March 2009

The futures were in the throes of a minor shakeout Sunday night, headed toward a Hidden Pivot at

Last week's tedium seems to have gotten the speculative juices flowing in the Rick's Picks chat room.  Stocks, bonds and gold did practically nothing all week, a condition that invariably causes market-watchers to expect something to happen the next. That's how Bollinger Bands work:  Stretches of boredom in the markets cause the upper and lower bands to constrict to an isthmus, supposedly foretelling the next explosive price movement.  From a Hidden Pivot perspective we see trendlessness somewhat differently, in the form of "dueling" impulse legs that are characterized by minor rallies on the lesser charts matched by minor declines of equal magnitude. In other words, tit-for-tat. But whereas Bollinger Bands effectively store up tension between bulls and bears, dueling impulse legs alleviate it. From an analytical perspective, we like to think the Hidden Pivot System allows us to predict boring stretches more comfortably than most other technical methods.  Not that we're actually expecting more of the same right now. We've already projected a minimum 848.25 for the June E-Mini S&P, implying that a Dow rally of as much as 300 points is imminent. Although we expect that threshold to be reached by no later than mid-week, it is what occurs immediately afterward that can tell us whether more tedium awaits; or perhaps a new rush of ebullience; or even a fatal stall. For if the target were to be exceeded by more than a couple of points shortly after first being touched, we would infer that Spring fever is likely to persist for yet more days or even weeks. And if the shares of one stock in particular, Goldman Sachs, were to lead the charge, we'll be urging bears to go with the flow, since the stock, currently trading around $108, could be headed as high as $129.  We're predicting

The Dow seemed inexorably and imminently bound for at least 8059.88 when the bell ended yesterday's spree, although it will always be a coin-toss predicting how anything will open the next day -- especially when the next day is a Friday, and especially when that Friday caps a week when arrant stupidity and hubris were at their very boldest

The futures continued their waft toward 848.25, a Hidden Pivot that looks like a high-confidence target, although not quite a hula number. Around 1:30 a.m. Thursday night, the rally was an a modest retracement, creating minor abc patterns that do not seem well suited for bottom-fishing. However, if someone put a gun to my head and said, "Make a profitable trade, or else!" I'd probably attempt it at

Someone in the chat room mentioned the 1007.70 high recorded in mid-February as the potential starting point of an ABCD downpattern yielding a target all the way down at 842.80. That's technically correct, but if you look at the pattern itself on the daily chart, it's the sorriest excuse for a downtrend that we could imagine.

Today's extensive analysis of Gold is intended to dispel the notion that I am bearish on bullion merely because I wrote a "tough love" commentary here the other day.  The opinions were subjective, but hard evidence in the form of Comex futures charts strongly suggests that bulls have little to fear.  Just this once, I would encourage Rick's Picks subscribers to share my analysis and the chart with any outsiders who might benefit, since there appears to be considerable uncertainty in the investment world about Gold's prospects.

We view the action in gold yesterday as constructive, even though its ups and downs didn't net out to anything terribly exciting. Notice how the little orgasm early in the morning exceeded a 944.60 peak recorded a few days earlier. That created a bullish impulse leg on the hourly chart -- always an encouraging sign. The rally detumesced, ending the day on a disappointing note, but it was not quite the selloff we might have expected, given the strong performance of the broad averages.  Clearly, although bullion has been lackluster as stocks have risen in the last week, it is no longer getting hammered just because investors are momentarily obsessed with the idea that maybe, just maybe, President Obama, Geithner, Bernanke and of course Larry Kudlow are succeeding at bringing the financial system back into balance. In any event, we'll stick with the rally target at 1001.10 that went out to subscribers Wednesday night. It may take a while, though, since we don't see the short-squeeze that has been driving the stock market higher ending quickly. In fact, the rally yesterday in the S&P Index created its own bullish impulse leg on the hourly chart, renewing the bull trend. I've included a target for the E-Mini S&Ps in Friday's touts that implies that considerable buying power remains to be spent. Will Friday craziness exhaust this potential?  We'll be eager to find out, since DaBoyz appear to have put this trading vehicle in a holding pattern Thursday night. Our guess is that if they take it down four to six points overnight, it will mean They are eager to buy 'em.

Some wag in the chat room mentioned my $22 target in crude the other day, and I'd have to concede at this point that the futures are taking a devious route getting there. In any event, the

I'll be attempting to resume my ski holiday these next two days, so don't look for me in the chat room. The outlook for Thursday gives the bull wide berth, especially since El Toro seems barely able to contain himself in thin trading Wednesday night.