
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One Support Left For August Gold

June 14 2006
Gold futures crushed an important hidden-pivot support at 599.40 yesterday, on their way to one of the worst single-day losses on record. The breach of the pivot, which I’d advertised here prominently, implies that the correction will continue to at least 549.40, basis August. That is the closest important hidden-pivot support below yesterday’s 566.80 settlement price, and it...
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Investment at Its Most Timid...

June 13 2006
Looks like it’s not just the usual bunch of numbskulls who have been buying stocks at these rarefied levels. Turns out that big companies buying back their own shares have been a major source of support for the stock market in recent months. S&P-listed firms bought more than $100 billion of their own stock in the first quarter of 2006, up 22 percent from a year earlier,...
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Playing Gold By-the-Numbers

June 12 2006
We have a bid in for August Gold, our first attempt to buy the stuff in nearly a month as we’ve waited for the correction to run its course. The bid is based on my minimum downside target for the Comex contract, 599.40, a hidden pivot first broached here a couple of weeks ago. A subscriber wondered in an e-mail message to me yesterday whether he should be picking up GLD as a...
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Zarqawi’s Death Bombs on NYSE

June 09 2006
If you were impressed by yesterday’s 200-point turnaround, don’t be. We’ve seen better rallies in an oncology ward. Considering the news – that one of the world’s deadliest terrorists has been silenced forever – we might have expected stocks to go wild. Instead, the Dow Industrials finished up just 7 points on the day after reversing a steep decline with the help of...
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Betting $200,000 On the Big One

June 08 2006
Here’s a Rick’s Picks  subscriber, Pat P., with $200,000 to burn. What would you do if you were in his shoes? He writes as...
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Iran Reacts!

June 07 2006
There’s nothing funny about Iran, not one single thing, but I had to stifle a laugh when this headline popped out at me at Google News: “Iran Reacts Positively to New Proposal”. It puts one in mind of the Tim Burton film Mars Attacks!, one of the wickedest satires since Dr. Strangelove. The film...
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How Putin, Iran Will Launch Gold

June 06 2006
I’ve long doubted the usefulness of head-and-shoulder patterns, since they tend to be everywhere you look for them. Still, there’s no denying that the one the Dow Industrial Average has been carving out since early March is quite a looker (see below). Yeah, it needs a little more development on the right shoulder to give it proper symmetry. But otherwise, it looks good to go for...
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Grand Fenwick Duchy Attacks

June 05 2006
The denizens of Grand Fenwick laid siege Friday after I published "their" list of news stories about the coming housing bust. The list evidently was compiled by bloggers at patrick.net, but it came to me in the form of an e-mail from someone who identified himself only as “Martin” and using the...
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Gold Turnaround Moves Into Focus

June 02 2006
If you’ve been wondering when gold’s correction will end, there may not be much longer to wait. There are three hidden pivots not far beneath the 630.70 low registered yesterday by the Comex August contract, the most bearish of them just a whisker under $600. I’ve provided exact numbers in my...
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Reader's Guide To Housing Bust

June 01 2006
The Rick’s Picks switchboard lit up like a string of Black Cats yesterday as alarmed readers responded to my wake-up call ahead of America’s impending real estate crash. The sole skeptic has been Frank P, a useful idiot whose thoughts served as counterpoint to the discussion we had on the topic yesterday. Turns out I’m not the only one Frank has been pestering with his odd ideas,...
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Optimist, or Doorknob?

May 31 2006
Yesterday’s sharp plunge looked like a prelude to…well, nothing, actually.  You don’t have to be a chartist to see that the entire 184 points of Tuesday’s decline failed by a country mile to take out last week’s lows in the Dow. For that reason, it barely qualified as a bearish impulse leg on the 15-minute chart, much...
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Some Perspective On Gold's Antics

May 30 2006
The broad averages finished the week with a pre-holiday rally that was all but ordained, but it remains to be seen whether the uptrend will mutate into a full-blown short-squeeze next week. Meanwhile, gold prices firmed after a weak opening, achieving little net gain for the day. We have a hunch that both will trend lower over the near term, although, as mentioned in Friday’s...
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A Package from The Unabomber?

May 26 2006
When opportunity knocks as loudly as it did yesterday, we should always check the peephole before opening the door. The opportunity I am alluding to is a stock market once again seemingly energetically on the rise. The Dow Industrials gained nearly a hundred points, and other broad indices rose along with it, making just about any stock that we might have been eager to short a day...
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Top Bears Capitulate

May 25 2006
My gut is telling me that we should short the bejeezus out of every rally that comes our way these days. Stocks feel like they are being held aloft, but only barely, as the smart guys prepare to bolt for the exits. Take the Dow Industrials. They’ve traced out a teepee in the last month and are now struggling to avoid breaking beneath its floor. Ordinarily, the consolidation...
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Stocks Swooned, Well, Because...

May 24 2006
Sometimes I’m thankful I’m not Scott Patterson, the Wall Street Journal reporter who has to explain each day why the stock market did what it did. His lead on yesterday’s market wrap-up showed promise: “A victory lap by stocks turned into a run for cover by day’s end.” But by the end of the next paragraph, he was threatening to run off the rails: “Higher most of the day, thanks in...
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It Ain't Over, Not Yet...

May 23 2006
The 636.00 correction target for June Gold touted here over the weekend came within less than a dollar of catching the exact low of Monday’s $40 swing. Even so, I have my doubts that the selling is over. Notice in the chart below that the entire day’s more or...
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Expect More Gold Selling

May 22 2006
Gold took a savage pounding on Friday, and although prices finished off their lows, more selling appeared likely next week. By my runes, the June Comex contract “should have” found support at 663.50, a well defined hidden pivot. Instead, the first time the futures encountered that number, on Friday morning, they smashed through it immediately. All subsequent rally attempts failed...
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Queensbury Rules No Longer Apply?

May 19 2006
I spent much of Thursday in a time warp, thinking and acting as though it were Friday. To make matters even more confusing, my web site proclaimed on an inside page – erroneously, I am told -- that it was Wednesday. So when stocks began to fall more sharply toward the end of the day – it was Friday for me, remember – I wondered whether the Queensbury Rules had somehow been revised...
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Guard Against Phony Gurus

May 18 2006
I could just about puke every time I get a promotional teaser in the mail from some guru bragging about his last Big Score. The put-and-call svengalis are the worst of the bunch -- and I would know, having traded options myself for more than 30 years, twelve of them on the floor of the Pacific Exchange. I always double-check the hype, and here is what I have determined: There is not a single option guru in America – at least none of the dozens of whom I am aware -- who even comes close to...
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Paint Is Drying On Wall Street

May 17 2006
A watchful day, albeit one with a resurgent bullion threatening to chew up naysayers and hock them into a spittoon, Jim French-style. Unable to find much to trade myself, much less to inspire, I swapped louche videos with pen-pals on my e-mail joke list. You...
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Gold Shakeout: Quick & Nasty?

May 16 2006
Via the bulletin launcher, I disseminated a precise correction target yesterday for June Gold as well as a recommendation to buy bullion futures (or the equivalent thereof) aggressively if and when the target is...
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Trucker Sees GM Crack-Up

May 15 2006
I’ve been dissing General Motors for years, baffled as to why anyone would choose a GM car over a Japanese model unless out of pure patriotism. Lately, the auto manufacturer has been busy rearranging the deck chairs...
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Plunge Team Versus Godzilla?

