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Alt 22.01.2003, 14:08   #31
RIVA
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Lagging Gold Stocks
by Rick Ackerman

A subscriber has forwarded a chart with implications that should hearten those of you who have been disappointed by the less-than-stellar performance of gold shares relative to the metal. The graph was produced by a firm called Proteus Capital Corp. (www.proteuscapital.com), which has developed a nifty “Gold Stock Fair Value Indicator.” Having compared the London p.m. fixing to a monthly average of the XAU index of silver and gold stocks over the last 20 years, Proteus concludes that gold shares would have to rally 20% to catch up with $350 spot. They offer no guarantees, of course, but the two-decade price history shown by this graph is reassuring on the matter of whether gold prices can long remain out-of-synch with mining shares. Evidently, they cannot. The graph tells us that stocks hav e a way of catching up, regardless of whether ingots are rising or falling in value. Assuming that bullion is in the early stages of a long and spectacular bull market, we would predict that a few powerful rallies lie ahead for gold shares, especially once the price of an ounce of gold has soared beyond the easy reach of the little guy.

In the meantime, what could account for the current price discrepancy? A recent essay by Jim Sinclair, whose work I’ve featured here before, asserts that the main demand for gold these days is coming, not from individuals, but from sovereign nations seeking to hedge their dollar exposure against a Fed that has effectively declared war on the dollar. Sinclair did not use the word “rubes” to describe those who are dabbling in shares rather than ingots, but it is clear that he considers gold bars superior to gold stocks as an investment. No argument from me, although the problems of affordability and storage that attend the purchase of physical gold will always make mining shares an attractive alternative. But if the very big players care not at all about gold shares now or even later, we can still be confident that millions of small investors eventually will care about stocks – voraciously -- as precious metal prices move ever higher.

We’ll let one Felix Zalauf have the final word today, quoted in the Barron’s Roundtable: "The policy of the U.S. central bank is going to destroy the dollar. Confidence in the U.S. currency at some point will collapse, and you'll have a run on dollars. Money can't go to other currencies, because they have to support the dollar. Gold will act as a monetary currency - a currency without the liabilities of ill-guided central bankers.”

_____________________________________________________________________________


[The + symbol means we have an open position, while $ means there is actionable advice.]



$ DJIA (8442.90): The Dow effortlessly breached a Fibonacci-based support we’d flagged at 8447, suggesting even lower prices ahead. Our minimum downside projection is now 8068.83, a hidden pivot that lies about 4.5% below these levels. You can try bottom-fishing the electronic Dow contract down there according to your own plan, but we’d risk no more than $10-$15 on the initial stop loss, since, if the pivot provides any support at all, it will be precisely at that price.



MAR S&Ps (888.50): The futures not only breached a hidden-pivot support at 892.35, they closed decisively below it, implying there is more downside ahead. Accordingly, our minimum projection is to 849.70. We may attempt bottom-fishing at that price if and when the time comes, but for now we’ll remain uninvolved.



OEX (450.35): The OEX fell 1.5% to close within a half-point of the 450.90 hidden-pivot support we’d flagged. We were trying to buy Feb 480 calls for 3.10, and they did touch that price – the low of the day – but because only ten contracts traded during the entire session, we’ll infer that you were not able to buy the calls for 3.10. We’ll back off for now, since a contingency-type placed on today’s opening would be somewhat riskier and trickier than yesterday’s gambit. I cannot predict with any great confidence whether the pivot s upport will hold this morning, but yesterday’s close slightly below it is a negative sign.



MAR 10-YEAR NOTE (114.020): Yesterday’s close above 113.650 implies the futures are on their way up to a minimum 114.52. If they can close above that price, or trade more than 0.15 points above it intraday, I’d make them an even-money bet to take out the December 31 peak, 115.175. FYI, just above it sits an even more important, multiyear high at 116.100 made last October.



QQQ (25.03): No change. The QQQs are groping their way down to the presumptive support of a cluster of lows near 24.50 that formed late in December.



FEB GOLD (357.50): The Febs continue to ho ld effortlessly above a crucial hidden pivot at 355.70, suggesting our 371.60 upside target will be reached on the next thrust. If that price is exceeded even slightly, however, it would portend additional upside over the near term, to a minimum 378.10.



MAR NASDAQ 100: (1009.00): We expect the Cubes to grope their way down to the obvious support of prior lows that range, approximately, from 980 to 990. With no pivots to offer and round-number mishagas from 1000 more or less assured, we’ll sit back and watch for now.



***



IBM (80.54): Yesterday’s fall slightly exceeded the 80.60 Fibo level that was our minimum downside target. From here we should expect at least a few days of tortured oscillations near 80, since that has been this stock’s equator for nearly three months. If the stock should crash through the suppor t and touch, oh, 78, it would probably have to come down to 75 to find good traction.



+ CSCO (14.18): We hold sixteen Feb 17.50 calls (CYQBW) for 0.10. They'll provide us with powerful leverage over the next month in the event that the bear rally begun in October gets second wind. Nothing further is advised for now.



INTC (16.29): Our minimum downside target for the near term is still 15.60, the approximate midpoint of late December's lows.



C (36.14): If the averages get sold down hard over the next few days, expect Citi to fall to 34-35, where it can plumb the artific ial depths of its deftly manipulated range. Otherwise, the stock should continue to oscillate between 36 and 38 until market conditions are right to move it above 40. Above that price it can be retailed to the usual bunch of idiots -- investors who would not even think to buy the stock at current levels.



$ + GG (12.64): We hold 200 shares for an average 4.35 and are short two Feb 12.50 calls (GGBV) against them for an average 0.80. Goldcorp s hows little inclination to retrace, so let’s try to cover the calls, bidding 0.80 for them, day order, no contingencies. Once the stock closes above 13.77, or trades more than six cents above that price intraday, we should assume it's bound for a minimum 15.72.



$ + DROOY (4.05): We hold 200 shares for 5.11 and are bidding 3.69 g-t-c for another 200. The s tock has teased bidders with fleeting feints lower, but it’s looking increasingly doubtful that we’ll be able to add to our position on-the-cheap. Let’s raise our bid to 3.80, still good-till-canceled. If the stock runs higher today, it would meet no resistance whatsoever below 4.19, a hidden pivot.



$ + MSFT (51.33): We hold two Feb 60 calls (MSQBL) for 0.80. The April 60 calls (MSQDL) we were trying to buy for 0.80 traded that low, but volume was so thin that we’ll infer no new position was taken. Today bid 0.60 for two of the April 60s, no contingencies.
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Alt 23.01.2003, 11:42   #32
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'All-In' Bet?
by Rick Ackerman

We made two predictions here ten days ago -- that we would not go to war with Iraq, and that President Bush’s speechwriters would come up with just the right words to allow him a face-saving exit. Although we are still reasonably certain the President will stand down, his wordsmiths will have to craft one heckuva speech to permit him a warrior’s dignity in retreat. For now, though, all we are hearing from the President are war whoops – an increasingly disconcerting sign of his obliviousness to the tidal shift in public opinion. Indeed, public support for a war on Iraq has withered sharply in just the last week. Approval ratings in the U.S. have dropped to 50%, and there is no reason to think they won’t fall even lower. What this says, with painful clarity, is that it is no longer America’s war, but Mr. Bush’s.

Under the circumstances, it’s hard to blame our allies for pulling back. Most recently, Jordan and Turkey ruled out an invasion of Iraq from within their borders, denying us the tactical advantage of a multi-pronged offensive. An ostensible bright side is that Britain has remained steadfast, sending one-quarter of its fighting forces to the Middle East. But perhaps Mr. Blair senses, as we do, that his troops will not have to fight. It’s all brinksmanship now, as we asserted here earlier, but Mr. Bush’s unrelenting conduct begs the question of whether it was necessary for him to push all of his chi ps into the pot, as he clearly has. We can only pray that, if it’s a gamble, the gamble pays off and Saddam goes peacefully into exile. Even then, however, the task of “rehabilitating” Iraq may be more than the U.S can handle, even with the help of our ostensible allies. As one subscriber wrote in an e-mail: “A quick victory or a coup leaves us in Iraq for years (we're still in Bosnia and Afghanistan with no end in sight), with rising Arab resentment and more localized terrorism that will only increase over time. Look at Kuwait, which is a docile and supposedly secure U.S. protectorate. The cost will be staggering. Our economy and stock market will mirror Japan’s. China will be the locus of growth and growing political strength -- certainly in Asia and possibly in Europe. I think we are witnessing the beginning of the dec line of the American Empire. Regards, P.L.”

Another View on Gold-Share ‘Lag’
Yesterday we discussed a graph from Proteus Capital that showed prices for gold shares trailing expanding bullion quotes. A subscriber points out that this conclusion is somewhat exaggerated bec ause of Proteus’ use of the XAU index. He writes: “The fallacy of Proteus Capital's call on 20% undervaluation of gold stocks -- using the XAU -- is that the XAU contains too many hedged, to-be-avoided, underpriced stocks. As such, the XAU index is understated. Gold stocks, as represented by the GOX or HUI show a much truer relationship. They are lagging the price of gold because of widespread fear of a negative correction of $30 in gold, which would bring those gold stocks back near the (clearly feared) July, 2002 lows. Clearly the stocks are dragging -- just not as much as the XAU would seem to indicate.”

______________________________________________________________________________________


[The + symbol means we have an open position, while $ means there is actionable advice.]

$ DJIA (8318.73): We’ll stick with the target given here earlier, 8068.83, as our minimum downside projection for the near term. If and when the opportunity arrives, you can try bottom-fishing the mini-Dow contract at that price acco rding to your own plan. We’d risk no more than $10-$15 on the initial stop-loss, since, if the pivot provides any support at all, it will be precisely at that price.

MAR S&Ps (877.50): Our minimum downside projection is still to 849.70. We’ll be tempted to try bottom-fishing at that price if and when the time comes, but for now let’s content ourselves with the educational experience of tracking a decline we understand.

$ OEX (445.67): A test of support is likely near 440, where several important lows have been made over the last three months. When it fails, as we expect, the OEX will be on its way down to a minimum 426.72, a hidden-pivot that can be bottom-fished with a very tight stop.

