March 2011

Don’t expect all hell to break loose in Saudi Arabia when demonstrators hit the streets today in a planned show of strength. Protests are likely to be subdued, according to a Rick’s Picks subscriber who lives there.  “You need to take what the news and Internet are saying with a grain of salt,” he wrote. “I am currently living in Saudi and have been talking to the locals the past few weeks. Everybody I have talked to does not believe anything will happen this weekend, nor do they want change. I am not saying nothing is going to happen, but that is the ground report. Everybody I have talked to, regardless of which Muslim religion they practice, loves the king and is grateful for what has occurred in thecountry over the past generation. You need to remember that these people were 98% nomads less than 30 years ago.”  The “experts” would indeed have us braced for the worst. “Although most political analysts predict any demonstrations to be swiftly – and perhaps bloodily – suppressed by the government,” the Financial Times reported, “any hint that the protests enjoy wider-than-expected support is likely to spook investors once again.” We suspect that even if Riyadh remains relatively peaceful, however, that crude oil prices will continue to head higher.  A short while back, we wrote here that the spike in crude caused by mounting troubles in Egypt and Libya would seem relatively tame in comparison to what we might see if Saudi oil production were to come under threat. While we still think that’s true, we now expect a quiet weekend in Saudi Arabia to ultimately have little impact on energy markets that seem likely to remain in the grip of speculators. They are quite obviously determined to keep squeezing until the fever breaks,

NEM has plummeted to 52.00 today, hitting a Hidden Pivot support that I'd all but given up on. Since chat-roomers are reporting fills at 52.30, I'm establishing a 400-share tracking position for your further guidance. We won't be out of the woods today until the bounce hits 53.21.  Support here is dubious, but if the position is stopped out (at 52.12, as noted in the chat room) we'll try again at 50.40, the next logical support below.  _____ UPDATE (Thursday 2:22 a.m. EST):  The stock fell hard, bottoming at 51.66.  We got stopped out for $72, but we'll try again at 50.40, as suggested above.

This session is interesting for its failures – mainly, to find a good trade no matter how hard we looked. Poring over charts for the E-Mini S&Ps, Gold and the Dollar Index, although we were able to precisely predict key price reversal in each – particularly reversals off midpoint supports -- downshifting to lesser charts revealed few distinctive camouflage opportunities if we strictly adhered to the rules. But with so many vehicles to trade, and so many opportunities in the course of an average day, why settle for trades that offer less-than-great odds?

Night time action around 3 a.m. was turgid not only in index futures, but in Gold and Silver contracts as well.  The E-Mini S&Ps have thus far failed to push above a tiny resistance peak noted in today's tout, suggesting DaBoyz were lacking in either guts, energy, or both.

Penetration of the 104.03 midpoint shown implies that the futures are likely to head lower, to a Hidden Pivot support at 102.27, before the uptrend resumes. Because the pattern is so un-obvious, you can try bottom-fishing with a stop-loss as tight as four ticks. _____  UPDATE:  By creating a new point 'C', yesterday's pointlessness raised out target to 102.40.  It too would be negated by a print above 105.92.

With Silver getting torqued for a shot at 37.300, our short-term target, perhaps it's time to introduce the next: 39.620.  This looks like a bit of a stretch, literally, on the hourly chart (see inset), but it is certainly no more implausible than the nearly correctionless, synthetic rally we've witnessed in the broad averages in recent months.  Boarding a trend that by now has attracted so many bulls will always be tricky,  but it is nonetheless possible in nearly all instances to cut risk down to size by employing camouflage on the very lesser charts. In this case, and as of this moment, Silver has just breached a minor peak at 36.160 equivalent to the one that I've flagged in today's Gold tout. ______ UPDATE (2:06 a.m. EST):  After popping a few ticks above 36.160, Silver  fell 33 cents without tripping any bullish entry signals. Action remains too nervous at the moment to offer any easy opportunities.

After assuming no one caught yesterday's low because it was so many hours in coming, I heard from an intrepid subscriber who said he bought 1124.70 yesterday and hung on after it survived a 1423.50 stop-loss by a single tick.  His stop was a bit wider than I might have advised, and that's why I am not tracking the trade as an "official" position. However, and for what it's worth, he said he hung with the trade -- is still hanging with the trade -- because it offers a low-risk shot at a big move to $1600+.  Indeed.  More immediately, and from a Hidden Pivot perspective, I'll suggest raising the minimum upside target by a few ticks, to 1459.40, a target whose provenance is shown in the accompanying chart.  The futures have already trashed its sibling midpoint resistance at 1436.90, dispelling all but the smallest doubts about a follow-through to 1459.40, but it will probably take a close above the 1441.20 midpoint of a lesser pattern to end the inertia of the last week.  Trading note:  Night owls can try bottom-fishing at 1419.60, stop 1419.20, if a so-far supportive midpoint at 1425.70 gets knocked down.

The hysterical swings of the last two weeks are starting to tighten into a pennant capable of producing an upthrust for which traders need to be prepared.  In Magee-and-Edwards theory, the dithering could go on for as long as another week or two, but using the Hidden Pivot Method, we can determine exactly when the futures are ready to move by watching closely for fresh impulse legs on the lesser charts. Keep in mind that it is after lengthy periods of tedium that camouflageurs enjoy their greatest edge -- as long as they're willing to pay close attention when most other traders will have fallen asleep. For starters, night owls should open a one-minute chart in order to spot a breakout above a 1322.00 look-to-the-left peak made on the way down yesterday at exactly 4:02 p.m. EST.  A 'b-c' pullback from just above that peak could provide the best opportunity you'll see tonight to jump aboard a fledgling uptrend. _______ UPDATE (9:45 a.m. EST):  The futures idled most of the night, finally poking above 1422.00 around 4:30 in the morning.  This did indeed initiate the best rally of the day, at least so far, but it was only to 1325.00, and there was a premature entry signal at 1321.75 (A=1317.50) that would have generated a small loss and required a second try (at 1321.25, 5:30 a.m.).  At 9:45 a.m., the futures were being manipulated lower, presumably to a 1312.75 Hidden Pivot target that would max-out corrective patterns on the 1-minute chart (A=1325.00, B=1318.00, and C=1319.75.).

(My response to Mario Cavolo's "rosy" economic outlook kicked off such a spirited discussion in the forum that I am letting it run for a second day.  Let me mention, however, that Mario himself has spurned my "optimist" label and said that he sees no roses, only reality. He lays out his case in a post that, as of early Tuesday evening, could be found at the end of the discussion thread. RA )  No one doubts that optimists like you will be essential when it comes time to rebuild the economy.  Might I suggest that you save your energy for later, when it will do the most good, rather than risk squandering even a small amount of it arguing in a forum where you’re outnumbered twenty to one? Much creative destruction remains to occur before America can get back on track, and only a great deal of pain can bring about the epiphany that the illusion of our economic well-being has been sustained entirely by lies.  (Fortunately, that is not true of our economic future, since Yankee know-how can never be counted out. But merely financing Yankee know-how will require re-allocating capital from a still-vastly overvalued financial sector to one that efficiently turns out real goods and services that the rest of the world vitally needs.) For the present, however, The Great Recession has dealt America’s standard of living a mortal blow, steepening our decline in ways that are likely to continue for perhaps a generation.  The upper strata of earners has not gotten away unscathed, as you would have us infer, even if the fraudulent, Fed-engineered stock market rally launched exactly two years ago has eased the pain of their dot-com and real estate losses. The stock market must now crash too, since it is buoyed by an all-but-irresistible tide of funny money.  Ultimately, however, nearly