Commentary for the Week of March 8

The markets were suspiciously subdued Sunday night -- developing thrust, perhaps, for the next maniacal surge. In retrospect, it seems remarkable that the broad averages were able to sustain an upward trajectory in recent weeks even as the most valuable stock in the world, Apple, was getting savaged. (Breaking news: Apple has fallen to second place, its cap value now exceeded by that of Exxon-Mobil.) The stock has plummeted 37% since September, from an all time high of $705 to Friday’s shell-shocked low of 435.  It must be conceded that even at $705, AAPL was not egregiously overpriced relative to earnings.  Presumably, Wall Street’s renowned shakedown artists have been intent on driving AAPL down to bargain-basement prices because they’re so confident they’ll be able to goose the stock back into the ionosphere before their 2013 bonuses are calculated.  Well, it’s optimists that make the world go ‘round, so perhaps we shouldn’t be so churlish as to deny them the spoils of such deftly executed opportunism. For our part, we’ve hated the stock market each and every step of the way up since, oh, 2009.  But it’s not as though we’re sore losers.  In fact, much of the time, we not only had the rallies nailed, we were able to profit from them on the way up -- and even to short them when they reached swing highs nicely foreseen by Hidden Pivot analysis. We recently attempted this gambit once again as the E-Mini S&Ps approached an important rally target at 1494.50. We came especially eagerly to this task, since we’d just come off a bullish ride from, effectively, 1433.  But discretion prevailed over valor, and we backed away with the futures glowering menacingly near 1500 as last week ended. Unapologetic permabear that we are, a thrust above 1500 would only

(The guru who takes a victory lap invites the market gods to smite him with a bolt of lightning. Even so, because things have worked out very precisely for a recent forecast drum-rolled here, I am airing yesterday's commentary for a second day.  In after-hours trading Thursday evening, Apple shares had dipped down to a so-far low of 447.36 -- exactly 19 cents from the 447.55 target disseminated to subscribers a week ago when AAPL was trading above $500 and rising. Battered and bloodied bulls should cross their fingers, however, since any further, decisive slippage beneath the targeted low would imply that Apple could grope its way down to 438.66 in search of better traction. Originally, Rick's Picks had told subscribers to back up the truck and buy shares aggressively if AAPL did indeed fall to $447.55. However, because this "Hidden Pivot" target has in fact been hit outside of regular hours, we are now suggesting that any buying be done either with a very tight stop-loss (i.e. 36 cents or less) or via a "camouflage" entry technique well known to those who have taken the trading course we offer from time to time. Click here for detailed information about the upcoming March webinar. RA] We had been looking for Apple to fall to at least $461, or to $447 if any lower -- a correction of about 37% from September's all-time high of $705. Last week, however, with the stock in the throes of a deftly engineered rebound after having gone no lower than $483, we moved to the sidelines. As we explained in a headline at the time, We'll Sit Out the Short Squeeze. And so we did, as Apple climbed to a recovery peak of $528 in off-hours trading yesterday afternoon.  That peak proved fleeting, however, to

Are T-Bond futures breaking down?  It’s important that we get it right, since, if they are and market forces are about to lay bare the biggest financial shell game in history, we want to be watching from the sidelines when the inevitable panic erupts.  From a technical standpoint, the key number to watch is 143^29, a “Hidden Pivot” derived from our proprietary runes. If this support were to fail we would infer that the selloff had significantly further to go, presumably to at least 141^09, before bulls would have a chance to reverse the tide. By then, however, it could be too late to calm the herd. Interest rates on the long bond would be up by about 25 basis points, to around 3.25 percent, and although that would still be shy of the 3.50 peak recorded last spring, it could suffice to unsettle equity markets and squash a a delicate uptick in real estate that has relied on massive infusions of credit created out of thin air by the Federal Reserve. At the very least, it would give pause to share buyers who have so far gotten 2013 off to a rousing start. To be sure, T-Bonds have pulled out of tail spins before. Early in 2011, they reversed a nasty decline that had threatened to derail the banking system’s recovery from the Great Financial Crash.  And they did so again later that year, saving the day for a mortgage market that might easily have relapsed. This time, however, although T-Bond futures are not in a steep decline, weakness has persisted since summer. Because of this, the markets are in poor shape to withstand whatever shenanigans Obama and the Democrats attempt to pull in lifting the debt ceiling.  In fact, the carelessness with which the subject is being debated