MAR 10-YEAR NOTE (114.175): If the futures can close above 114.52, or trade more than 0.15 points above it intraday, I’d make them an even-money bet to take out the December 31 peak, 115.175. Just above it sits an even more important, multiyear high at 116.100 made last October.

QQQ (24.93): The QQQs are groping their way down to the presumptive support of a cluster of lows near 24.50 that formed late in December. If it fails, expect the decline to continue to at least 23.67, a hidden pivot.

FEB GOLD (359.90): Our minimum upside target for the near term is still 371.60. If that hidden pivot is exceeded even slightly, however, it would portend additional strength over the near term, to a minimum 378.10.

MAR NASDAQ 100: (1004.00): No change. We expect the Cubes to grope their way down to the obvious support of prior lows that range, approximately, from 980 to 990. We’ll remain spectators, since there are no hidden pivots to advantage us.

***

IBM (79.70): We exp ect the stock to spasm near 80 for another 2-3 days, since that price has been IBM’s equator for nearly three months. If Big Blue should break down and touch, say, 78, the stock would probably have to continue down to at least 75 to find traction.

$ CSCO (13.96): We hold sixteen Feb 17.50 calls (CYQBW) for 0.10 – great leverage if Da Boyz can turn this market around in February.

INTC (16.25): Our minimum downside target for the near term is still 15.60, the approximate midpoint of late December's lows.

C (35.90): Citi finished the day beneath its accustomed helipad at 36, suggesting its handlers may be resigned to creating a new bottoming zone between 34 and 35. I am still betting they’ll eventually find a way to distribute the stock above 40, but that would require at least modest support from the tape.

$ + GG (12.74): We hold 200 shares for an average 4.35 and are short two Feb 12.50 calls (GGBV) against them for an average 0.80. Once again, let’s try to scratch the calls, bidding 0.80 for them, day orde r, no contingencies. Once the stock closes above 13.77, or trades more than six cents above that price intraday, we should assume it's bound for a minimum 15.72.

$ + DROOY (4.12): We hold 200 shares for 5.11. DROOY is bound today for a minimum 4.19 if it rallies at all, so I’ll suggest bidding 4.14 for 200 shares, good in the first hour only. < /SPAN>

$ + MSFT (51.00): We hold two Feb 60 calls (MSQBL) for 0.80 as well as four April 60 calls (MSQDL) that quite a few of you wrote to say you bought for 0.80. Let’s try to buy two more, bidding 0.60 for them, day order.

$ + EBAY (75.26): We hold two Feb 75 calls for a 1.50 CREDIT. Yesterday the stock broke lower rather than higher, stranding our closing offer of 4.40 for one of the calls. Today, offer a single call for 3.20, good on the opening only.
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Alt 24.01.2003, 08:43   #33
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Disinfecting the Mailbag
by Rick Ackerman

Writing a Sunday column for a newspaper with half a million readers for a few years taught me that those of us in the opinion business cannot hope to please everyone all the time. To put it mildly. Yesterday’s note on Iraq seems to have touched off quite a few subscribers. There was this note, from Steven J., of Bartlesville, Oklahoma: “You are obtuse without a real geo-political understanding or perspective. Your recommendations reflect a vacuous strain of chaos; i.e. DROOY. Please remove me from this idiocy. Neville Chamberlin [sic] would be proud of your rants. Sell it somewhere else.” Not to put too fine a point on it, Steve, but we are not selling MarketWis e Black Box – it is free to anyone who cares to register at www.marketwise.com. And for the record, you can unsubscribe any time you want, simply by clicking on the “unsubscribe” button on the left-hand side of the newsletter. As to the Neville Chamberlain comparison: I am a war-mongering, pinko-baiting, right-wing troglodyte by nature – someone who would have considered Rumsfeld an unregenerate peacenik just a few months ago. But in this case I am persuaded that war will set in motion a chain of horrific events that we can neither control nor contain. In any event, I’ll stick with my prediction that, no matter how aggressively President Bush is talking now, we will not go to war.



Here’s another note that make’s Steve J’s message seem almost pleasant in comparison. It is from Dave K, whose e-mail address implies that he considers himself some kind of “bond wizard.” I have edited it some, just in case your kids subscribe to Black Box: “Sorry dude, but you're wrong on your ‘no attack Iraq’ view. You are ignoring some key news releases and key White House statements. Who the f__ cares if Russia or France or Germany supports the effort – they are the ones who armed Iraq in the first place (outside of China). Your calls on gold have been horrible also. Please take me off your mailing list. Every time I open my mailbox it smells like rancid baby s___. Thank you.” Dave, if you are as uncivil toward your neighbors as you’ve been to me, perhaps one of them actually has stashed a soiled diaper in your mailbox. Better check it out, dude.



Not everyone was so unkind. Craig C. wrote, “Thanks for a great column. This is one of the most astute and lucid commentaries about the current political situation that I have read all week. I hope you are right about the ‘bluff.’ The current drop in defense stocks has me thinking that the big boys also agree with you.”



DROOY Whiner



But then there was Jim D, apparently still riled by my gentle refusal a few weeks ago to answer his daily pleas for specific advice on some gold stocks: “Several of us were reviewing your market report and maybe you could enlighten us. You say that you make money trading stocks and you sell DROOY for under 4.00 but had over 5.00 invested and bought back in over 4.00 and you still make money, right? Are we missing something?” Or is it I who am missing something? I told Jim D a couple of weeks ago to get lost -- to simply unsubscribe -- but now he apparently critiques the newsletter each day with the help of an ad hoc editorial committee. Perhaps they are new subscribers who will at least find entertainment value in my miserable stupidity and errant forecasts. Whatever your interest, guys, please be sure to tell your friends. And Jim, would you care to bet that we don’t eventually exit DROOY with a profit? For anyone unclear on where I stand, with a $5.11 basis, I still think DROOY is a no-brainer “doubler.” Also, how could you have failed to noticed that our other gold stock, Goldcorp, is trading at three times what we paid for it?



Another subscriber, Phil C, is the kind of dissenter every editorialist loves to hear from: “I thoroughly enjoy your newsletter and often agree with your commentary. Although it is still possible and obviously the desirable outcome if Saddam were to go into exile, what made you do a 180 about Bush standing down? You seem to forget, fellow skeptic that you are -- especially when it comes to politicians -- that this is a man of conviction and belief. This is not Bill Clinton, who had no convictions other than to be re-elected and made policy based on polls. I am not naive enough to suggest Bush doesn't look at polls or not care about public opinion, but on anything of substance and major importance, it is doing what is right that determines his policy decisions. Sure they will try to spin things to their favor, but if Saddam doesn't lea ve nor disarm we are going to war. It would be great if he blinks in the face of our troop deployments being increased, but if he doesn't they were the next necessary step towards implementing his removal. I think you totally missed the ball on this one. Keep up the great work. Phil C.”



Bush a Principled Man



I should make clear first of all that I think President Bush is a decent and principled man as well as strong and capable leader. He is certainly no Bill Clinton, who along with Hillary deserves to be tarred, feathered and pilloried for disgracing the presidency in ways that even political cynics like myself could not have imagined. To return to the point, I do not think the President is trying to bluff Saddam -- that he really is ready to go to war. Nor would I expect Mr. Bush to back down because of fear that a war might cost us the lives of many soldiers, as wars often do. What has swayed me against our rolling into Iraq is the tectonic shift in public opinion that has occurred in just the last two weeks, as well as some particularly persuasive letters from subscribers who have been to war. As one Vietnam vet wrote, wars are won at home, not on the battlefield. This suggests why the widening gap between Mr. Bush and the masses both here and abroad could diminish the odds of a successful outcome, even if we are able to flatten Iraq with a blitzkrieg in the early days of a war.



This doesn’t mean I think that public opinion should determine our course, especially when a groundswell grows out of the simplistic argument that war is morally indefensible. In fact, as Churchill’s unflinching stand against Hitler taught us, war is justifiable unde r some circumstances. But is Saddam another Hitler? Probably not, even if Iraq had a Wermacht to back him up. Is he harboring weapons that pose a grave threat to the rest of the world? Perhaps. Would it be worth going to war if he is? Some would say no, others yes; with the latter I do not stridently disagree, since just a short while ago I was in their camp. But I am no longer persuaded that the potential gains outweigh the risks, especially given our poor track record in trying to mop up the mess in Afghanistan.



Nuking Baghdad



War against Iraq would be justified, in my opinion, if Saddam were to deploy biological, chemical or nuclear weapons. It evidently already has been decided that we will nuke Baghdad if Saddam uses such weapons. But the decision concerning whether to go to war before that happens is far more difficult, since the larger threat is that Saddam will not strike with a WMD, but that he will arm terrorist groups such as al Qaeda, enabling them to devastate us and our allies without risking the kind of retaliation that a missile launched from Iraq would provoke. Unfortunately, it may take a first strike by Saddam to bring the West to the point of agreeing on how he should be eliminated. But absent any overt aggression by the Iraqi dictator, the world remains too bitterly divided to prosecute a successful war against him. President Bush has said all along that the U.S. would be willing to go it alone, but now we really are alone. My strong hunch is that this will ultimately sway the President. He will first bring us even closer to war, but I am still predicting that he will not give the command to open fire.

___________________________________________________________________________________


[The + symbol means we have an open position, while $ means there is actionable advice.]



(Note: On their respective daily charts, stochastic indicators for numerous issues tracked below – most particularly the Dow, S&Ps and the OEX – are starting to roll up from oversold extremes. My short-term forecasts are mostly bearish, but if stocks can close strongly higher today I’d expect a powerful follow-through next week.)



$ DJIA (8369.47): The Indoos spent the whole day trying to make it back to the fraudulent highs achieved in the first hour, but we’re unconvinced they can go much higher over the near term. Accordingly, 8068.83 remains our minimum downside projection for the near term. If and when the opportunity arrives, you can try bottom-fishing the mini-Dow contract at that price according to your own plan. We’d risk no more than $10-$15 on the initial stop-loss, since, if the pivot provides any support at all, it will be precisely at that price.



MAR S&Ps (883.00): Our minimum downside projection is still to 849.70. We’ll consider bottom-fishing if and when the opportunity arises, but for now we’re on the sidelines. The decline would be aborted if the futures can close today above 893.00.