May 12 2006
Thursday’s plunge felt right as rain, at least to me it did. But if the weakness were to continue for another day or two, what to think? After all, it’s been a long, long time since the Dow Industrials experienced a decline of more than a hundred points two...
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Volatility Our No. 1 Export

May 11 2006
Glance at the chart below and you might think it was a hot new IPO on the Dubai stock exchange, or perhaps a coffee drinker’s EKG after he’s downed a triple espresso. But both...
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Yellow Flag Out For Gold Bulls

May 10 2006
Traders and investors who have been using my “hula numbers” to leverage gold’s resurgence one predictable stride at a time, please take note: The June Comex contract is stealing up on an important rally target that merits our return to caution, however briefly. The precise number is 709.50, a hidden pivot broached here earlier that has...
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Real Estate Fear Goes Mainstream

May 09 2006
The article below, from Fortune, is important because it shows that at least one big-circulation, mainstream business magazine is capable of speaking bluntly about the coming real estate crash. Granted, it includes a...
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We're Nibbling On Some Puts

May 08 2006
On Wall Street, every Friday is Whoopee Cushion Day, as we know, so the 139-point rally in the Dow should have surprised no one. Spirited as the buying was, however, it still left room for a little more fun and games next week. Specifically, my minimum objective for the Industrial Average is 11627, exactly 50 points above Friday’s close....
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Hula Number Now 709.50

May 05 2006
By featuring “hula numbers” for Comex gold, I’ve tried to take some of the guesswork out of trading an increasingly volatile bull market. Okay, so it’s also a marketing gimmick. But why shouldn’t a guru be made to dance a hula in...
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A Rod and Reel For Subscribers

May 04 2006
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Menacing Signs of Top

May 03 2006
New all-time highs for the Dow Industrials could conceivably come next week, but if and when they do, we should pay close attention to the technical quality of the rally. I’ve reproduced a chart below that shows how very perilous the rise from last May’s lows looks from a stochastic perspective.  Note that two of the three price peaks...
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Financial Supernova

May 02 2006
Take a look at the chart below if you want to see just how silly investors can get. I’ve deleted the title bar so that you can speculate on what it shows. Note in particular the bottle-rocket action of the last two price bars. Is this the chart of a company that has found a way to extract gold from seawater? To cure cancer…or...
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Gold Taunts Meek Buyers

May 01 2006
While I’ve expressed mild skepticism in the past that an ounce of gold will eventually change hands for $10,000, there is no longer much room to doubt that the old high at $850 is destined to fall. How long it will take for prices to blow past that peak and hit $1,000? Count me among the lunatics on this question, since I think it’s going to happen well before the end of the year and perhaps even...
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Stocks at Crucial Resistance Point

April 28 2006
While I cannot give you an ironclad guarantee we’ll see a major stock-market top within the next few days, the two charts below explain why we shouldn’t be too eager to bet against one. The first comes from Peter Eliades of...
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June Gold Staging For Push to $665

April 27 2006
I’ve been looking for an excuse to visit the Big Apple when Central Park is in full bloom this May, and here it is:  If June Gold doesn’t surge to at least 665.50 by mid-May, look for me in Times Square dancing the hula in a...
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Can Borrowers Handle 10% ?

April 26 2006
I ended yesterday’s commentary with a trick question:  What is the easiest way to make real returns of nearly 10 percent on one’s money? The answer is, there is no easy way...
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Finally Time To Buy Puts?

April 25 2006
Not that we should care, but the so-called Hindenburg Omen has flashed red again – for the fourth time since early April. To the weary pessimist this is supposed to be a bearish warning, akin to the groundhog emerging from his lair and getting his head sheared off...
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Dizzy from Gold? Get Used to It...

April 24 2006
The most powerful bull markets are invariably punctuated from beginning to end by wrenching spasms. Were it otherwise, we could all simply load up on bullion assets, quit our day jobs and go fishing as we watch our net wealth grow, day by day, along with soaring...
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April 22 2006
TYPE...
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Gold, DJIA Part Ways

April 21 2006
Gold quotes plunged yesterday without having quite reached the $657 rally target I’d projected for the Comex June contract. The actual high was $649, representing an $8 shortfall. Usually, when a trend fails by this big a margin my outlook for the intermediate term (i.e., three to five weeks) will change to bearish. However, I have my doubts that so robust a bull as this one will abide...
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Market Lull Just a Trick

April 20 2006
Don’t be fooled by the lack of follow-through yesterday, since it is exactly the kind of dullness we should expect from a stock market grown increasingly adroit over the last few years at goosing shorts. Realize that Tuesday’s 192-point rally was not the kind of event that...
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Getting High On Fed Hints

April 19 2006
The canny investor had just one thing on his mind yesterday: how all of the other bozos would react to news that the Fed may soon stop tightening. The fact that Wall Street has been anticipating exactly this news for umpteen months did nothing to mitigate the irrationality of those who stampeded to discount it yet one more time. Stocks zoomed higher because loose money is like crack cocaine for the...
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How High, June Gold?

April 18 2006
I can see as high as $703, basis June, but we’ll get to that in a minute. First let me mention that subscribers who followed my advice to-the-letter could have caught one heckuva ride in gold yesterday, having boarded the June Comex contract Sunday evening, just as it was lifting off the launcher....
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It's Bad News For Borrowers

April 17 2006
I had flagged a hidden-pivot support at 117^19 as a potentially important turning point for the beleaguered June 30-Year Treasury Bond futures, but sellers demolished it on Thursday, telegraphing a strong likelihood of still higher yields in the weeks and perhaps months ahead. The June CBOT contract had already traded as low as 117^17, slightly beneath the advertised turnaround pivot, but the...
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Housing Bust's 'Ground Zero'

April 13 2006
Fed chairman Bernanke and his cronies are said to be “confident” that the statistically compelling slowdown under way in the housing sector won’t much affect the U.S. economy. He evidently sees it as a case of a hot market cooling down...
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Iran Could Face Dreaded 'Plan B'

April 12 2006
If investors needed a wall of worry to climb, they’ve got one now. With oil prices again pushing $70 a barrel and Iran giving the finger to the world, worrying should come easy to market-watchers who are inclined to fret. To give the...
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Anti-Gold Cabal Is Batting .100

April 11 2006
So, the G-Men supposedly are at it again. Yesterday, they were spotted playing whack-a-mole with Comex gold when it poked its ugly little head above $600. Hey, give me a break! Where on earth do these conspiracy theories come from? Here’s an e-mail message I received...
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Helicopter Ben's Japan Fix-ation

April 10 2006
A debt deflation is not merely likely for the U.S. economy but inevitable, and that is why I no longer debate the issue in this forum. If the inflationists don’t “get it” by now,...
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Exploiting 'Bad' News

April 07 2006
Just when we were starting to get the hang of Wall Street’s bad-news-is-good-news reflex, they change the rules! Yesterday’s bad news was that March retail sales had fallen short of expectations, producing the weakest monthly increase in same-store receipts since November 2004. Now, there is no question that this is indeed bad news for an economy in which consumption has at times accounted for as...
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Gene Pitney: The Real Deal

April 06 2006
A big news day yesterday, what with Gene Pitney’s death in England and Katie Couric’s move to CBS. Taken together, these ostensibly unrelated events serve to remind us of how much better the Today show might have been if Pitney had...
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Will Gold Drag Oil Cost Higher?

