Commentary for the Week of March 8

Don’t let this nasty shakedown in bullion scare you. For the record, we are quite confident that gold and silver will be back on track soon, bounding toward new record highs. But both may have a little farther to fall if forecasts disseminated earlier to Rick’s Picks subscribers prove correct. Specifically, we’ve been drum-rolling a possible 1709.20 bottom for Comex December Gold, and a 35.70 low for December Silver.  As of yesterday, the latter had overshot its target by 17 cents, hitting a 34.53 low that in a single day shaved 10 percent off the value of the world’s store of silver.  Gold, for its part, didn’t quite reach the 1709.20 target, instead turning higher from 1723.20. We think the December contract’s so-far $29 bounce from that number will prove short-lived and that the futures will make an important low at or very near 1709.20 today or Monday. If so, this is likely to put pressure on Silver, perhaps pushing quotes below $35 for a day or two. In any event, if the selloff in bullion is not over already, it will be soon. Those who follow Rick’s Picks closely would not have been surprised by yesterday’s across-the-board avalanche in commodities and currencies.  The night before, a commentary bearing the headline “Strong Dollar Predicting Europe’s Breakdown” went out to subscribers and readers. Our actual target for the Dollar Index lay well above, at 79.86, but yesterday’s explosive move came within 1.06 of hitting it. We remain confident the target will be achieved, albeit earlier than we might have expected.  If so, and the dollar's rally has further to go, yesterday’s dramatic unwinding of the so-called “risk trade” will continue apace. How much farther?  We’ve provided subscribers with a precise target for the December E-Mini S&P futures, and although the carnage could conceivably

The dollar looks primed to move significantly higher, implying that U.S. stocks and precious metals will remain under pressure for the foreseeable future. That doesn’t necessarily mean Gold and Silver cannot continue to rise against all currencies nonetheless, since the global monetary blowout that has caused them to ascend for more than a decade shows no sign of abating. However, whatever strength bullion musters in the weeks and months ahead will in dollar terms be tempered at least somewhat by a resurgent buck. We recently called subscribers’ attention to a possible nascent bull market in the dollar via a trading “tout” that recommended setting a chart alert at 78.87, about 0.6 percent above where the NYBOT Dollar Index was trading at the time. Yesterday, the  Index spiked to within 3 cents of that benchmark, so officially the baby bull has not yet been born.  However, during an online tutorial session that we conduct every Wednesday morning, we had a powerful sense of déjà vu yesterday while looking at an hourly chart of the Dollar Index. (Want to be alerted in real time to these changes? Click here for a free trial subscription to Rick’s Picks, including access to a chat room that goes ‘round-the-clock, and to trading recommendations and analysis that are continually updated during market hours.)  The chart is reproduced above. The crucial piece of it, based on our proprietary Hidden Pivot Method, is the 77.52 peak achieved during Monday morning’s spike-up opening. Notice how that peak slightly exceeded an earlier one at 77.49, creating on the hourly chart what Hidden Pivot-eers  call a bullish "impulse leg.” The implication is that any pullback such as the one that occurred yesterday represents a buying opportunity.  As for our feeling of deja vu, the price pattern on the dollar's hourly chart

Ahhh, it’s those old Greek worries again!  Yesterday they were blamed for undoing a nearly 150-point rally in the Dow, although the question of what had caused the rally to begin with seemed of less concern. We’ll proffer the usual, technical explanation: Yesterday’s ups and downs were caused entirely by algorithm-driven machines with nothing more on their tiny digital brains than a bunch of zeroes and ones.  And if they had a smattering of human help, the humans undoubtedly applied the same tried-and-true tactic that has carried the day for the hedgies time and again in recent months – i.e., letting the index futures fall on thin volume, exhausting sellers overnight; then inducing a short-covering panic ahead of the opening bell. Would that Greece were driven by algorithms and polymath dervishes!  Granted, this wicked combination could send millions of Greeks into manic-depressive fits and potentially suicidal lows. But, oh, just think about those highs -- just like the ones we thrill to nearly every week on Wall Street, where even the glowering menace of a Second Great Depression evidently cannot kill the insensate ardor of buyers.  So, if 300-point Dow rallies are still possible, why hasn’t the same kind of exuberance seized the proletarian mind in Athens?  The answer, of course, is that Greece’s mood is driven not by “technical factors,” but by the grim realities of a failing economy and an economic future utterly bereft of hope.  Greek businesses cannot get bank loans to tide things over while their customers try to scrounge enough cash to redeem their IOUs. This has by now developed into a vicious cycle that can only spiral outward until it has encompassed all economic activity. In the meantime, a Europe desperate to save the euro and a transnational political confederation that had been dreamt about by