MAR 10-YEAR NOTE (114.115): We now expect the futures to make a run at late December’s watershed top, 115.175. If they can surpass that resistance our minimum upside expectation thereafter would be 117.15.



$ OEX (450.70): A test of support awaits near 440, where several important lows have been made over the last three months. The OEX would signal a moderately important turnaround, however, if it can close today above 458.20.



QQQ (25.51): The QQQs need only close today above 26.30 to generate a weakly bullish stochastic signal. Otherwise, expect them to grope their way down to the presumptive support of a cluster of lows near 24.50 that formed late in December.



FEB GOLD (364.70): There should be little question by now about w here the futures are headed. For weeks our minimum upside target has been 371.60, an important hidden pivot, and it is about to be kissed. If it is exceeded even slightly, however, that would portend additional strength over the near term, to a minimum 378.10.



MAR NASDAQ 100: (1026.50): A close today above 1041.00 would turn stochastic indicators mildly bullish for the near term. Otherwise we expect the Cubes to continue groping their way down to the obvious support of prior lows that range, approximately, from 980 to 990. Again, we’ll remain on the sidelines.



***



IBM (81.05): My hunch is that today’s action will presage next week’s, with bullish or bearish outcomes determined by, respectively, a close above or below Thursday’s range.



+ CSCO (14.59): We hold sixteen Feb 17.50 calls (CYQBW) for 0.10. We’ll sit on them, rooting for Cisco to turn frisky. The stock would scare our calls back to life with a rally to about 16 over the next few days.



INTC (16.67): A clo se today above 17.10 would turn stochastic indicators for the daily chart moderately bullish. Otherwise, our minimum downside target for the near term remains 15.60, the approximate midpoint of late December's lows.



C (37.14): Citi will continue to bounce around between 36 and 38, or between 34 and 35 if it drops into a lower range, until such time as conditions are right to mark it up for distribution above $40. The outside strangle (Feb 35 put/40 call) is a tempting s ale for $1, but we won’t make that an official recommendation because of the open-ended risk.



$ + GG (12.74): We hold 200 shares for an average 4.35 and are short two Feb 12.50 calls (GGBV) against them for an average 0.80. We keep missing covering our calls by a nickel, so let’s buy them both back on today’s opening at-the-market. FYI, once the stock closes above 13.77, or trades more than six cent s above that price intraday, we should assume it's bound for a minimum 15.72.



$ + DROOY (4.16): We hold 200 shares for 5.11 but missed buying 200 more yesterday because of a time-limited contingency on the order. Today, bid 4.12 for 200 shares, day order.



+ MSFT (52.28): We hold two Feb 60 calls (MSQBL) for 0.80 as well as four April 60 calls (MSQDL) for 0.80. We’ll let the position ride for now, since the April 60s are not coming in for 0.60.



$ +< SPAN style="mso-spacerun: yes"> EBAY (75.70): We hold two Feb 75 calls for a 1.50 CREDIT, since we did not sell one yesterday for 3.20 due to a contingency on the order. Since the stock is acting so well, let’s get slightly greedy and offer the call again today, but for a little more: 3.90 or better.
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Alt 27.01.2003, 07:59   #34
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A Trader Weighs In
by Rick Ackerman

: I’ve just emerged from a two-day seminar at MarketWise for the school’s instructors, so I’ll keep my comments brief in order to get Monday’s edition to you in good time. Under the circumstances, I could do not better than to offer you the wise reflections of one subscriber, a veteran trader who evidently has been able to integrate MarketWise Black Box forecasts and recommendations successfully into his own trading regimen. This is one trader who has his head screwed on straight, and I offer you his thoughts not merely for informational purposes, but for inspirational purposes as well. He writes as follows:



“Rick, I have to tell you I'm amused by you readers who seem to look only for opinions that reflect their own and become resentful if your opinion differs from theirs. Perhaps they should apply for the soon to be vacated position now held my one Saddam H. I am amused, too, by your presenting these outrageous dissenters – but I wonder if they really want to squander even a few seconds of their 15 minutes of fame with such unworthy comments.

”Politics is one thing and, for reasons that have always escaped me, many seem to think their constitutional right to voice opinions has become a constitutional obligation. But trading is another matter. I learn nothing from people wh o resentfully disagree with you, but I am in a position to benefit when your comments disagree with my own opinion. That you differ will only become important enough to cancel my subscription when I become obligated to mimic your trades. Right after getting a life, I am thinking they should get their own trading plan -- but I'll refrain from saying so because I'm not really interested with what other people do with their lives.

”As I remarked with DROOY [Editor’s note: He bought it for 4.12 in the pre-market.], I have taken trades you recommended. Have I ever made money on your trades? Of course. Many times. A lot of money. Have I ever lost money because of your recommendation? Never. Not once. Not ever. Never will. You don't do my trading for me. You don't think for me. You don't push my "send order" button. When you take over thinking and trading for me, I'm done. I'll leave the business. ; Until then I'll continue to expose myself to people who help me think and will take your trade recommendations as a short-cut to trades to consider and place them in unmodified form, modified form or ignore entirely based solely on my own technical work.

”The ‘my own technical work’ is a key to my trading. Quite frankly I do not make any trading decisions based on what I think or what anyone else thinks about Saddam, war news – or any news or opinion whatsoever – yours included. As an individual, I have a little interest in information that may affect me and my future – but I tend to just deal with what's in front of me and leave the bigger picture result, er, rather all the results up to God. As a trader I leave all my decision-making up to the technicals specifically because they are not influenced by news, opinions and so forth, but only by the markets’ reaction to the news.


My market timing continues to impress me, even if there's no reason it should impress anyone else. I called for going from long bias to cash between 1/10 and 1/17. I have not yet made a definitive decision to go long or short – but I'm very close to making a short-the-market call again. I'm still getting warning shots across the bow via the point-and-figure anticipators. Like you, I do expect a rally next week – although a week ago I thought the rally would happen by today. I'm hoping to see cause to put my IRAs back into inverse funds when the rally materializes – inverse funds more than doubled my IRA last year. But rest assured of two things: 1) My decision will be my own and based strictly on technical parameters; and 2) I'll let you know, not because I'm looking for agreement or because I anticipate it will change any of your decisions, but because writing to you helps keep me honest in any later boasting.”

__________________________________________________________________________________


[The + symbol means we have an open position, while $ means there is actionable advice.]



$ DJIA (8131.01): Just a little further to the target we used last week -- a high-confidence hidden pivot at 8068.83. You can try bottom-fishing the mini-Dow contract at that price according to your own plan, but we’d suggest risking no more than $10-$15 on the initial stop-loss, since if the pivot provides any support at all, it will be precisely at that price.



$ MAR S&Ps (860.30): Friday’s low fell just 8 points from our projection, so we should infer the futures have a bit farther to fall before they find decent traction. Accordingly, in the first hour only, you can try bottom-fishing at the pivot, 849.70, using an 849.75 bid for a single E-mini contract, stop 848.75. You’ll be on your own thereafter.



MAR 10-YEAR NOTE (114.220): No change. We expect the futures to make a run at late December’s watershed top, 115.175. If they can surpass that resistance our minimum upside expectation thereafter would be 117.15.



$ OEX (436.14): There’s a very enticing hidden pivot at 426.69. Let’s try to bottom-fish there with a 4.10 bid for a single Feb 450 call (OXBBJ). That would be pretty cheap -- but not implausible -- with the index trading near our target. Make the bid contingent on the OEX trading 426.60 or higher.



QQQ (24.82): The Cubes are headed down to the 24.50 support area we used all last week as a minimum target. If 24.00 is penetrated, however, the next stop lower would be 22.96, a hidden pivot that will be worth bottom-fishing if and when the time comes.



FEB GOLD (368.40): A longstanding target at 371.60 came within less than $2 of being achieved Friday. It will be soon, but if the futures go even slightly higher we would infer the rally is going to continue to a minimum 378.10. That last price is a good place to take some profits if you’ve been long on the way up.



< SPAN style="FONT-SIZE: 9pt; COLOR: black; FONT-FAMILY: Verdana">MAR NASDAQ 100: (1000.00): Friday’s round-number close will not save the futures from testing real support down in the range 980-990, where they’ve made two key lows since November. If support at that level does not hold, we should assume the futures are bound lower, to a minimum 924.50 (a hidden pivot).



***



IBM (78.99): The most obvious support is down near 76, where the stock began a two-week rally in late December. If the stock is going to rally out of the hole, it will probably do so following a false breakdown below the December 30 bottom, 75.60.



+ CSCO (13.86): We hold sixteen Feb 17.50 calls (CYQBW) for 0.10, but they are fast becoming a longshot with the stock sinking toward whole-number support at 13. Below 13, support at 12 would start to beckon.



INTC (15.85): Our minimum downside target for the near term is still 15.60, the approximate midpoint of late December's lows. It is too vague a target to bottom-fish, but we should expect the stock to fall to at least 15.00 if it doesn’t hold.

&nb sp;

C (35.79): Citi bounced from a supportive hidden-pivot at 35.50 on Friday, but if it penetrates that number today we would infer that the stock is on its way down to a more significant pivot support at 33.80.



+ GG (12.95): We hold 200 shares for an average 4.65 after covering two Feb 12.50 calls we’d shorted at the worst price of the day, 1.10. We will rarely use market-on-opening orders, since that is rip-off time for retail customers, but we’d wearied of chasing the stock over the last few days. We’ll sit on the position for now, less inclined than before to tamper with it. FYI, once the stock closes above 13.77, or trades more than six cents above that price intraday, we should assume it's bound for a minimum 15.72.



+ DROOY (4.26): We hold 200 shares for 5.11 but once again missed buying 200 more shares by a few cents. We’ll put a bid in below the market – 4.21 for 200 shares – but otherwise remain content with the position we’ve got if the stock does not come in.



+ MSFT (49.85): We hold two Feb 60 calls (MSQBL) for 0.80 and four April 60 calls (MSQDL) for 0.80. We plan to offer some Feb or March options short against the Aprils when the stock rallies, but for now there is nothing more to do.