April 05 2006
The good news, for reasons aired here yesterday, is that gold looks like it’s staging to blow past $600 and run up to at least $625 over the near term. The bad news is that it could pull crude oil quotes along with it. I proffer the chart below as evidence that this scenario may be about to occur. Although most technicians would regard Monday’s high at 67.90 as a double top of sorts, the fact that...
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$600 'Barrier' Will Fall Easily

April 04 2006
I’m back in my office after a somewhat relaxing week in the tropics, but it would appear that I didn’t miss much. The new week began yesterday with a feeble attempt by Da Boyz to short-squeeze traders who went home on Friday expecting the world to end, as some traders always...
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Abductees Win a Round

April 03 2006
Three months after being abducted by religion-of-peace advocates, Jill Carroll has been released. According to the New York Times, the freelance reporter had “kind words for her captors and says she was treated well.” Treated better the Daniel Pearl, for sure. Fortunately for those of us on the abductee side of the civilizational divide, fashions change, even among terrorists. Indeed, if Ms. Carroll...
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Girls Gone Wild? Not This Bunch...

March 27 2006
Friday was yet one more week-ending snoozefest, the sort of day when the patient trader might have reaped greater satisfaction watching Room Raiders than monitoring the tickertape. I was engrossed in the former, imbibing...
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Stealth Killer At the Pump...

March 24 2006
Crude oil prices reportedly “worried” investors yesterday, perhaps because there was nothing more menacing in the news. But look at the chart below. It doesn’t take a technician to see that the current uptrend in prices is yet another gratuitous stab into the mid $60s, as likely to be followed by a $4 or $5 decline as high tide is by low.  Face it, if...
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Precise Targets For Gold Bugs

March 23 2006
With gold’s bull-market correction now in its thirty-fifth day, investors in mining shares and precious metals are eager to know whether prices are likely to turn decisively higher any time soon. To save on guesswork I’ve reproduced a chart below of the Gold Bugs Index (HUI)....
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Can Bird Flu Be Beaten?

March 22 2006
I am fortunate to have as a pen-pal a guy who has tracked the global bird-flu menace closely enough to understand it in ways that the news media evidently do not. He got my serious attention a while back with some interesting (and so far, profitable) thoughts concerning which stocks to short ahead of an all-but-inevitable bird-flu panic. Is it...
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We'll All Be Billionaires

March 21 2006
Will the Dow Industrials surpass 11350, a threshold that I’ve characterized as crucial to the bullish case for the intermediate term? If Monday’s turgid action is any indication, the Indoos will get there eventually, but probably later rather than sooner, one mincing step at a...
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Housing Stocks Defy Pessimists

March 20 2006
Just when you though it was safe to factor a housing bust into your investment outlook, lo, the shares of the homebuilders explode like gas from a bloated corpse. Here’s what it looked like on Friday, a veritable gusher of exuberance recorded by the PHLX Housing Sector...
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Very Coy Rally Kisses Targets

March 17 2006
The spyders rallied to within 0.30 points of our hidden-pivot target at 131.77 yesterday – close enough to imply that a correction could be in the works, though not quite close enough for us to get short at the high. We attempted to do so by purchasing some April 131 puts for up to 1.35; however, they traded no lower than 1.50 intraday. Our 1321.75 projection for the Mini-S&P got even closer to...
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Dow Stealing Up On a Key Peak

March 16 2006
The Dow Industrials recorded their highest close in nearly five years, but you’ll have to pardon us if we don’t sound too excited about it, at least not yet. In fact, the blue chip average has gained less than five percent in the last two years in relation to the important peak...
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Exuberance!

March 15 2006
It took the S&Ps all of two days to chew through a thick wad of supply that we had talked about here on Monday. Now the June futures are practically guaranteed to reach a minimum 1321.75, equivalent to an approximately 100-point rally in the Dow Industrial Average. Since we treat all such crazed leaps as the potential last gasp of the now three-year-old Mother of All Bear Rallies, we’ll be...
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Gold Correction Is Petering Out

March 14 2006
Last weekend’s hidden-pivot seminar drew some goldbugs, and so we naturally lingered for a while on the chart below, which shows the Comex April contract. It is more bullish than I had originally realized, notwithstanding the fact that gold bulls have been getting hammered for the last five weeks. What led me to this conclusion? Well, in the first place, the bearish impulse legs have...
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Joblessness Now Permanently Low

March 13 2006
Navel-gazing pre-occupied Wall Street on Friday as investors lifted the Dow Industrials 75 points on word of stronger than “expected” payroll growth in February. Seemingly overlooked by the revelers was that unemployment also rose slightly, to 4.8 percent. This might seem like a curious discrepancy, but who’s quibbling? Everyone but CNBC’s anchors and a few over-the-hill pundits are in...
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Joblessness Now Permanently Low

March 13 2006
Navel-gazing pre-occupied Wall Street on Friday as investors lifted the Dow Industrials 75 points on word of stronger than “expected” payroll growth in February. Seemingly overlooked by the revelers was that unemployment also rose slightly, to 4.8 percent. This might seem like a curious discrepancy, but who’s quibbling? Everyone but CNBC’s anchors and a few over-the-hill pundits are in...
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Million Dollar Igloos Coming?

March 10 2006
The real estate boom that is just beginning to deflate in many regions of the U.S. seems to be picking up steam in, of all places, Alaska. We just heard from a friend of ours who in 1989 bought a stake in...
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Gold Gets No Respect

March 09 2006
A pen-pal of mine has seized on a source of frustration that continues to vex many of us. To wit, gold and bullion shares sell off savagely in a bull market while the broad stock market rarely fall for more than an hour or two in the midst of a secular bear. “I don’t think there’s any doubt that the market is ready to [collapse],” he writes. “The violence of the sell-off in gold shares indicates...
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Survival Guide For Put Buyers

March 08 2006
We billboarded a 49.08 target in Newmont yesterday because a fall to that number, precisely, looked like a lead-pipe cinch. Our strategy was therefore simple: Put up a 49.08 bid on the opening, then simply wait for NEM to come to Papa. And so it did, sort of. After a curmudgeonly feint higher in the early going, the stock reversed course and plummeted four percent to 49.20. Those of you with bids in...
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Buying Newmont, But Delicately...

March 07 2006
Newmont has been good to us in the past, so we’ve been on the lookout recently for a good spot to re-enter the stock. You may recall that we exited a small position in January near $60, reaping a trading gain of $3,620. Alas, with the stock down by nearly $10 a share since them, it is evidently still not a buy, not quite. As much was evident yesterday when we tried to catch the falling...
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Wall of Worry Theory 'Twaddle'

March 06 2006
Until the final hour or so on Friday the stock market seemed to be holding its own against an onslaught of negative news. Topping the list was a sales warning from Intel. The stock opened sharply lower on the news, but rallied back to fill the gap by day’s end. The broad averages followed suit but ultimately closed well off their highs because of the final-hour selloff. On balance,...
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Are T-Bonds About to Dive?

March 03 2006
Is the long bond about to break down? John B., a subscriber who has taken an active interest in hidden pivots, studied a weekly bond chart like the one below and that’s what he concluded. Take a look for yourself and see if you...
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Bullion Bargains Beat GOOG-Lust

March 02 2006
From a hidden-pivot standpoint, a relapse to exactly 345.35 seems as likely for Google as an early-March  snowstorm in North Dakota. Not that I would try to discourage anyone from thinking GOOG might at some...
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Clueless Wonk, Or Bad Actor?