[This commentary drew such a heavy response Monday in the Rick's Picks forum -- 60 posts so far -- that I am letting it run for a second day. RA] We lean strongly libertarian on the issues of the day, especially when debating those who would raise taxes to feed the insatiable maw of Government. So why are we rooting for the revenuers in their battle to squeeze more tribute from the customers of retail giant Amazon?  That’s right: We’re hoping the company loses its knock-down, drag-out battle to avoid collecting taxes for cash-strapped states, even if it means online shoppers will ultimately pay billions more for their purchases.  The states want Amazon to collect and remit taxes wherever the company sells merchandise and irrespective of whether it has a physical presence where the sales are conducted. In the long run, we would argue, it will be better for consumers to go along with this than letting them continue to buy untaxed goods online.  In the end, leveling the retail playing field between virtual and brick-and-mortar sellers in this way will help avert the day when Amazon and other globally scaled sellers have driven most of their brick-and-mortar competitors into the ground. Such an outcome may be more likely than shoppers might care to imagine, as the chart of Best Buy (below) suggests. Shares of the big-box purveyor of consumer electronics, computers and appliances have fallen by half since last November, when they traded for as much as $45, and recently touched a three-year low of $22 on weak earnings.  To be sure, the Great Recession has played a significant role in the collapse of Best Buy’s once high-flying stock. But with the firm’s release of dismal sales figures for Q2, analysts have begun to question whether the retailer is becoming

This past Friday evening, several hundred investors turned out to watch Rick Ackerman conduct a one-hour overview session on the Hidden Pivot Method. Several hundred more registrants expressed interest but were unable to attend, perhaps due to the late hour at which it was held. For those who missed it, or even if you watched it and want to review various segments,  the recording of the event has been posted to YouTube. As a reminder, the next Hidden Pivot Seminar will be held on October 5th - 6th. The $50 early-bird registration discount for the seminar has been extended through Friday (9/23) to accomodate those who may have missed the live event. To take advantage of this offer, visit the signup page and use coupon code: 7D5629

Is anyone really surprised by Netflix’s sudden fall from grace? The company’s shares have fallen 45 percent since mid-July, down 136 points from an all-time high of 305.  Nearly 40 of those points came yesterday alone, when the movie-rental company acknowledged that its customers have been canceling their subscriptions in droves, apparently because of a horrendous new pricing scheme announced earlier this summer.  It’s not often that a bell rings on Wall Street to tell investors it’s time to get out.  In this case, however, the ominous “clang!” came via an avalanche of complaints when Netflix aired plans in July to separate its DVD-by-mail service from its faster-growing Internet streaming service.  In the days that followed, the high-flying stock, a favorite of investors manifestly as brainless as they were giddy, shed 15 percent of its value.  NFLX never even bounced until mid-August, after it had lost a third of its value and was trading for around $200.  The firm’s new business model probably would have had little impact on revenues if they had retained their original pricing scheme. Instead, Netflix jacked fees substantially for both services, forcing many of its 25 million customers to choose one or the other. Each service now costs $8, but the price of DVDs delivered by mail has risen sharply for those who want to keep two or three DVDs in the pipeline at all times. Your editor has been a Netflix subscriber for years but was never crazy about the streaming service because the selection of titles stinks. It’ll do for teenagers who missed a movie at the suburban multiplex, but for buffs who enjoy good films, especially offbeat ones, Netflix’s streaming video catalogue was the pits. The company was so aggressive in trying to push customers onto streaming that one might have thought they had a