$ + EBAY (75.28): We hold two Feb 75 calls for a 1.50 CREDIT. eBay has been bucking the trend, but the broad market would have to firm some to allow us to close out one of the calls for 3.90 or more. Today offer it for 3.20 on the opening rotation, but if the order is not filled, raise it to 3.70 and leave it in for the rest of the sess ion.
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Alt 28.01.2003, 13:20   #35
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Useful Idiots
by Rick Ackerman

We bought back some DROOY shares yesterday, but that was before I even knew about this potential source of nitro-methane fuel for the rally cycle:

http://www.mips1.net/MGGold.nsf/UNID/TWOD-5J2SQ3

Seems that short sellers have taken a r ather keen interest in Durban, boosting their positions in November from an average one million shares to nine million – about one-fifth of the company’s float. You’ve heard the expression “useful idiots”? Well, for those who own DROOY shares, these guys are idiots from heaven -- blessed idiots worthy of our thanks, our praise -- and perhaps even our prayers, which they will need when the stock grabs hold of their scrota.

Don’t Bet on Upturn Soon
For those of you whose hope and patience have ebbed as we’ve await signs of economic recovery, here’s a bracing dose of reality from our friend Bob Bronson of Bronson Capital Markets Research:

“With the weak consumer and inventory figures and the trade figures, the Q4 '02 GDP figure could be as low as 0% or even slightly negative, whereas the Q1 '03 year-over-year comparison will be difficult, particularly due to the lack of pent-up demand and the prospects for saturation in the auto and housing sectors. Not only have Wall-Streeters not priced in 2% or slower real GDP for '03, no-growth or recession is completely o ff Wall-Streeters' radar screen, so to speak, and 3% or higher growth is the consensus. If I am correct about a 1%-2% real GDP trend for '03-'04 (and converging real and nominal GDP), the major stock indices and Treasury note/bond yields have much further to decline over the next ~12-16 months.

Hidden Agenda in Iraq?
And finally, here is an excerpt from a very fascinating Stratfor analysis (www.stratfor.com) that may help to dispel mounting confusion over just what it is the President seeks to accomplish by going after Iraq. Mr. Bush has made it sound as though we want to punish Iraq and disarm Saddam, but the following list probably comes much closer to describing our true objectives. The President has been opaque, according to Stratfor, because our allies would never countenance our attacking and occupying Iraq to achieve the following goals: 1) [Remove] a potential ally for al Qaeda, one with sufficient resources to multiply the militant group's threat. Whether Iraq has been an ally in the past is immaterial – it is the future that counts; 2) [Place] U.S. forces in the strategic heart of the Middle East, capable of st riking al Qaeda forces whenever U.S. intelligence identifies them; and 3) most important, [allow] the United States to bring its strength – conventional forces – to bear on nation-states that are enablers or potential enablers of al Qaeda. This would undermine strategically one of the pillars of al Qaeda's capabilities: the willingness of established regimes to ignore al Qaeda operations within their borders.

Stratfor continues: “From a U.S. standpoint, this is the strategic rationale for a war with Iraq. Or, to be more precise, if this is not the rationale, the purpose is the one thing a war's strategic goals should never be -- a baffling secret. This is not the explanation that ha s been given for the war's

strategy. The Bush administration's central problem has been that it has not been able to tie its Iraq strategy in with its al Qaeda strategy. At first, the United States tried to make the case that there had been collaboration between al Qaeda and Iraq in the past, as if trying to prove that a crime had been committed that justified war. The justification, of course, was strategic – not what might have happened, but to prevent what might happen in the future. The administration then settled into a justification concerning weapons of mass destruction, creating the current uproar over whether an empty rocket could be construed as a justification for war.”

___________________________________________________________________________________


[The + symbol means we have an open position, while $ means there is actionable advice.]

DJIA (7989.56): Look for lower prices still, since yesterday’s dive easily pierced an 8068.83 pivot we’d been using for a target for nearly two weeks. The rule is simple: When a trend exceeds a hidden pivot, the next pivot is likely to be reached. So what is the next pivot support for the Dow? Precisely 7668.87. If it, too, fai ls, the next major pivot support below it would be 7305.56. (Note: If you bottom-fished yesterday’s decline, the attempt should have cost you little, since a very tight stop was advised.

MAR S&Ps (847.30): The 849.70 hidden pivot we flagged here yesterday proved to be a precise inflection point but by day’s end it had given way, implying still lower prices ahead. The next pivot lies not far below, at 839.40, but if that too is breached, thena last-ditch Fibonacci level at 837.25, we should expect the futures to fall at least to the round number – 800 – in search of support.

MAR 10-YEAR NOTE (114.120): Still no change. We expect the futures to make a run at late December’s watershed top, 115.175. If they can surpass that resistance our minimum upside expectation thereafter would be 117.15.

OEX (429.47): The OEX fell to within less than a point of our target, a fairly important hidden pivot at 426.69. We were unable to buy a Feb 450 call, though, because it became relatively pricier as the index fell. We won’t bid the call again, however, since the only time we buy options is when they are dirt cheap. If the OEX penetrates the 426.69 pivot decisively, we should infer that this sinking spell will continue down to around the 400 level, at least.

QQQ (24.53): We’ve been advertising a 24.50 minimum downside target for weeks, and the Cubes have finally arrived. If 24.00 is penetrated, as we expect, the next stop lower would be 22.96, a hidden pivot that will be worth bottom-fishing if and when the time comes.

$ FEB GOLD (369.40): By rallying intraday above a longstanding target at 371.60, the futures signaled that the short-term bullish cycle will continue to at least 378.10. Profit-taking between here and there is advised if you’ve been long on your own initiative, but I’d suggest holding no more than 30-35% of any position above 378.10.

MAR NASDAQ 100: (988.50): The futures have come down to the 980-990 level we’d predicted a while back, but if they close below it the next likely stop would be around 950. That’s not a pivot, just a level on the long-term chart that draws the eye, albeit weakly. A breach of 950 would probably doom the futures to a fall down to at least 924.50, a hidden pivot given here previously.



***



IBM (78.42): No change. The most obvious support is down near 76, where the stock began a two-week rally in late December. If the stock is going to rally out of the hole, it will probably do so following a false breakdown below the December 30 bottom, 75.60.

+ CSCO (13.71): We hold sixteen Feb 17.50 calls (CYQBW) for 0.10. From a stochastic perspective, Cisco would need to close 14.08 or higher to trigger a possible short-term turnaround. Otherwise, 13 seems like an obvious place for the stock to seek support.

INTC (15.88): Intel made a low 12 cents beneath our 15.60 minimum target, then rallied moderately. It will need to close above 16.14 today to keep the rally alive; otherwise, a fall to at least 15 remains likely.

C (35.09): Look for weakness to continue down to at least 33.80, a hidden-pivot support. The stock could abort the beraish short-term outlook by closing today above 36.10.

+ GG (12.59): We hold 200 shares for an average 4.65. Nothing further is suggested for now. Once the stock closes above 13.77, or trades more than six cents above that price intraday, we should assume it's bound for a longstanding target at 15.72.

+ DROOY (4.16):&nb sp; We hold 400 shares for an average 4.66 after buying 200 shares yesterday for 4.21. Sit tight for now.

+ MSFT (49.17): We hold two Feb 60 calls (MSQBL) for 0.80 and four April 60 calls (MSQDL) for 0.80. The stock appears headed for a hidden-pivot support at 46.13. We won’t try to bottom-fish there, since whole-number support near 46.00 could diminish the pivot effect.

$ + EBAY (73.69): We hold two Feb 75 calls for a 1.50 CREDIT, but selling one of them for a fat profit has proven elusive. Let’s offer one today for 2.60, no contingencies.
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Alt 29.01.2003, 07:28   #36
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Fading Into Oblivion
by Rick Ackerman

For what it’s worth, two estimable subscribers, Kip Reich and Jim Davis, have advised that they are fading my bullish gold advice aggressively these days. Kip you all know as a pretty square guy, if a bit of a noodge. But Jim I’ve alluded to only once, about a week or so ago. Lately he’s been checking in almost daily to tell me how badly my forecasts suck. (Some who paid as much as $3,000 for the very same newsletter your are receiving for free would beg to disagree, Jim:

http://www.marketwise.com/MW_WiseG/BBFTestimonials.asp )

In spite of this, the guy evidently cannot bring himself to cancel his subscription to MarketWise Black Box, as I urged him to do weeks ago. Go figure? Here’s a smarmy note from him back in the old days, when he obviously was cultivating me as a potential source of free, one-on-one trading advice (which for legal reasons I cannot provide): “How do you know so well of when to buy and sell a stock? I picked up another 1,000 shares today of DROOY as it passed 3.20. Your pivot system works like magic! Do you have a pivot of when to sell DROOY? I would like to make as much profit as possible and do not want to get caught holding the stock as it starts downhill. I have done that too many times!” Like magic, no less. It’s all pretty obsequious, but I’d be lying if I said I didn’t enjoy hearing every now and again from a fawning subscriber. Now listen to him, all sour grapes after I politely told him to get lost when his too-frequent requests for specific advice began to annoy me: “Looks like you caught the DROOY train just as it started to back up. Sold my 1000 shares today at 4.35 for a hefty gain. I'll wait till it's under 4 and get back in. Since you were buying I guess I made the right choice.” Only time will tell, Jimbo.

Unclear on the Concept?
The Kipper, who unlike Jim is a guy I would probably miss if he stopped sending me off-the-wall notes, is just as eager to go on the defensive in gold: “Rick, I got a chuckle from your letter today, you must know something that the people who went from one million to nine million shorts don't. I learned a long time ago NOT to bet against a heavy short position. It usually comes back to bite you in the ass. You have failed to recognize something, the shorts came in at the top, not the bottom. But the biggest buyers of mining stocks are mutual funds and their buying has dried up. I follow what mutual funds buy and when, more than anything else to correctly know what to bu y and when. If I were you I would take my gold profits now and be a hero later.”