March 01 2006
Yesterday’s comments in this space proved timely, since all the evidence that Helicopter Ben could need of an economic slowdown was there in spades: ebbing consumer confidence, a cooling housing market, punk GDP growth and a slowing in the manufacturing sector. The Wall Street Journal’s reaction quotes implied that investors were caught off guard by the...
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Pimco Betting Against Bernanke

February 28 2006
Add Pimco’s Steve Rodofsky to the list of institutional heavies who aren’t buying “Helicopter Ben” Bernanke’s rosy outlook for the economy. “We’re concerned about the lag effect of the tightening,” said Rodofsky, senior vice president of portfolio management in charge of U.S. Treasury trading at Pimco. “Our overwhelming concern – more than the introduction of the 30-year bond – is the outlook for...
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Stocks Bide Time in a Warp

February 27 2006
My comments for Monday will be brief, since I’ll be off to Denver shortly for Rick’s Picks’ first hidden-pivot seminar, at the JW Marriott in Cherry Creek. Ironically,...
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We're Short Agnico, IBM

February 24 2006
We picked up some put options in Agnico Eagle Mines and IBM, although an attempt to get short in D.R. Horton as well proved a tad too ambitious. The homebuilder’s shares opened at their best levels of the day, but that was still 62 cents shy of our short offer. Concerning Agnico, it is not often that I recommend shorting the shares of a mining stock, but it has had quite a run-up and was looking...
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Endless Distractions Of the Home Office

February 23 2006
Working at home has its advantages, not the least appealing of which is to be able to enjoy the local traffic reports for their entertainment value rather than as strategic intelligence. I often don’t get around to shaving until after my daily workout in the late afternoon, and blue jeans are about as...
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50-Year Mortgage Like...Paris Hilton

February 22 2006
Several items pertaining to the perennially sunny real estate market came across my desk yesterday, reminding me of why we should always take the stock market’s innate inability to sniff out...
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Seven Lean Years

February 21 2006
Like so many of you, I like to hold a few put options in inventory each month “just in case.” You never know. Suppose investors were to awaken one morning troubled by doubts about the health of the economy? I’m not suggesting that such a thing is likely to happen, mind you, only that we should take the odds if they’re juicy enough. Well, we’ve actually taken odds that were plenty juicy in each of...
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Economy Just Hunky-Dory

February 16 2006
In his first report to Congress, the new Fed chairman reassured listeners that the American economy was rebounding robustly after a statistical lull in the third quarter. Some astute Fed-watchers took this as a subtle warning to statisticians to produce “friendly” CPI numbers next month, so that the developing, rosy picture is more credibly corroborated by the numbers, most particularly those...
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Trading Gold On Autopilot

February 15 2006
Yesterday’s forecast for Comex Gold caught the low of a $13 rally to the exact tick, 537.80. Because this occurred after midnight in New York, I was somewhat surprised to hear from a couple of subscribers who nailed the trade, using a suggested 0.90-cent...
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Is Bank of Japan Pulling the Plug?

February 14 2006
By holding interest rates close to zero, Japan has been been the global carry-trade’s best friend, fostering liquidity worldwide for purposes, mainly, of promiscuous financial speculation. However, the Bank of...
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Why He's A Goldbug

February 13 2006
Worried that you’ll awaken one day to news that the dollars you’ve got in the bank have to be exchanged for “new” dollars? You’re not the only one. Subscriber Ben Woo allowed here yesterday that that was one of his worst fears, financially speaking. “It would be suicidal,” for the government, he wrote, and there would be “blood in the streets.” But...
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Gold's Next Challenge

February 10 2006
Gold has rebounded sharply in the last two days, recovering nearly two-thirds of Tuesday’s savage decline. Yesterday’s peak came within three ticks of a 570.70 hidden-pivot target I’d said would be reached if a lesser pivot at 565.90 was exceeded. And so it was. Despite this impressive show of strength, the burden of proof over the near-term will remain with the bulls, since the April contract must...
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Dollar's Fate In Deflation?

February 09 2006
I reprinted an essay here yesterday from Chris Laird that explained why the Fed would not be able to prevent deflation. One of the more interesting responses came from a reader,...
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Is Gold Correction Already Half Over?

February 08 2006
We were a step behind Newmont’s swan dive yesterday, bidding 1.35 for some June 50 puts that stayed well out of reach. They opened at 1.60 and traded as high as 2.15 intraday on relatively strong volume. The chart that I used to justify a change of heart concerning Newmont (and other mining stocks) is not subtle, as you can see. The divergence between rising price tops and a falling MACD shouts for...
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Pittsburgh's Other Team

February 07 2006
Even for us Steelers fans, the Big Game was a bit of a snooze. But who knows? May it’ll make Mark Cuban, the flamboyant owner of the Dallas Mavericks, a little more nostalgic for his home town. The effusive billionaire is a native Pittsburgher best known to basketball fans for his on-court antics and outbursts, a few of which have gotten him heavily fined. But hey, how often do you find a team owner...
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Playing Newmont By the Numbers

February 06 2006
We may get a chance on Monday to try out some of the theories espoused here the other day under the rubric “Buying Gold Without Pain.” We much prefer getting aboard when there’s weakness to exploit such as we saw on Friday. Newmont in particularly is a favorite because it is...
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Buying Gold Without Pain

February 03 2006
Some readers have asked why I haven’t had much to say lately about mining stocks and the precious metals complex. In a word: risk. Those of you with access to my inside pages will already know that we recently took profits on, among others, a $3,600 winner in...
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Getting to Know The Feb 42 Calls

February 02 2006
We’ve been noodling around in the QQQs in recent weeks for two reasons. The first is to make money at it; the second, to gain a better feel for the way the puts and calls behave in this very heavily traded vehicle. Our approach usually begins by plugging in some numbers on the Options Calculator, based on the underlying vehicle trading at a targeted swing point. Typically, we try to buy...
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GOOG Defies The Eggheads

February 01 2006
No doubt, the eggheads who espouse the efficient-market theory would say Google shares were priced “just about right” when regular-session trading ended on Tuesday afternoon. Do we then regard GOOG’s so-far 65-point drop in after-hours trading as just a fluke – the kind of...
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Politics, Trading Not a Good Mix

January 31 2006
In a little more than 24 hours, January will have passed without a word from these quarters concerning Sen. Ted Kennedy. Hardly a day goes by when I don’t receive some droll reflection on Massachusetts’ senior senator – aka, the last...
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Bernanke Planning A Nasty Surprise?

January 30 2006
A while back, we went toe-to-toe here with Jim Otis on the topic of deflation. Jim holds forth at the Optimist, a Web site that, as the name implies, tries to see the sunny side of things. But we think it’s a bit of a stretch to find...
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Cheapie Puts, Calls The Only Way to Go

January 27 2006
A short squeeze in the final hour of Wednesday’s session telegraphed yesterday morning’s bolt from the gate, leaving us with little to do but pick our teeth. We had a 0.15 bid in for some Citigroup Feb 47.50 calls (CBW) on the opening, but it proved too stingy. Because these...
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Back to Normal, Stocks Vegetate

January 26 2006
Last Friday’s promising heart attack on Wall Street has given way to a quasi-vegetative state that holds no particular opportunities for either bulls or bears. What to do? We’ll sit on the cost-free put spread that we legged on in the QQQs, but my hunch is that we may be glad we bought some cheapie call options on the side. That’s...
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Kiss Pixar Good-Bye?

January 25 2006
Given the $7.4 billion price tag, it’s hard to blame Steve Jobs for selling out to Disney even if it means that his Pixar Animation Studios, one of the most successful companies in the history of show business, is about to be turned...
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No Bergdorf's In Dearborn

January 24 2006
Stocks rallied for all the wrong reasons yesterday, including an announcement from Ford that it will shut 14 plants and cut 34,000 North American jobs over the next six years. GM appeared to have benefited as well from investors’ loopy notions about the tonic effects of creative destruction. “Getting small” used to be the running gag of comedian Steve Martin, but now it evidently has become the...
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Bulls Turn Tail As Woes Mount

January 23 2006
Friday’s punitive stock-market decline wiped out the New Year’s rally and then some, challenging the arrant complacency that has ruled Wall Street of late with a steady drumbeat of unsettling news. Much of it emanated from Iran, which...
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Readers Skeptical Of Deflation Thesis

January 20 2006
We resume our discussion of deflation today with some interesting letters from readers. If you’d like to respond, please cite the specific passage and the author. First up is Marv Anderson, who says that the question of whether...
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Readers Weigh In On Deflation Debate

January 19 2006
Recent give-and-take here on the subject of deflation, including a would-be debate with uber-inflationist Gary North, generated quite a bit of reader mail. To stimulate, provoke and enlighten you, I will be presenting some of the more...
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Too Much Liquidity For Stocks to Crash?