Fasten your seat belts, since yesterday’s rally may have been the last gasp of the bull cycle begun last spring.  In the E-Mini S&P, using our proprietary technical method, we’ve been expecting a stall or perhaps something worse at exactly 1482.00. Yesterday the futures got as high as 1480.50, and although that fell an inch shy of getting us short on our offer, it was close enough to satisfy the target.  Rick’s Picks subscribers had been instructed not only to get short at these levels with a tight stop-loss, but to exit a long position they’d held from, effectively, 1433.50 after partial-profit taking. (Could you have done this trade and managed it yourself based on our detailed instructions?  Click here and judge for yourself.) So what happens now if the futures simply blow past our target?  That’s always a possibility, and it would have undeniably bullish implications going forward.  But even then, we wouldn’t expect the E-Mini S&P to much exceed 1548.25, a longer-term “Hidden Pivot” 5% above these levels that looks well capable of cold-cocking the bull market begun in March of 2009. We’d short even more aggressively there than at current levels, albeit with the usual tight stop-loss. In the meantime, there is one more number that seems likely to show very precise stopping power.  It lies between 1482.00 and 1500.00, and we’ve told subscribers to re-short there with a micro-tight stop-loss or via a “camouflage” trading technique designed to hold risk to a bare minimum.  If you’re interested in the details, click here for a no-risk trial subscription to Rick’s Picks. You’ll get access not only to our detailed daily trading “touts” and archives, but to a 24/7 chat room that draws experienced traders from around the world.

A trading “tout” disseminated to subscribers the night before caught the exact low in the E-Mini S&Ps Tuesday morning, allowing subscribers to climb aboard for a ride worth 12 points so far. That equates to a theoretical gain of $600 per contract. The graphic below (click on it to sharpen and enlarge the image) shows not only the original recommendation as it appeared on the home page late Monday night, but intraday updates that went out to subscribers as Tuesday’s session evolved. The purpose of the updates was to provide further guidance to subscribers who had reported doing the trade.  Rick’s Picks shuns P&L claims, by the way, since they rarely seem to match the results subscribers achieve following the advice of some guru.  Our policy is to provide “tracking guidance” for a recommended trade, but only if at least two subscribers report having filled the order.  And if their prices differ, we use the worst price reported as our theoretical cost basis for the position. In the case of the E-Mini recommendation, several subscribers weighed in with fills shortly after the index futures touched 1456.50, the number highlighted above in brown. Technical jargon aside, and as you can see for yourself, the advice was pretty straightforward: Take a speculative stake if the futures fall to 1456.50. The likelihood that this would indeed occur was signaled the night before when the futures slightly exceeded the target’s midpoint “sibling,” labeled as a red “p” in the chart immediately below. Typically, we advise taking a small partial profit early in a trade if the opportunity should arise. The relaxation this brings is the best tool we’ve found to help a trader manage the risk of a trade from that point forward.  In the trade detailed above, based on the two guidance alerts

Wall Street Journal reviewer Walter Mossberg has finally come over from the Dark Side, acknowledging what PC world’s early adopters have known for months – i.e., that Microsoft’s latest operating system looks like a loser. While it’s hardly unusual for Rick’s Picks to put the knock on Microsoft, a company that couldn’t innovate its way out a Glad bag, it’s almost unheard of for Mossberg to do so. In the  past, he’s played softball with the Redmond behemoth’s products because, if you want to keep your job as a computer-product reviewer for a major newspaper, you don’t pick fights with the largest software company in the world. And yet, in a Personal Technology column published last week, writing with a boldness we’ve never before seen in the man, Mossberg said in effect that unless your computer is practically brand new, you’d have to be crazy to “upgrade” to Windows 8:  "To be sure,” Mossberg wrote, starting in low gear, “people upgrading newer PCs, whose makers anticipated Windows 8 or have software patches ready to accommodate it, will likely have a much better experience. I learned—too late—that neither of the computers I was upgrading was on the list of models for which their manufacturers provided such patches. This may be because, in both cases, aspects of their hardware weren't up to snuff for Windows 8's more demanding requirements.”  Oh, come on, Walter!  Up to snuff??  Don’t blame it on your equipment. Just come out and say it! Death’s Head Warning And boy, did he ever! Mossberg’s next sentence should be affixed to every Windows 8 installation disk, like an FDA death’s head to a pack of cigarettes: “The touch pad on my Lenovo ThinkPad X301 laptop can't be used to scroll in the new tabletlike Start Screen environment in Windows 8,