Well, as I told Kip, he is not me – not by a longshot, is my guess -- so he should follow his bliss wherever it may lead, even if away from the most obvious bull market of our lifetime. For our part, we are no longer inclined to trade in and out of gold positions so aggressively, but rather to stick with a couple of stocks that we are absolutely confident will move into the firmament over time. Which raises a point that my fellow guru Steve Saville noted in his most recent update. Steve points out that, although the ebb and flow of tensions related to Iraq seems to be driving bullion prices each day, the much larger and more important force – a bear m arket in the dollar – is likely to continue for a long while. In his words: “The misguided notion that this gold rally is being driven by the impending war against Iraq results in traders buying/selling in response to the latest Iraq news or in anticipation of what the news is likely to be. We don't think the current phase of the gold bull market will end until there is widespread belief in the sustainability of the gold rally as indicated by enthusiastic speculation in the gold shares. This will occur if the gold price continues to defy gravity and just keeps pushing higher. It will also occur if there is a 1-2 week pullback in the gold price followed by a move above the recent high.” I strongly agree, and that is why, when gold sells off for a few days, as it is wont to do in a bull market, we should not lose sight of a far bigger picture that suggests gold will be a solid buy-and-hold bet for years to come.

Arbitrage Skew in DROOY

One more gold-related item comes to us today from Montreal subscriber Brian Ostroff, who thinks the short position I mentioned yesterday in DROOY may have been inflated by an arbitrage situation: “I was just reading your commentary this morning as I usually do (and enjoy). Your comments regarding the DROOY short position might be explained by a $60 million (plus $6 million over-allotment) convertible issue the Company did in mid November. What is common in these situations is that the Convert buyer then shorts the underlying stock and earns his coupon risk-free (pretty much). Obviously I don't know if that is the only fact that drove up the short position, but it probably has something to do with it.

“On another matter, you and I had a conversation about debt. Namely, all debt gets repaid either by the borrower or the lender. That is almost correct. There is on e other entity that may also pay back the debt; the insurer of the debt. That means the government in the case of failed banks,

Fannie/Freddie, etc. or the organizations that insure corporate bond offerings such as MBIA. The debt will be repaid alright, but who gets hammered in the process is the question.”

_______________________________________________________________________________


[The + symbol means we have an open position, while $ means there is actionable advice.]



DJIA (8088.84): We continue to look for lower prices, since an important hidden-pivot support at 8068 has recently been decisively breached. If this bear rally continues, however, there are three places where we would look for resistance: 8306, a Fibonacci level; 8413, a 50% retracem ent of the decline since January 13; and 8527, another Fibonacci level.



MAR S&Ps (854.50): Resistance points analogous to the ones I have given for the Dow lie at the following three prices, respectively: 877.92, 888.75 and 899.66. FYI, tomorrow we will begin using targets and pivots that come from the E-mini chart, since that appears to be the vehicle most actively traded by Black Box subscribers.



MAR 10-YEAR NOTE (114.050): No change. We expect the futures to make a run at late December’s watershed top, 115.175. If they can surpass that resistance our minimum upside expectation thereafter would be 117.15.



OEX (434.65): Resistance points analogous to those given for the Dow and the S&P futures lie respectively at 445.38, 451.06 and 456.73.



QQQ (24.78): If the cubes can get past a Fibo-based resistance at 25.28, they’d be an odds-on bet to challenge the minor peak at 24.84 made last week. This scenario yields no special opportunities for us.



$ FEB GOLD (370.00): Our minimum upside target for the near term is still 378.10. Profit-taking between here and there is advised if you’ve been long on your own initiative, but I’d suggest holding no more than 30-35% of any position above 378.10.



MAR NASDAQ 100: (998.00): Just little stuff. The futures have rallied out of a support range where we’d projected a possible short-term low. The most immediate resistance above, a minor Fib level at 1018.87, wil l serve as our target for now, but if the futures penetrate it decisively they’d be on their way to a test of the January 23 peak at 1041.



***



IBM (80.11): Once again, IBM has homed in on its tediously magnetic “equator” at 80. We have n othing to recommend, since the obvious but relatively risky strategy would be to sell naked straddles or strangles within the range 75-85.



+ CSCO (14.22): We hold sixteen Feb 17.50 calls (CYQBW) for 0.10. If Cisco can close above a hidden pivot at 14.92, it’ll be a good bet to test mid-January’s peak, 15.63.



INTC (16.03): A close of 16.27 or higher today would generate a moderately bullish stochastic sign on the 100-day chart. If so, there would be upside potential to 18 over the next 4-5 sessions.



C (35.46): We’ll stick with the downside target at 33.80 given earlier until such time as Citi rallies above 37.20. Meanwhile, there is nothing compelling to recommend.



+ GG (12.65): We hold 200 shares for an average 4.65. Again, nothing further is suggested. Once the stock closes above 13.77, or trades more than six cents above that price intraday, we should assume it's bound for a longstanding target at 15.72.



+ DROOY (4.06): We hold 400 shares for an average 4.66. No changes are recommended at present. The stock could come down to as low as 3.50 without changing a short-term technical picture that remains bullish.



+ MSFT (48.82): ; We hold two Feb 60 calls (MSQBL) for 0.80 and four April 60 calls (MSQDL) for 0.80. Microsoft still looks to be headed for a hidden-pivot support at 46.13, but the short-term outlook would brighten some if the stock can rally above 50.60 over the next two days.



+ EBAY (73.43): We hold two Feb 75 calls for a 1.50 CREDIT, but after missing the sale of one of them at yesterday’s high by a nickel, we’ve decided to pull the offer and wait for better days. The first clue the good times may have returned would be a close above a hidden pivot at 75.88.
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Alt 01.02.2003, 21:13   #37
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Microsoft and IBM
by Rick Ackerman

TRADING NOTES: I’ve devoted a lot of ink lately to the Iraq crisis, neglecting a folder that has been filling up with subscribers’ thoughts on a wide variety of topics. Here’s a letter from D.S., who has been waxing bearish on IBM. He also makes some interesting points regarding Microsoft:

“As a general proposition, in a deflationary business environment the lowest-cost provider always wins. The enterprises that buy IBM's services are under financial pressure and can't afford to hire IBM to do the things they are hired to do. Further, the marketplace is full of individual enterprisers who are highly trained surplus from IBM and other companies who can do what IBM does at a fraction of the cost. As users become more sophisticated, they recognize that the supplier market is much larger than just IBM and comparable enterprises. I know of a law firm that had used IBM for training at a six-figure price that fired IBM and hired a small startup group of MSFT alums for about a quarter of what they were paying IBM.

“Further, I don't see how IBM can make it better. They are a very high-overhead, large company that cannot manage activities effectively down at the dirt level where it counts. In competition with [smaller companies run by individuals] – guys who are working to put bread on the table and who in many cases were initially trained by IBM, they lose every time. This is of course the most important part of their business. There is still some (diminishing) volume in the mainframe and collateral hardware business; however if the service end does not work, I question what kind of business they have left that will. In the business environment of the future, large companies with an entrenched, inefficient management structure and high overhead will have great difficulty developing a business plan that will work.

Wrong Approach
“Microsoft has the advantage of having a franchise – the operating system. In my view, their business mistake is in not focusing on the operating system and on the proprietary software (Microsoft Office, etc.), which can be produced and sold at a profit. They also may have a service business that could be managed to make a profit, although as I recall (I may be wrong), I don't think they make money with it now – as a matter of fact, I seem to recall reading that Microsoft has never made a dime doing anything except selling operating systems.

“I think Microsoft is squandering their basic business advantage. The goal of forcing OS customers, software service customers, and basic software users online to a user fee is counterproductive. Their biggest quarter ever came last fall, when all their service customers signed up to renew their old deals early to beat having to sign up for the new deal. That is not an inspiring story. If you and I were running a company, we would do just about anything to buy our software somewhere we could have the whole package on our own machines and under our own control. When you don't do that, you are exposed to having Bill tell you he is going to charge you whatever he feels like; supply it whenever and wherever he feels like it; and you have no control over it under circumstances where firing him is very burdensome. There is nothing sufficiently more effective in the new software to force people into what is an undesirable business/supplier relationship.”

_________________________________________________________________________________


[The + symbol means we have an open position, while $ means there is actionable advice.]



DJIA (7945.13): Another close below 8000 will likely have frayed some nerves on Wall Street. Stochastic indicators for the daily chart are itching to turn up from extremely oversold lows, but if the Indoos confound by going lower, the closest prospective support of signifi cance is a Fibonacci level at 7889.69. If it is breached just slightly, we’d look for the decline to continue to at least 7668.87, a hidden pivot flagged here earlier. Worst case over the near term is a still-lower hidden pivot at 7305.56 (also noted here earlier).



E-Mini S&Ps (838.50): A few days ago we gave a fibo level at 837.25 as last-ditch support, but with yesterday’s breach of that number we now expect the futures to continue on down to a test of round-number support near 800.



MAR 10-YEAR NOTE (114.015): The futures found support just above where we’d projected, but they’d need to close above 114.310 to suggest that a test of the important January 31 peak at 115.175 is in the offing.



OEX (426.71): A prediction made here a few days ago that the OEX would fall to at least 426.69, a moderately important hidden pivot, was borne out by yesterday’s decline, which produced an intraday low of 426.26. Any lower and the second part of that forecast, calling for a test of support near 400, will

be in play.



QQQ (24.54): The cubes are fighting for life near levels where several important bottoms were made over the last few months. We expect the support to fail, sending this vehicle down to a potential short-term low at 22.96, a hidden pivot. You can bottom-fish there according to your own plan, but don’t risk more than pocket change on the initial stop, since the inflection point will work very precisely if at all.



FEB GOLD (370.80): It would appear the futures needed hardly any pullback at all to recharge for the next big surge. Our minimum ups ide target for the short term is still 378.10.



MAR NASDAQ 100: (987.00): Nothing to suggest. We should avert our eyes for a day or two, lest this vehicle’s gratuitous ups and downs have a Medusa effect on our brains.



***



IBM (78.30): Any further weakness today will likely send IBM down to around 75 in search of short-term support.



+ CSCO (13.87): We hold sixteen Feb 17.50 calls (CYQBW) for 0.10. If Cisco can close above a hidden pivot at 14.92, it’ll be a good bet to test mid-January’s peak, 15.63. Otherwise, look for a pullback to the whole number, 13.00.