January 18 2006
Yahoo and Intel were getting shaken down in after-hours trading on Tuesday, presumably by the kind of arse bandits who would be out stealing little old ladies’ handbags if trading stocks were not so lucrative. Intel’s earnings came in a whopping three cents below expectations and Yahoo’s numbers were actually pretty good, so we should hardly have been surprised to see widows, orphans and pensioners...
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The Firebugs

January 16 2006
Now those crazy Iranians supposedly are feeding uranium hexafluoride into a centrifuge enrichment cascade, a key step toward producing a nuclear bomb. The good news is that, unlike the Iraqis, they are making it extremely difficult for the civilized world to ignore their nakedly hostile intentions. The prospect of having to face down a nuclear threat from these lunatics puts one in mind of...
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How Would Dollar Act in a Deflation?

January 13 2006
My remarks yesterday concerning deflation elicited some insightful responses from readers. I’d planned to publish the best letters without comment, but the one below, from Greg Payne, is sufficiently provocative to warrant special handling. My reply follows, along with some further comments from the redoubtable Bob Hoye of...
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Inflationist North Dodges a Debate

January 12 2006
  Eager to alert readers to the imminent danger of deflation, I tried unsuccessfully to draw...
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Bull Moose On the Loose

January 11 2006
I spent Tuesday nursing the flu, tuned to Samuel Alito’s confirmation hearing on C-Span. The tone of the proceedings was surprisingly civil, perhaps because going on the attack against the mild-mannered judge would have been like trying to savage Mr. Peepers. Things are bound...
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A Turner Tribute To Leaden Acting

January 10 2006
Can you guess what the following films have in common: Woman of the Year (1942), Race Street (1948), The Time of Your Life (1948), The Big Steal (1950), Gambling House (1951), Blackbeard the Pirate (1952),...
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Googling Disaster

January 09 2006
We know, as clearly as it is possible to know such things, that the stock market is now in the hands of the lunatics. As much was evident Friday in the price action of Google, which at one time was up nearly 20 points on the day. I hesitate to tell you that this was the blowoff we’ve all been expecting, since one can never predict what manner of stupidity, insanity and piggish greed will hold sway...
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More Reasons To Get Short

January 06 2006
We were in there bidding yesterday for more QQQ puts, but even with the underlying index acting more buoyant than the broad averages, the options stayed just out of reach. This is encouraging, since, as in other areas of life, we shouldn’t be too eager to possess things that come too easily. We’ll be bidding once again for put options this morning, although not necessarily as generously. If shares...
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Dimmest Memories Of Jack Abramoff

January 05 2006
The seashore town of Margate, New Jersey, where I grew up in the 1950s, didn’t produce many big-time celebrities. There were no professional baseball players, no Wimbledon aces, no famous...
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Fed Does Its Bit To Fuel a Hoax

January 04 2006
Who needs a Plunge Protection Team when the Federal Reserve stands ready to ignite Wall Street’s New Year with a rip-roaring bonfire?  Never mind that the fuel for yesterday’s short-squeeze was a low-octane pile of manure, containing as it did little more than coy hints from the Fed’s December minutes that the central bank might stop tightening sooner...
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Got That Sand In My Shoes

January 03 2006
Warm greetings to you all in the New Year. I spent the holiday with friends in Colorado ski country, but as the photos below will attest, I’ve still got some sand in my shoes. The pictures were taken recently by two childhood buddies. One sails...
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Yield-Curve Jitters?

December 29 2005
Based on what we saw yesterday, the stock market is likely to spend the last two sessions of 2005 wafting gently higher. Unlike a day earlier, when the Bulls of Bozo-dom drove stocks up sharpl on the opening, only to be rebuked by sellers thereafter, Wednesday’s tepid, see-saw action was unlikely to have produced many big winners or losers. Still, three important stocks that we track and trade were...
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Gotta Love Those Bozos!

December 28 2005
How can we prepare for a stock-market crash in 2006 without risking our shirts if we’re wrong? We spent Tuesday morning doing exactly that – lining up our ducks for the Big One that for all we know could still lie ten years down the road. The opportunity we were looking for beckoned in the first hour with the subtlety of a string of exploding firecrackers. Bulls, hopped up on whatever it was that...
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More Thoughts On Deflation

December 27 2005
Recently, I responded here to an essay by Reality Check’s Gary North that asserted deflation was all but impossible. I have long maintained the opposite – that a ruinous deflation is not merely possible, but inevitable. My comments...
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Risking $240 To Make $3,200

December 23 2005
Ever hopeful that the market will effect the “healthy correction” that permabears have been expecting for, um, years, we acquired a small inventory of QQQ put options yesterday, paying a measly 0.15 apiece for sixteen January 40 puts. Our risk is $240, but the position has the potential to reward us with profits more than ten times that if the underlying index falls just five percent in the next...
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A Deflationist Goes for the Kill

December 22 2005
In the debate over whether inflation or deflation will eventually wreck the global economy, I’m always eager to take on a heavyweight. Gary North, for one. Let me say first that I have tremendous respect for the man, a writer with the kind of talent that other writers, including me, can only envy. North’s...
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Wild Grace

December 21 2005
It’s 2 a.m. in the East, far later than I’d expected to resume working on Wednesday’s edition, so I’m going to hold the inflation-vs.-deflation commentary that I’d promised for another day.  In its place, here’s one of the more interesting e-mail items that I received yesterday, an interview with photographer-cum-Renaissance man Eric Alan to nourish the...
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Bear Blues

December 20 2005
The VIX is once again plumbing ten-year lows, providing a graphic picture of year-end inertia that rivals a lug nut in its undecipherable muteness. In only two instances during the last decade, in 1999 and 2003, did the early days of the New Year find investors and traders the least bit excitable. Will 2006 begin with a bang or an implosion? As always, the answer is: maybe. Many top-flight...
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Dollar's Weakness Just a Correction

December 19 2005
The U.S. dollar has been trending lower for the past month, but speculation in some quarters that the bear market begun in July of 2001 has returned is not only premature but unwarranted. To the contrary, there is strong technical evidence that the dollar will soon be moving higher, reviving the baby bull that began early this year. To be sure, it is still just a baby, one that would need climb more...
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Street Hoping For the Worst

December 15 2005
With shares of Altria up by nearly four percent yesterday on favorable tobacco-suit news, the Dow Industrials still managed to close down on the day. Go figure. Sage observers attributed the market’s skittishness to investors’ concern that a supposedly robust economy might kick inflation into a higher gear. Indeed, capacity utilization in November rose above 80 percent for the first time since...
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'Junk' Silver's Role in a Crisis

December 15 2005
The fruits of yesterday’s regular Q&A session should keep paid subscribers busy for a while, since 12 of the 18 queries that I fielded contain actionable advice. There are specific buy-side recommendations for silver, gold, Swiss franc, Sirius Satellite Radio, Whole Foods, InPhonic, Yamana Gold and Citigroup, so make some...
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Fed-Mania At Its Silliest