[We’ve heard back from our friend James Tolard now that he’s had a chance to digest your responses to his very bullish forecast for stocks and gold.  In the note below, he says that although it’s one thing for James the commentator to offer opinions about the market, James the trader would rather simply do the trade and not have to justify it to anyone.  Those of us who have had the experience of trading with other people’s money know the feeling well.   RA] Interesting responses. You may not remember this about my histoire, but from 1975 through 1998 I had a very good biz as a consultant, primarily in oilseeds, but also as a technical consultant, as the old guard did not take easily or kindly to technical trading. Tech trading was, however, becoming necessary, as the volatility in futures markets was such that even “serene” sideways markets required some money management. Anyway, over time, and as I began to push into my 40's, I realized that no one takes a trading recommendation, particularly if you try to defend, rationalize, or otherwise advance it. Rather, I merely stated strongly and firmly that I think this is true, and that this and that would happen, etc. When I was right, they remembered; when I was wrong, they didn't. BUT, when I gave reasons,  they gave arguments -- usually persuasive ones, too! -- against my arguments, and the result was that I was always wrong. So, going back to a dictum which I think is famous, but if not, it should be:  When you make a decision, always give your decision; never give your reasons. The decision might be right, but the reason are always wrong! Clever. Most Contrarians Are Bears In my bullish forecast, I gave my reasons, including some

The U.S. dollar showed its first sign of life in nearly a month last week when it rallied above some distinctive price peaks on the daily chart. The trend bears watching, since any significant upside progress from here would put pressure on gold and silver quotes. How likely is this to occur? The chart below leaves the matter unsettled, at least for now. Traditional chartists will see a bearish head-and-shoulders formation in the making. If it pans out in textbook fashion, that would of course be bullish for precious metals.  We think this is the least likely of several scenarios for two reasons: 1) head-and-shoulders patterns are everywhere we want to find them, too popular for their own good; and, 2) this particular one looks too fetching to do what we expect it to do. More likely, in our opinion, is a prolonged slog higher for the dollar over the next 6-8 weeks, with a modest upward slope that hugs the dotted red trendline.  This would be congruent with a forecast we aired a couple of months ago calling for range-trading in gold from around $1480 to $1800 between now and early 2014. Most Bullish for USD Which brings us to the scenario most bullish for the dollar, and therefore least bullish for precious metals. According to our Hidden Pivot Method of analysis, sustainable rallies nearly always begin with an upthrust exceeding two prior peaks, an “internal” and an “external.”   In the chart above, these peaks are labeled, respectively, #1 and #2.  However, more than merely exceeding both highs, the rally would have to do so without pulling back significantly after the first high is surpassed. Another way of saying it is that if bulls can get past peak #1, they must top #2 as well without pausing for breath.

Dow 20,000?  We seriously doubt it, although our good friend James Tolard explained why he thought it could happen in a guest commentary here last week. What were his reasons?  Okay, you’re having a little trouble remembering why he was so bullish. So are we. His arguments didn’t quite stick to our ribs. You may recall there was a lumber chart that accompanied the essay. What was that all about?  Well, Jim mentioned that rising lumber prices imply that the uptick in the housing sector is no fluke.  Our take is that the uptick is pretty feeble considering how many trillions of dollars the Fed has shot at the singular objective of inflating home prices. We think the housing mini-boom will end by mid-year, followed by a resumption of real estate deflation that eventually will reduce values to 30% of the peak valuations achieved in 2007. Jim also mentioned that big companies can borrow for practically nothing. While that may sound like a good thing, the bad news is that they have found little productive use for all of that cheap money.  Actually, the best reason they’ve been able to come up with for borrowing it is that they can.  Some companies are doing it even though they hold surplus cash of $10 billion or more. And why not?  It never hurts to have as much cash on hand as possible for that rainy day, right?  Our take is that the rainy day is not going to be quite what corporate treasurers are expecting.  While they are looking ahead to the next recession, we see a financial cataclysm taking shape that will turn U.S. corporations’ supposed $2 trillion surplus into digital fumes overnight. A Nutty Idea After all, It’s not as though the firms have stored this unused, and currently