INTC (16.66): Despite yesterday’s belly-flop, stochastic indicators for the daily chart still look moderately supportive. If they are buttressed by a firm tape, expect Intel to reac h 18 by no later than early next week.



C (34.20): No change. Our downside target at 33.80 will remain viable unless Citi can rally above 37.20. There is nothing compelling to recommend.



+ GG (12.38): We hold 200 shares for an average 4.65, and no changes are contemplated. When the stock closes above 13.77, or trades more than six cents above that price intraday, we should assume it's bound for a longstanding target at 15.72.



$ + DROOY (4.06):&n bsp; We hold 400 shares for an average 4.66. Stochastic indicators for the daily chart look sufficiently humdrum to favor a holding pattern between 3.80 and 4.40. Accordingly, I’ll suggest bidding 3.82 for 200 more shares.



+ MSFT (48.24): We hold two Feb 60 calls (MSQBL) for 0.80 and four April 60 calls (MSQDL) for 0.80. The stock would need to close above 50.13 today to trigger a faintly bullish stochastic signal on the daily chart.



$ + EBAY (74.20): We hold two Feb 75 calls for a 1.50 CREDIT. With eBay’s relative strength holding up nicely, we’l l continue to offer one of our calls to close for 3.80, good till canceled.
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Alt 02.02.2003, 11:10   #38
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Golden Trade
by Rick Ackerman

Would you believe that the late, great Cisco has been boring us for nearly two years? The stock first dipped below $20 in early March 2001 and has moved between $10 and $20 ever since, drifting like a mass of kelp on a quiet tide. The good news is that we have swapped it for a bull-market stock, Royal Gold (RGLD), which has the kind of chart pattern that will help freshen our outlook. The subscriber who drew my attention to Royal is Barney D, who evidently has been having one heckuva good time trading it: "It's been a terrific performer for me over the last year and looks poised to continue on into the future." We agree, and that is why we've added it to our list. Meanwhile, although we will continue to hold a small, very leveraged position in Cisco by way of some Feb 17.50 call options, we won’t comment further on them unless the stock pops above 15. If not, the calls will die a quite death and we will book a small trading loss.

Unlikely Oil Supplier
Below is an item from The Guardian that is going to amuse you. You’re probably aware that a strike in Venezuela has significantly curtailed oil shipments to the U.S. -- by about 1.5 million barrels per day. But guess who is making up for the shortfall:

"Facing its most chronic shortage in oil stocks for 27 years, the US has this month turned to an unlikely source of help - Iraq. Weeks before a prospective invasion of Iraq, the oil-rich state has doubled its exports of oil to America, helping US refineries cope with a debilitating strike in Venezuela. After the loss of 1.5 million barrels per day of Venezuelan production in December the oil price rocketed, and the scarcity of reserves threatened to do permanent damage to the US oil refinery and transport infrastructure. To keep the pipelines flowing, President Bus h stopped adding to the 700m barrel strategic reserve.

Bizarre But Legal
"But ultimately oil giants such as Chevron, Exxon, BP and Shell saved the day by doubling imports from Iraq from 0.5m barrels in November to over 1m barrels per day to solve the problem. Essentially, US importers diverted 0.5m barrels of Iraqi oil per day heading for Europe and Asia to save the American oil infrastructure. The trade, though bizarre given current Pentagon plans to launch around 300 cruise missiles a day on Iraq, is legal under the terms of UN's oil for food programme.

"But for opponents of war, it shows the unspoken aim of military action in Iraq, which has the world's second largest proven reserves - some 112 billion barrels, and at least another 100bn of unproven reserves, according to the US Department of Energy. Iraqi oil is comparatively simple to extract - less than $1 per barrel, compared with $6 a barrel in Russia. Soon, US and British forces could be securing the source of that oil as a priority in the war strategy. The Iraqi fields south of Basra produce prized 'sweet crudes' that are simpler to refine."

Perhaps if we simply asked the Iraqis nicely… Anyway, with enemies like that, who needs friends?

Gangs of New York
If you haven’t yet seen the movie Gangs of New York, I recommend it highly. Like numerous other films directed by Martin Scorsese, it draws its power from the bravura performance of a single actor – here the always remarkable Daniel Day-Lewis. Day-Lewis plays Bill Cutting, aka "The Butcher," a real-life Tammany Hall "Nativist" whose cruelty, ruthlessness and hatefulness is destined to set a new standard for movie villains. The London-born Day-Lewis is one of the finest actors of this generation or any other, and he puts his remarkable talents and imagination to work here by engaging us with an evil-eyed squint and a New York accent that sounds like third-generation Flatbush by way of lower-class London. Even his voice is in an unfamiliar register – ever-so-slightly higher and nasal than usual, so that it literally chills us when he speaks. Not to take anything away from the other great actors who will be nominated for Oscars this year, but Day-Lewis’s performance was so powerful that even Michael Caine and Jack Nicholson are apt to get shut out. Nicholson was superb in "About Schmidt," but in 50 years, when his Schmidt is all but forgotten, Day-Lewis’ Bill Cutting will be recalled by movie-lovers as vividly as Charles Laughton’s "Captain Bly."


_____________________________________________________________________________________



[The + symbol means we have an open position, while $ means there is actionable advice.]

DJIA (8053.81): We’re in that tiresome loop again where the market zigs meaninglessly each day while my forecasts zag. Be that as it may, stochastic indicators for the daily chart are rolling up steeply from oversold extremes, and that will make us more reluctant than usual to get short. Since upside targets are effectively useless Fibonaccis (useless, because every trader and his mother is watching the same levels) I’ll just say "mildly bullish" and leave it at that.

E-Mini S&Ps (857.00): We’ll go with the flow by suggesting an 899.25 target for the next few days. That’s a Fibonacci-based level and therefore of little value to us for trading purposes. (It can still be traded, of course, but you’ll have to guess for yourselves how far above that number the bottom-fishing by a thousand others is likely to commence.)


MAR 10-YEAR NOTE (114.045): The futures would need to close above 114.310 to suggest that a test of the important January 31 peak at 115.175 is likely.

OEX (432.57): An garden-variety bear rally this week should be able to reach 456.16, equivalent to a 0.618 retracement of the decline from mid-January’s high. Wake me when we get there – assuming we get there at all -- so we can figure out how to get short.

QQQ (24.44): The cubes are struggling to hold their ground at levels where several important bottoms were made over the last few months. With other issues we track seemingly ready to rally, we’ll de-emphasize a bearish, 22.96 target given here earlier and put into play a Fib-based objective above – 26.17, a Fibo level. It holds no special opportunities for us.

FEB GOLD (368.30): Our minimum projection is still to 378.10, but if that price is exceeded by more than a couple of ticks we’d expect the short-term bull cycle to contin ue up to at least 382.90. The move to these targets will be in the booster stage once the futures have traded above 372.80, a hidden pivot, intraday.

MAR NASDAQ 100 (984.50): Stochastic influences are turning bullish, but it would take a close today of 1014.50 or higher for the effect to kick in with some force.


***

IBM (78.20): IBM struggled to rise from its gurney on Friday, but perhaps it was overwhelmed by sellers who’d read our bearish comments. It’s not a ripe short, not yet, but we’ll looking for such an opportunity if it can muster a rally into the low 80s.


+ CSCO (13.87): We hold sixteen Feb 17.50 calls (CYQBW) for 0.10. If Cisco can close above a hidden pivot at 14.92 it’ll be a good bet to test mid-January’s peak, 15.63. Otherwise look for a pullback to the whole number, 13.00. I’ll leave this glue horse on the sheets for a while, since it’s become such a familiar old friend. We can always reinstate t he stock if "packets, switches and routers" make a comeback in the pages of some slick magazine like Maxim.


INTC (15.70): Friday’s slippage was not a healthy sign, since it breached an important low at 15.42 that was made in the final day of 2002. Look for the stock to become more or less untradeably antsy between 15 and 17 over the next 2-3 weeks.


C (34.38): Friday’s low slightly exceeded the 33.80 target we’d been using, but perhaps not by enough to send the stock still lower. To get out of stochastic jeopardy, however, Citi will need to end the day above 35.12.

+ GG (12.20): We hold 200 shares for an average 4.65, and no changes are contemplated. When the stock closes above 13.77, or trades more than six cents above that price intraday, we should assume it's bound for a longstanding target at 15.72.


$ + DROOY (4.00): We hold 400 shares for an average 4.66 and are bidding 3.82 for 200 more, day order.< /P>


$ RGLD (27.29): The easy aplomb that has characterized this stock's consolidation above a hidden pivot at 26.49 tells us it will soon be on its way up to the next, 29.74. The Feb 30 calls (MJQBF) closed a bit rich for our taste, but we can bid them cautiously: 0.40 for two, contingent on the stock trading 27.20 or higher.

+ MSFT (47.46): Just a small change. We hold two Feb 60 calls (MSQBL) for 0.80 and four April 60 calls (MSQDL) for 0.80. The stock would need to close above 49.25 today to trigger an anemically bullish stochastic signal on the daily chart.


$ + EBAY (75.16): We hold two Feb 75 calls for a 1.50 CREDIT. A friend who is close to eBay tells me the firm’s business is exploding, so let’s not be so eager to sell our Feb 75s. Instead, we’ll bid 1.40 for two March 80 calls (QXBCP), contingent on the stock trading 74.50 or higher. If the stock continues to rise, our minimum target for today is 76.56, a minor hidden pivot.
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Alt 04.02.2003, 08:22   #39
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Captain Nellie
by Rick Ackerman

Trading Notes will be brief today and tomorrow, since the two-day E-mini course is in progress. I will respond to your e-mails when I have time, probably later in the week, but for now I would ask that you hold your messages for a couple of days. I should mention nonetheless that several of you wrote me over the weekend to correct my spelling of Captain Bligh, which came out “Bly” as in Nellie Bly, the early-1900s suffragette and all-around, stand-up gal. I stand corrected.

___________________________________________________________________________________


[The + symbol means we have an open position, while $ means there is actionable advice.]



DJIA (8109.82): If the Dow is sitting above an 8162 hidden pivot after the first hour, we should infer that it has sufficient strength to reach a minimum 8240 in this minor rally cycle. Short the latter target with a tight stop only if you are exiting a profitable long held on your initiative at that level.