December 14 2005
Fed-watchers reached a new low for self-absorbed silliness yesterday trying to divine whether the central bank intends to stop tightening any time soon. News that the Fed had raised interest rates for the 13th consecutive time surprised no one, of course. The federal-funds rate was pushed up to 4.25%, just as everyone had expected. But even if there was nothing alarming in this, that...
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Heating Bill A Real Shocker

December 13 2005
My latest heating bill didn’t include the recent cold snap here in Colorado, but even without it, the bill was 50% higher than any I’ve ever paid before. So much for the hundred bucks a month I was just starting to save on my monthly phone bill by...
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The $250M Hiccup

December 12 2005
If you’ve ever looked at the keyboard of a cash register at McDonald’s, you know that it has been designed to be idiot-proof, as unchallenging to a cashier’s mental abilities as counting one’s toes. In fact, the entire fulfillment chain at Mickey D’s, from order-taking, to french-frying, to mustard-dabbing  and napkin-dispensing, has been so well thought...
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A True Believer Champions Gold

December 09 2005
I have quite a few pen-pals who are ardent goldbugs – true believers who disdain the more subtle arguments that occasionally play out in this forum. Chuck Cohen is one such fanatic, an erstwhile Rick’s Picks lurker whose unqualified, well-reasoned enthusiasm for precious metals and mining shares sometimes makes me feel ashamed to have entertained even mild...
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Trojan Horse At GM's Door

December 08 2005
What the heck could GM investors be thinking? A surge in the stock late yesterday cut the DJIA’s losses nearly in half, but you’d have to be a cynic to believe the celebration was warranted. The news that caused GM shares to rise 2.9 percent in mere minutes concerned the growing likelihood that Kirk Kerkorian, a 9.9% stakeholder, will get a seat on GM’s board. Kerkorian’s hatchet-man, Jerome York,...
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Under Pressure, Dow Slogs Higher

December 07 2005
The DJIA remains locked on 11000, and if it should fail to push above that number by year’s end – well, there’s no point even thinking about it, since the odds of failure are by now so remote that only a collision between Earth and a huge asteroid could conceivably deter investors from doing the requisite lifting between now and New Year’s Eve. For sure, they did their bit yesterday, keeping the Dow...
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Is OPEC Tiptoeing Into Gold Bullion?

December 06 2005
Comex gold has been making short work of my hidden pivots, and not just the little ones either. There was an important hidden resistance at $500.00 that “should have” slowed the rally down; instead, it exhibited about as much stopping power as the Orleans...
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Market on Cruise Till Bonus Time

December 05 2005
I’ve reproduced hourly charts below of the mini-contracts that we trade more or less regularly. A pessimist would probably notice first that the most important indexes – i.e., the Dow Industrials (YM) and the S&P 500 (ES) -- are lagging behind the Russell 2000 (ER) and the Naz. But you could spin it another way, too – that if GM and Honeywell had not been dragging the blue chip average down on...
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Puts Are Cheaper Than Bass-Fishing

December 02 2005
A Dow thrust above 11000 seems like a foregone conclusion, but even so, it’ll be tempting to try and impede it with some shorts if and when the big day arrives. We’ve taken a cautious approach so far whenever bucking the bullish tide, buying a few puts here, a few puts there, as certain favored trading vehicles approached promising hidden-pivot targets. Looking back at the stock market over the last...
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Deranged Bull About to Cool?

December 01 2005
I don’t usually pay much heed to conventional trendlines, since they are too well watched to be trader-friendly, but the one governing the S&P 500 Index shown below is pretty compelling. It connects five tops going back nearly two years, including one made just two days ago at 1270.64. Was there by any chance a hidden pivot close by? Turns out there was – at 1275.07. The nearly five-point...
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Cliff Looms For $ Bears

November 30 2005
With gold hovering near $500 an ounce, the barbaric relic is finally getting some attention -- from the Wall Street Journal, for one, in the form of a bylined article, “Gold Flirts With $500,” that hit the Dow Jones newswire on Tuesday afternoon. Be patient, dear gold bugs, since it could be another year or two before the likes of Newmont and Barrick make the cover of...
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First-Hand Memories Of Economic Turmoil

November 29 2005
I spent many hours over Thanksgiving weekend responding to a huge backlog of e-mail messages, many of which concerned our favorite topic, deflation. Below are a few such letters that I thought you might find interesting. I will publish the remaining letters tomorrow (Wednesday). First up is Kahlif David, responding to my theory that someday we could...
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Dot-Com Mania's Final Hurrah?

November 28 2005
Google blew past my hidden-pivot target at 418.58, implying the stock will reach a minimum 439.05 before it can peak. We had an order in to buy some December 400 puts, but only at bargain prices. In fact, we bought none, since put options in Google picked up volatility as the stock moved higher on Wednesday. This suggests that the market makers are not exactly wild about shorting GOOG puts as...
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Dot-Com Mania's Final Hurrah?

November 25 2005
Google blew past my hidden-pivot target at 418.58, implying the stock will reach a minimum 439.05 before it can peak. We had an order in to buy some December 400 puts, but only at bargain prices. In fact, we bought none, since put options in Google picked up volatility as the stock moved higher on Wednesday. This suggests that the market makers are not exactly wild about shorting GOOG puts as...
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The Easiest Way To Short Google

November 23 2005
Google, up 9 points on Monday, is within striking distance of a potentially important hidden-pivot target at 418.58. The stock shredded its way higher after faking out bulls with a gap-down opening. It took about 20 minutes for this hoax to play out, coaxing shares from panicky sellers two points below the previous day’s close before trampolining into the wild blue yonder. There...
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The Easiest Way To Short Google

November 22 2005
Google, up 9 points in the last six hours, is within striking distance of a potentially important hidden-pivot target at 418.58. The stock shredded its way higher yesterday after faking out bulls with a gap-down opening. It took about 20 minutes for this hoax to play out, coaxing shares from panicky sellers two points below the previous day’s close before trampolining into the wild blue yonder....
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The Market That Would Not Tank

November 21 2005
The Market That Would Not Tank turned a promising dive into a swoon Friday, but not before letting us get short on the high tick of the day. We had an offer in to sell two E-Mini S&P contracts short at 1252.25, precisely where the index peaked early in the session. We covered half the position six...
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An Old-School Newsman Dies

November 18 2005
I just received word of the death of my old boss, Charles C. “Chuck” Reynolds, former editor-in-chief of The Atlantic City Press. Chuck hired me in 1971, a week after I graduated from college, and I spent the next seven years learning the craft of journalism before migrating to the trading pits of the PSE. This was before Woodward and Bernstein,...
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Titillating Times

November 17 2005
Danger, or opportunity? The S&P chart below titillates us with plenty both. We see a rally that has spent the last month in coil-and-lunge mode, fitfully making its way toward the year’s earlier peaks. Having surpassed one of them already – the 1233 high...
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Sleepwalking

November 16 2005
Yesterday’s forecast nailed the exact low in the Yen – 0.8411, basis December – offering us an exhilarating ride and a profitable (i.e., $475 per contract) exit shortly thereafter. The intraday high was 0.8458, but I can’t predict whether there is significantly more upside to come. If so, corresponding weakness in the dollar could be expected to lend buoyancy to gold quotes, which so far have...
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Now It's Black Helicopter Ben

November 15 2005
Now Helicopter Ben’s been spotted at the controls of a black helicopter. Conspiracy theories abound concerning the Fed’s recent decision to stop publishing M3 data. Some fear this will give Alan Greenspan’s successor more room to manipulate monetary policy surreptitiously. There’s a more plausible explanation, though – one that is about as intriguing as the Boy Scout Handbook. Very simply, M3 growth...
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Petites Tetons Loom for Bulls