The Dow was up nearly 300 points at its highs yesterday, savaging bears who may have gloated over last week’s equally impressive decline.  These short-squeeze rallies are usually catalyzed by economic headlines, and it doesn’t seem to matter whether the news is good or bad, since the markets have a mind of their own and can sometimes surge on the gloomiest data. U.S. markets actually seem to thrive on bad news as long as it does not emanate from Europe.  But it is probably just force of habit that causes shares to rise at such times, since, for nearly a decade, ostensibly bearish stories came to be associated with a likelihood of further easing by the Fed. Easing is of course no longer possible with administered rates already at zero, but any news that might help us cling to the notion that things can’t get much worse is arguably a plus for stocks.  So what were the day’s headlines? The top stories could not have been much gloomier. For starters, we learned that the inflation-adjusted income of male workers has not increased since 1978. Nor have households fared so well in more recent years despite Keynesian and monetary stimulus amounting to many trillions of dollars. Even with all of those digital bucks flooding the financial system, however, the income of the typical American family appears to have dropped for a third straight year and is currently at 1996 levels after adjusting for inflation.  A report on this in the Wall Street Journal noted delicately that the statistics showed “how devastating the recession was [our emphasis], and how disappointing the recovery has been.” Rodney Dangerfield That’s putting it mildly – not to mention, in a way that denies what we all know – i.e., that The Great Recession never left us…has

With Bank of America’s recent announcement that it plans to lay off 30,000 workers, the Great Recession has finally spread its shadow over a sector of the economy that had seemed inured to hard times.  Investment consulting, mortgages, mergers and acquisitions and the rest of banking’s most lucrative concessions have fallen into a more or less permanent funk, and so the banks are faced with the prospect of earning their money the hard way – i.e., through ruthless cost-cutting, and via fees on checking accounts, credit cards and other transaction-based services.  How dull! Embarrassing, even, since financial bigwigs who were pulling down seven-figure bonuses just a year ago thanks to the Federal Reserve’s extravagant bailout terms will now be fighting to earn their base pay by nickel-and-diming their customers to death. Imagine a loan officer having to concern himself with something so mundane as a local businessman’s request for money to finance inventory. We feel sorry for the many bank employees who are about to lose their jobs, especially since they face such bleak prospects for re-employment. With respect to the fate of banking’s top brass, however, it’s going to be hard to hide our schadenfreude if a few of these prodigious paper-shufflers wind up living out of shopping carts.  Ditto for securities traders at the big banks, for they have turned the markets into a giant casino, exploiting mathematically arcane opportunities that have absolutely nothng to do with the business of making, buying and selling real things.  In recent years, stock and bond markets have almost completely decoupled from the real economy – so much so that they will probably have to collapse into ruin before honest markets can re-emerge – markets that serve the real commerce of the real world.  The epic fraud of financial markets reached its

If you thought Obama’s vote-buying “jobs” scheme was political bilge when he announced it last week, the plan sounds even less appealing now that we know how he'd like to pay for it.  For starters, in search of revenues, the president has returned yet again to his cherished notion that anyone making more than $200,000 is “rich” – i.e., in the same category as leftist envy-mongers put hedge fund managers and Big Oil.  Reportedly, tax breaks for all who fall in those categories, and in many others from which the government is already extracting more than 90% of its revenues, would be eliminated in order to offset Obamajobs’ supposed $467 billion cost.  Is it possible that when the President went to war with Republicans earlier this summer over raising the debt limit, he completely missed the main point of the discussion – i.e., that new taxes were off the table?  Op-ed supporters will undoubtedly claim there are no new taxes involved in the jobs proposal, only the elimination of existing tax breaks.  This is an argument we thought Obama lost when he tried to hike taxes to pre-Bush II levels a while ago.  Say this for the guy:  Like the die-hard disciple of hard-left rabble-rouser Saul Alinsky that he is, Barack Obama never gives up. We should have realized as much when he rammed health care legislation down our throats even though most Americans indicated they strongly opposed – still oppose – it. Concerning the jobs scheme, who could possibly believe that the $467 billion would be well spent?  Outside the Keynesian lunatic fringe championed by Paul Krugman, we read mainly about the epic sums expended on each new job associated with Federal handouts.  At best, these jobs routinely seem to cost taxpayers many hundreds of thousands of dollars apiece, especially