E-Mini S&Ps (859.25): The nearest hidden-pivot support worth mentioning lies at 840.50, so that will be our minimum downside projection if the futures fall hard in the first hour. We won’t suggest bottom-fishing there, however, since the 840 level looks vaguely supportive because of some prior lows near there.



MAR 10-YEAR NOTE (113.310): No change. The futures would need to close above 114.310 to suggest that a test of the important January 31 peak at 115.175 is likely.



OEX (435.70): Just a small addition: The closest pivot, and therefore our minimum upside target if the OEX should rally, is 442.66. In a somewhat larger picture, a garden-variety bear rally this week should be able to reach 456.16, equivalent to a 0.618 retracement of the decline from mid-January’s high.



QQQ (24.49): The cubes are struggling to hold their ground at levels where several important bottoms were made over the last few months. With other issues we track seemingly ready to rally, our slightly bullish bias yields a modest upside target of 26.17, a Fibo level. It holds no special opportunities for us.



FEB GOLD (370.80): Our minimum projection is still to 378.10, but if that price is exceeded by more than a couple of ticks we’d expect the short-term bull cycle to continue up to at least 382.90. The move to these targets will be in the booster stage once the futures have traded above 372.80, a hidden pivot, intraday.



$ MAR NASDAQ 100 (986.50): If the futures move higher, our minimum projection is to 1008.00, a hidden pivot; if lower, 970.25. The latter number can be bottom-fished in the first hour only, using the E-mini contract and a 970.50 bid, stop 969.50. You’ll be on your own thereafter.





***



IBM (78.18): We’re looking for a chance to short IBM if it can rally into the low 80s. More immediately, the stock looks moderately lower. If so, a hidden pivot at 76.74 will make a logical downside target, if not a high-confidence place to try bottom-fishing.



+ CSCO (13.48): We hold sixteen Feb 17.50 calls (CYQBW) for 0.10. We’re keeping Cisco on the sheets out of respect for the dead. It has been replaced by Royal Gold (see below).



INTC (15.77): We’re on the sidelines for now, since we expect Intel to flounce around between 15 and 17 until those who care deeply become d izzy.



C (34.65): Just a small change. Stochastic signs on the daily chart portend mild weakness over the near-term, but Citi could turn them favorable with a close today of 35.37 or higher.



+ GG (12.20): We hold 200 shares for an a verage 4.65, and no changes are contemplated. When the stock closes above 13.77, or trades more than six cents above that price intraday, we should assume it's bound for a longstanding target at 15.72.



$ + DROOY (3.92): We hold 400 shares for an average 4.66. Once again, bid 3.82 for 200 more shares, day order.



$ RGLD (27.60): Our immediate upside target is 29.74, but we were unable to buy Feb 30 calls (MJQBF) for 0.40. Today let’s bid 0.45 for two of them, good on the opening rotation only.



+ MSFT (48.56): We hold two Feb 60 calls (MSQBL) for 0.80 and four April 60 calls (MSQDL) for 0.80. The closest hidden-pivot support lies at 47.86, but any easy move through it would portend further weakness. Alternatively, the st ock would need to close 49.60 or higher today to pick up a stochastic tailwind.



$ + EBAY (74.04): We hold two Feb 75 calls for a 1.50 CREDIT but were unable to buy March 80 calls (QXBCP) yesterday for 1.40. Let’s bid 1.20 for two of them today, day order, contingent on the stock trading 73.60 or higher.
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Alt 10.02.2003, 12:09   #40
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Pivots Say Lower
by Rick Ackerman

We’re headed bruisingly lower -- but then, I’m probably not telling you anything you weren’t feeling in your bones already. How much lower? The downside targets I’ve been using for the major indexes imply a fall of nearly 5 percent over the near term. But the DJIA objective at 7163.85 implied significantly worse – a fall of about 9 percent, or more than twice what I am expecting for the other averages. A careful search for hidden pivots associated with the Industrial Average has remedied this discrepancy, however, since it allowed me to identify a potential inflection point at 7467.65 that I hadn’t noticed earlier. (Those of you who have taken the E-mini course and want to corroborate this should start with the 10353 high that occurred last May.) This is almost precisely 5 percent below Friday’s close, 7864, and well in line with my forecasts for the S&Ps, the OEX and the Nasdaq 100. Respectively, my downside targets for those vehicles are 4.3%, 3.7% and 3.8% below current levels. If I am right, stocks are about to take a mild header, with the DJIA leading the way down. My specific targets are furnished below, and although they should be considered minimum objectives for the bearish cycle begun in August, they could conceivably provide a launching pad for a decent rally. I am confident about the DJIA target and expect it to work precisely, if at all. If it is exceeded by more than 3-4 points, however, I’d say "Look out below!" The assumption, as always, is that these targets are not chopped liver – that they always work, even when they are easily exceeded. I infer in such instances, not that I have miscalculated, but that the dominant trend is sufficiently strong to make short work of hidden pivot support and resistance points.

Double-Dip Recipe
In the "don’t-get-your-hopes-too-high" department, here’s an interesting note from our friend Bob Bronson at Bronson Capital Markets Research: "With the weak consumer and inventory figures and the trade figures, the Q4 2002 GDP figure could be as low as 0% or even slightly negative, whereas the Q1 '03 year-over-year comparison will be difficult, particularly due to the lack of pent-up demand and the prospects for saturation in the auto and housing sectors. Not only have Wall Streeters not priced in 2% or slower real GDP for '03, no growth or recession is completely off their radar screen, so to speak, and 3% or higher growth is the consensus. If I am correct about a 1%-2% real GDP trend for '03-'04 (and converging real and nominal GDP), the major stock indices and Treasury note/bond yields have much further to decline over the next ~12-16 months."

__________________________________________________________________________________


[The + symbol means we have an open position, while $ means there is actionable advice.]

DJIA (7864.23): As we’ve noted above, our minimum downside projection for the short term is to 7467.65, a hidden pivot, but if it’s decisively breached we’d expect the decline to continue to at least 7163.85.

E-Mini S&Ps (830.25): Our minimum downside projection is still 793.75. No bear rally worthy of the name is likely to occur until that hidden pivot is touched.


MAR 10-YEAR NOTE (114.110): I’m going to switch back to the 30-year Treasury for two reasons: I’m not getting any "vibes" from this contract; and, I have a gut feeling that Uncle Sam will start moving further out the yield curve to do his borrowing. We’ll make the switch in Tuesday’s edition, but for now my outlook is unchanged, as follows: The futures would need to close above 114.310 to suggest that a test of the important January 31 peak at 115.175 is likely.

OEX (418.79): We are bearish for the near-term, with a minimum downside projection of 403.75. We’ll consider buying some call options if the target is reached in time to give us at least a six-day play in the February calls, or two weeks in the March series. Meanwhile, it would require a close today above 429.62 to trip a moderately bullish technical signal.

QQQ (23.81): Yesterday’s low came within 0.26 points of our by-now-familiar target, 23.69. If the feeble bounce from that pivot cannot be sustained today, look for the cubes to continue their descent, to a minimum 23.23. You can bottom-fish there until the final hour with a 23.24 bid for a round lot, stop 23.19. Switch to a 15-cent trailing stop above 23.52, using 24.09 as a minimum objective.

APR GOLD (370.50): The April contract appears to be consolidating at significantly higher levels than we’d anticipated. It could still drop to as low as 358.90 before embarking o n a new surge, but we’d rule this out if the futures close even slightly higher today and tomorrow. A single-day close above 374.50 would probably set the next bullish cycle in motion.

MAR NASDAQ 100 (959.50): No change. The fall from mid-January’s high just above 1100 still has a ways to go – to a minimum 924.50 if our pivot analysis is accurate. Stochastic influences are now delicately neutral, so the decline could accelerate if the Naz takes a fall today.


***

IBM (77.10): Zzzzzzzzzzzzzzz.

+ CSCO (12.85): We hold sixteen Feb 17.50 calls (CYQBW) for 0.10. Friday’s low took out a mid-December bottom that we’d have expected to provide more support, solidifying the impression that this stock looks like hell. If it continues to fall, look for the stock to grope for support in the range 11-12.

These are Cisco’s final days on the sheet, since we’ve replaced it with a bull-market mining stock, Royal Gold (see below).


$ INTC (15.05): There’s an interesting-looking hidden pivot at 14.67 that could end Intel’s agonizing decline, at least for a while. If it is hit today, the February 15 calls (NQBC) would be a decent value at 0.30. Let’s bid there for two of them, contingent on the stock trading 14.64 or higher, day order.

C (32.91): My minimum projection for the short-term bear cycle is 28.19, a hidden pivot that comes after diligent scrutiny of the weekly chart. I would not warrant this pivot as a high-confidence spot to go long against the trend, although I’m fairly confident it will be reached.

+ GG (12.16): Goldcorp is quietly biding it’s time in preparation for the next leap. A pullback to as low as 11.00 would be natural, but it may not be necessary. We hold 200 shares for an average 4.65, and no changes are contemplated. When the stock closes above 13.77, or trades more than six cents above that price intraday, we should assume it's bound for a long standing target at 15.72.


$ + DROOY (4.07): We hold 400 shares for an average 4.66. Today, bid 3.82 for 200 more shares.


RGLD (26.27): Stochastic indicators for the long-term charts are bending down from very overbought levels, so we are cautious about initiating a long position up here. That said, it would not be unusual for a stock in a powerful bull market to simply shrug off incipiently bearish stochastic influences and continue higher. Royal’s most recent top, at 28.80, fell within six cents of an important hidden pivot, but if that resistance is exceeded by even a penny, we’d look for the rally to continue to at least 34.23.

+ MSFT (46.58): We hold two Feb 60 calls (MSQBL) for 0.80 and four April 60 calls (MSQDL) for 0.80. What drudgery. We can only waiting for the rally that would help us short some February or March calls against those we already hold.