November 14 2005
Stock averages wafted into the rafters Friday, setting the stage for an attempt over the next week or two to lift the roof on this year’s constipated range. For the S&P 500 Index, that would require a move above the 1245.86 high recorded in early August. That’s almost exactly 4% above current levels, and one could expect the financial press to rain fireworks and confetti on Wall Street if and...
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Doing the 'Fly

November 11 2005
That was quite a turnaround yesterday, eh? Google, for one, ripped for a $14 gain following a weak opening, finally closing within 25 cents of the intraday high. We’d hoped to get aboard at a swing low, but had expected it to take a few more days for the stock to find traction. In fact, the entire, savage correction lasted all of two days, terminating abruptly in the opening minutes of Thursday’s...
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Why $509.25 Is Crucial for Gold

November 10 2005
We’ve had excellent success recently using hidden pivots to predict important swing points for gold, which is now inches from a bullish breakout. Recall that on October 12, the Comex December contract peaked at 483.10, a single tick above the $483.00 target that had been projected here several weeks earlier near $467. The subsequent decline from $483.10 was nasty, hitting a low of $456.10 on...
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Surrender Monkeys Keep Their Cool

November 09 2005
Say one thing for those cheese-eating surrender monkeys, they can keep their cool. Take a look at the chart of the CAC 40 Index below. With blood flowing in the streets and flames devouring police cars and public buildings by the score, lapping at the gargoyles, French stocks have rallied almost as though nurtured by the riots. In the past, we’ve seen the Dow Industrials and...
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What If Google Bought Microsoft?

November 08 2005
Google is closing fast on a $407 target (or $418 if any higher) we’ve had in our sights for a while. The stock is not so much a proxy for the market as a nose cone, but we follow it closely nonetheless because of its power to inspire the downtrodden investor. Not long ago, when GOOG shares were trading around $335, I was feeling inspired myself – to short the stock, as some of you may recall. Of...
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Dollar Bulls Rare as Dodo

November 07 2005
The “strong-dollar guy.” That’s not how I want to be remembered, although it surely couldn’t hurt if my loyal subscribers would talk up this point to friends and acquaintances who might be shopping for a guru with a very different slant on the economy. Regarding the curiously strong dollar, I like...
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Bulls Munch Into Supply

November 04 2005
Yesterday’s strength in the indexes had been telegraphed a day earlier, when the S&P futures pushed above a hidden-pivot resistance I’d flagged at 1215.00. This allowed us to jump aboard overnight, using another “invisible” trigger point at 1218.25. Ordinarily we try to initiate trades at swing points where intraday trends begin. However, the market has been too coy lately to make this an...
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Mining Sector's Dirty Dozen?

November 03 2005
Of the many questions that I fielded during yesterday’s real-time Q&A session, no fewer than seven concerned gold stocks. Clearly, interest in the miners is on the rebound among Rick’s Picks subscribers. Not coincidentally, we’ve been in there bidding for a piece of the action the last two days. So far,...
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Gold Looks Right For Bottom-Fishing

November 02 2005
Gold is starting to look attractive again. We’ve been waiting for a buying opportunity since mid-October. That’s when the Comex December contract touched 483.10, a single tick above an important hidden-pivot target at 483.00 that I’d flagged several weeks earlier. Here’s what I wrote at the time, on September 28: Upside...
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Time Running Out For Seasonal Bears

November 01 2005
As trick-or-treaters make their annual rounds Monday night, we should be reminded that bulls will have seasonality on their side into year’s end. As some old-timers may recall, Christmas shopping used to commence officially the day after Thanksgiving,. These days, though, retailers at the local mall will be revved up to the redline by the time Turkey Day rolls around. The stock market may be off to...
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9 Tons of Gold In His Mattress

October 31 2005
Interesting times continue to drive the market every which way but loose. Rallies go to resistance, declines to support -- more feverishly so in recent weeks, seemingly, than many of us can recall. One of these days a trend is going to exceed our tired expectations, then reverse with a unanimous consensus leaning the wrong way. Friday’s little frisson was...
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Gold and Deflation: Readers Weigh In

October 28 2005
Deflation has never occurred on a global scale, nor in a financial environment such as currently exists – one in which fundamentally worthless currencies serve not only as legal tender, but as the world’s chief store of value. Under the circumstances, the prospect of deflation raises some tricky questions for gold bugs, most of whom were attracted to bullion because of their deep distrust of paper...
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Do We Grow Fat Just to Be Eaten?

October 27 2005
With “Helicopter Ben” Bernanke slated to take charge of the Fed next year, I raised the question here yesterday of who’s interests he will serve. Those of big business? Of the U.S. Government? The Federal Resereve’s member...
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Bernanke Faces Trial by Ordeal

October 26 2005
If the appointment of “Helicopter Ben” Bernanke as Fed chairman portends a major change in monetary policy, it will most likely come in the form of a shift from fighting INflation to guarding against DEflation. Recall that Bernanke burst onto the financial scene two years ago with a provocative speech to the National Economist Club that made clear the central bank’s resolve to fight deflation by any...
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Bottom-Fishing In December Oil

October 25 2005
December Crude fell yesterday to a hidden-pivot target at 59.43 first broached here two weeks ago, allowing us to get long with the very tight (i.e., 59.18) stop-loss that had been suggested. The actual low was 59.31, but it’s too early to tell whether it will mark a major turning point. I had raised that possibility last week in response to apparent consensus expectations that oil prices have...
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Living to 100

October 24 2005
I had planned to continue our dialogue today concerning deflation, but the mood eludes me at the moment. The weekend was a joyous one for my family, which had gathered here in Boulder for the bar mitzvah of my son,...
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Readers Braced For Tough Times

October 21 2005
Last week’s dialogue concerning deflation and the impending hard times produced quite a pile of interesting mail. The discussion resumes today with several more fascinating letters from...
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Falling Oil Prices Spur Stock Bulls

October 20 2005
Wall Street shrugged off losses at GM, Honeywell and Intel to focus on the good news -- a $1.00 drop in the price of crude. The Dow Industrials were up nearly 129 points at the close, having rallied from a moderate deficit in the opening hour. If the ratio between blue chip stocks and oil quotes holds, a decline in spot crude to $51 might be expected to propel the Dow to new all-time highs. Of...
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Iraqi Vote Offers A Taste of Chicago

October 19 2005
It’s starting to sound like the constitutional referendum in Iraq last weekend was run by a bunch of Chicago ward-heelers rather than by a fledgling committee of Muslim and Kurdish locals. In some...
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Nascent Bull, Or Bear Ruse?

October 18 2005
Hard to know why stocks were so feisty yesterday. Perhaps it was the world-shaking news from the Hollywood – that a new actor has been chosen to play James Bond (a blond (!!!), the “news” media breathlessly informed us), and that Stallone is gearing up for...
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Hey, You Lurkers: See for Yourselves

October 17 2005
A while back, I promised you that I would never become a cheerleader for gold – that  I would simply call ‘em as I see ‘em. The ranks of guru-dom are already far too crowded with hucksters who never stop blathering about a supposedly imminent bullion moon-shot to $1,000-plus an ounce. These are the same guys who tell us, every time the price of gold...
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Why Monetization Is Not the Answer

October 15 2005
I’ve covered the markets and specific securities on the paid-subscriber pages, providing some key supports for crude oil as well as guidance for the short positions we hold in Citi and the Diamonds. In today’s commentary, I’d like to continue our dialogue on deflation by responding to some of your letters. The first is from...
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Why Monetization Is Not the Answer

October 13 2005
I’ve covered the markets and specific securities on the paid-subscriber pages, providing some key supports for crude oil as well as guidance for the short positions we hold in Citi and the Diamonds. In today’s commentary, I’d like to continue our dialogue on deflation by responding to some of your letters. The first is from...
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Whiskey, or Gold?

October 12 2005
Judging from the mail I’ve received recently, some of you are not taking my deflation warning lightly. Of course, to mainstream commentators, we’re just lunatics. But let me say it again: Deflation is unavoidable. And hey, don’t shoot me, I’m only the messenger. I’ll be publishing your letters on this topic over the next few days, and there are some...
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High Fuel Costs Painless for Citi

October 11 2005
The Citi puts we hold will give us some positive exposure if stocks take a dive between now and December. Anything below $40 a share would be worth $1,800 a point to us, so we’ve got pretty decent leverage. And it doesn’t hurt that earlier profit-taking has reduced our cost basis on these puts to just 27 cents apiece. ...
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Deflation's Revenge On Illusory Wealth

October 10 2005
Deflation is the unknown that scares gold bugs the most. The typical hoarder of gold is contemptuous of paper assets in general and of fiat currency in particular. He is hostile toward the very idea of central banking, convinced that the bankers, by pushing easy credit, have brought the global financial system to the brink of collapse. And he believes, most fervently of all, that only a hoard of...
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If System Collapses, Who'll Bid Up Gold?

October 07 2005
I’ve been a dollar bull for quite some time, a position that puts me sharply at odds with the likes of Buffett and Soros.  Of course, anyone who owes lots of dollars – mortgagors, to name just one class of debtors – should be rooting for these guys, since a dollar cheapened by inflation would effectively reduce the burden of debt for all of us. And extreme...
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Fannie's Weight Could Sink Stocks

October 06 2005
With Citi evidently in the grip of lunatics – the stock was down a whopping seven cents yesterday, even as most other banking shares got savaged – we’ll shift our attention to Fannie Mae, a bellwether whose price action is perhaps more in tune with reality. Fannie’s dead-cat bounce looks to have run its course, and the stock should now be presumed bound for a hidden-pivot support at 37.60 that I...
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Winter Shortfall: $5,500 Per Home

October 04 2005
The blow to our consumer economy is already being felt at the retail level, as I implied here yesterday. How much worse might things get? My friend Doug at Merrill Lynch calculates that, compared to last winter, the average household will face an increase in non-discretionary spending of at least $700 per month, or $3,500 for the five-month...
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Economic Plunge Is in the Pipeline

October 03 2005
Friday’s S&P range was the sixth lowest in the last two years, in case you’re keeping track. Of course, it must have seemed even duller to market watchers who have been patiently awaiting an October crash. And not without good reason. Stocks may have shrugged off Katrina and Rita, and even the prospect of Fannie Mae’s directors being hauled into court, but there are a few wall-of-worry items...
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Fannie's Swoon Barely Registers

September 30 2005
Far shrewder observers than I are already characterizing the developing Fannie Mae saga as Enron/Worldcom writ large. “The biggest Ponzi scheme in world financial history” is how one regular in a chat room I frequent -- a money manager who oversees mega-billions -- sees it. For starters, think of all the little people who for decades have been buying Fannie...
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Should We Heed Hindenburg Alert?

September 29 2005
The market continued to inhale and exhale yesterday. Pondering the alternatives, perhaps we should be thankful. From a hidden-pivot standpoint it was a case of rallies falling short of their modest targets and declines doing more or less the same. I had some bids in below the market in several of the mini-indexes, but sellers lacked whatever conviction it might have taken to get them filled....
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Lake-Surfing

September 26 2005
I’d suggested keeping your Bulletin Launchers open Friday in case an opportunity popped up, but we certainly didn’t get much to work with. The day’s highlight was a soporific ride aboard the Mini-S&P in the early afternoon. The rally allowed us to exit on a trailing stop 20 minutes later with a 2.25-point gain, or about $100 after commissions. Lunch money if you live in...
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Ebullience? Or Just A Routine Bounce...

September 23 2005
Buyers tipped their hand early yesterday when homebuilders and bank stocks refused to fall on an otherwise weak opening. In fact, two of our faves, Beazer and D.R. Horton, were actually showing gains with the Dow Industrials off nearly 30 points in the early going. We’ve always paid close attention to Citi in particular, since, as far as I’m, concerned, it’s a perfect proxy for a...
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Signposts

September 22 2005
December Gold spiked to 476.20 yesterday, just a hair shy of the 476.50 hidden pivot we’ve been using as a minimum rally target. Once above the pivot the futures would become be an odds-on bet to reach the next at 483.00, an impediment that looks sufficiently daunting to warrant shorting, albeit with a very tight stop-loss. Assuming a tradable pullback occurs from that number, we would expect the...
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As Citi Goes...

September 21 2005
Citigroup may be the perfect proxy for an economy that has been running on smoke and mirrors, and it therefore behooves us to pay close attention when the stock reverses sharply, as it did yesterday -- especially when the reversal comes precisely at a hidden pivot, as indeed it did. Citi shares have been in a short-squeeze since late August, with only a couple of minor corrections along the way. The...
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Key Numbers For Gold Bugs

September 20 2005
Gold peaked early in yesterday’s session, but not before making a 17-year high that will have very bullish implications going forward. The actual top occurred at 472.40, less than a dollar from the hidden-pivot resistance at 473.20 that I’d identified a while back as a minimum rally target. The pivot could still show a little stopping power later this week, but judging from the way the futures...
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Market Climbs Wall of Hubris

September 19 2005
This market creeps me out, really. It’s one thing for stocks to climb a wall of worry, but quite another for them to dance a jig every time the major averages advance a foot or two on some fresh shard of appalling news from Iraq or New Orleans. Bad news is good news these days, in case you hadn’t noticed, and as far as Wall Street is concerned, the disaster in...
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Time to Short Google Shares?

September 16 2005
Is it time to short Google? This is a question that pops up frequently in my mail, and although the short-term answer may be “yes,” the longer-term outlook should temper our enthusiasm for betting against the Web’s reigning searchmeister.  The company is pursuing a course that will put it increasingly in competition with Microsoft, and although it could...
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Trashed Pivots Spell Trouble

September 15 2005
I don’t like the way the averages trashed a couple of  hidden pivots supports yesterday, not at all, and I said so in an intraday bulletin. We had bids in below the market in two trading vehicles, the Mini-Russell and the Mini-Dow. The latter fell to 10630 in the first two hours of the session, just a single tick above the 10631 hidden-pivot target I’d...
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Turn On, Tune In...

September 14 2005
Although Rick’s Picks  is not explicitly geared to day trading, I’ll occasionally send out updates and recommendations in...
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Timing Trades So They Work

September 13 2005
We offered the E-Mini Nasdaq short at 1615.00 yesterday, and although that hidden pivot offered daunting resistance throughout the day, we ended the session with no position. A case of cold feet? Definitely not. I’m as eager to short the market at these levels as you are, but only if we are able to initiate a position on our terms. On Monday, I’d specified that the short offer be left in until 10:30...
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Living in These Interesting Times

September 12 2005
Interesting times beget interesting e-mail, of course, and last week’s torrent of messages and attachments commenting on these all-too-interesting times could take me a month of Sundays to get through. I can only hope that next week is wholly uninteresting, eerie is that might seem, lest I get even further behind in my reading. A week of profound eventlessness wouldn’t be so bad for humanity,...
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