+ EBAY (72.37): We hold two Feb 75 calls for a 1.50 CREDIT as well as two March 80s for 1.20. Friday’s low at 71.63 came within 18 cents of fulfilling a 71.45 target, but that hidden pivot will remain viable today as our minimum price objective.
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Alt 11.02.2003, 08:42   #41
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Pyrite a-Plenty
by Rick Ackerman

The “Dirty Dozen” list of fools-gold stocks is rapidly taking shape. We received nearly two dozen suggestions on Monday, possibly owing to the wide circulation of MarketWise Black Box at some of the more popular gold sites on the Web, including www.321gold.com, www.gold-eagle.com and www.goldseek.com. So far, one company stands out as purveyor of the gold stock you most love to hate: Silverado (SLGLF). The Alaska-based miner has fluctuated between 8 cents and 90 cents over the last few years, but its rallies to the high end of that range have been relatively fleeting. Most recently, it has falle n from a high of about 70 cents earlier this year to an eight-month low last week of about 20 cents. Small wonder, then, that the stock is foremost in the minds of gold investors who are looking for revenge.

Silverado would appear to be a nice fit with our Dirty Dozen list, since the company claims to be clueless about why the stock dropped like lead last month. In a release dated January 22, its president, Gary Anselmo, had this to say: “The Company knows of n o reason to cause today’s dramatic fall in its share price. There is no material fact or information relating to the Company which has not been fully disclosed. In particular, the Company knows of no adverse fact or information relating to, or which would affect the Company or its share price.” If our Dirty Dozen list turns out as bad as we think it’s going to turn out, Mr. Anselmo will soon have plenty of company on the lower-rungs of public esteem. He might also take heart in the fact that the purpose of our list is to demonstrate that even the gold stocks that investors now revile are destined, in this still-nascent bullion bull market, to soar like the late, great dot-com stocks into the firmament of overvaluation. We promise to keep you posted as the Dirty Dozen list comes into shape.

Radically Pro-War Essay
We’ve written often about the impending invasion of Iraq, both pro and con, but here is the scariest essay we’ve seen to date. It asserts that the root cause of terrorism is the incompatibility of Arab culture with the modern world:

http://www.siliconinvestor.com/stoc...?msgid=18556233

____________________________________________________________________________


[The + symbol means we have an open position, while $ means there is actionable advice.]

DJIA (7920.11): There are two hidden pivots just above that we can use for targets this morning: 7926.41 and 7992.03. If the first is exceeded within the first 30 minutes, we should infer the second is likely to be achieved soon thereafter. Looking at a bigger picture, our bearish scenario calls for a fall to at least 7467.65; or if any lower, to 7163.85.

$ E-Mini S&Ps (836.00): The futures were on their way up to a hidden-pivot target at 842.50 when the closing bell rang yesterday. You can short an E-mini contract at that price in the first hour, stop 843.25. Switch to a 2.00-point trailing stop below 839.25, using 833.00 as your minimum objective. Our outlook for the next 2-4 weeks is bearish, with a minimum downside projection (still) of 793.75.

MAR BONDS (112.08): If the futures can close today above a hidden pivot at 112.22 we’d rate them an even bet to take out late December’s high, 113.26. If it is a flight to quality rather than, say, a reaction to a rally in the dollar, gold quotes will confirm by surging higher.

OEX (422.03): Yesterday’s peak was 422.65, but the more important obstacle to any rally today is a hidden pivot at 422.21. If th e OEX is trading above that number after the first hour, we’d infer the short-term rally cycle has sufficient power to reach 425.92.

QQQ (24.02): Yesterday’s closing-hour rally stalled just below a hidden pivot at 24.18. If that obstacle is penetrated this morning we should assume the OEX is on its way up to at least 24.50, a slightly more important pivot. You can short the higher number on your own terms, but I’d use the narrowest of stops initially – no more than 3 cents.

APR GOLD (364.20): We’ve projected a pullback low near 358.90, a Fibonacci-based level, but with less confidence for purposes of bottom-fishing than if it were a hidden pivot. To keep things in perspective we should mention that a correction to as low as 344.86 would not even blemish the bullish look of the intermediate- and long-term charts.

MAR NASDAQ 100 (969.00): Yest erday’s modest hook in the final hour stalled less than a point from a hidden pivot at 973.25, but if the futures can get past it in the first hour today we’d infer they are on their way up to a minimum 985.50. Our outlook for the longer-term is still bearish, with a minimum downside projection of 924.50.

****************************************************************************

IBM (77.91): Our rally target is 78.25, but if B ig Blue gets past it our hope would soar all the way to…79.03, the next hidden pivot above 78.25.

CSCO (13.15): We’ll write off sixteen Feb 17.50 calls bought for $160 and kiss this glue horse goodbye. We’re not particularly bearish on Cisco, just bored.

$ INTC (15.27): Just a small change. There’s an interesting-looking hidden pivot at 14.67 that could end Intel’s agonizing decline, at least for a while. If it is hit today, the February 15 calls (NQBC) would be a decent value at 0.20. Let’s bid there for two of them, contingent on the stock trading 14.64 or higher, day order.

C (32.89): Our minimum downside projection for the next 2-3 weeks is 28.19, but we’d be won over to the bullish case for a day or two, perhaps, if the stock can reach 33.69 today without a pullback exceeding 20 cents.

+ GG (11.58): As noted here earlier, a pullback to as low as 11.00 would be quite healthy. In any event, we hold 200 shares for an average 4.65, and no changes are contemplated. When the stock closes above 13.77, or trades more than six cents above that price intraday, we should assume it's bound for a longstanding target at 15.72.

$ + DROOY (3.83): After purchasing 200 more shares yesterday for 3.82, we own a total of 600 shares for an average 4.38. Today let’s bid for 200 more shares at 3.69, one cent above an important hidden-pivot.

RGLD (24.70): To remain the very picture of health, Royal will need to arrest this pullback somewhere above 24.21, where the stock made a fairly important low on January 21. If not, it would be telling us it needs more time to recharge, implying a possible correction down to 21-22, where it consolidated for a powerful rally thirteen months ago.

+ MSFT (47.38): We’ll write off two Feb 60 calls (MSQBL) acquired for 0.80, leaving us with four April 60 calls (MSQDL) that now have a cost basis of 1.20. The 2-for-1 stock split is effective February 18, so our Aprils will turn into eight April 30s if we are not out of them before next Tuesday.

$ + EBAY (73.56): We hold two Feb 75 calls for a 1.50 CREDIT as well as two March 80s for 1.20. We have no specific target for today, but let’s be ready for a rally by offering one of our Feb calls to close for 2.40, t he other for 3.20. Make the orders g-t-c.
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Alt 24.02.2003, 11:47   #42
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Gold and the Endgame
by Rick Ackerman

We’ve enjoyed a correspondence that began a few months ago with Pierre-Jean L., a Canadian subscriber who shares many of our views concerning the inflation/deflation conundrum. Here’s a piece of that dialogue that I hope will shed further light on the topic, as well as on diverging prospects for gold and the dollar. Pierre-Jean writes, in part, as follows:

Governments cannot go bankrupt, since they have the power to tax. But banks can. It will happen when the monetary system that we take for granted collapses. That is the real definition of the word deflation. We will know deflation has lurched into high gear when banks start going bankrupt. It has not happened yet in this economic cycle, thanks to the way derivatives have spread risk throughout the financial system. But the next time there is a hedge-fund failure on the order of the one that befell Long Term Capital Management, the world will quickly learn the meaning of the word 'domino.' The contributing factors are all in place. Stock market P/E ratios are sky-high and dividends are near historic lows. On a global scale, and, following a supply-side model, we have pushed consumption and credit beyond the edge as never before in history. The question is not whether consumer binging and the real estate boom will collapse, but when. In some developing countries, most particularly Japan, that question has already been answered. It will be our turn when the dollar begins to implode -- a process begun last year. When the process begins to accelerate, everyone will see the game is over. For the investor, what could possibly soften the unwinding of derivatives and government debts? Gold is the only obvious answer, as you have pointed out so forcefully in your newsletter.

Our reply, in part, was as follows:

Banks Thriving Till the End
"You say the banks will continue to thrive until the day they begin to collapse -- an assertion with whi ch I have always agreed. If you accept that the banks' main business lies in 'manufacturing' and 'servicing' dollars, it is possible to infer that business will be good so long as the dollar itself appears healthy.

"Until recently, it appeared that they couldn't lose, since they've been able to borrow dollars for as little as 1.25%, and to re-lend them to businesses and consumers for up to 15-20%. Judging from the number of 0% teaser loans I receive in the mail from issuers of bank credit-cards, I would infer that the banks are using their 1.25% borrowing privilege to expand loans and increase their customer base. They can hope to recoup the difference in several ways: 1) when customers make actual purchases with these cards, rates of 10% or more apply on the new balance until the amount borrowed at 0% is completely paid off; 2) when the 0% teaser rate expires, the entire balance is shifted to a 10-15% rate; 3) if you are late making a payment, the entire balan ce becomes subject to such punitive rates.

"Where the banks lose is a year or so down the road, when the unthinkable happens: the dollar is falling, interest rates are climbing, and 0% teasers are no longer possible. Then, every revolving-credit junkie in America is faced with the prospect of paying off huge debit balances that have been carried for zero but which are suddenly accuring interest charges in excess of 10%. If we are experiencing deflation of 1-2% at that time -- as I believe we will, best-case -- and if wages are stagnant and joblessness soaring, as they almost surely will be, imagine what a crushing burden it will be to pay back a 10% loan. In the end, I fear, the banks are going to face writeoffs that will make the 1930s look like a picnic. Meanwhile, only an imbecile could buy Citigroup shares at their current price. The banks are headed for a fall, and it will be coincident with the fall of the dollar.

____________________________________________________________________________________



[The + symbol means we have an open position, while $ means there is actionable advice.]

DJIA (8018.11): The Dow managed to slightly exceed an unnoted hidden pivot at 8029 intraday, but that is sufficient to imply the rally will continue today and possibly into tomorrow. Our upside target is 8205.23, but because there is no way we can simplify a day-in-advance strategy and still control tightly for risk, you’ll be on your own in using these numbers.

$ E-Mini S&Ps (847.25): We nailed Friday’s low with two decimal accuracy, but a defect in our instructions could have hindered at least some of you from gathering the fruits of the 23-point rally that followed. We’d intended to advise that no trade be initiated if the futures exceeded 843.25, but, looking at the wrong peak on the chart, wrote 840.50 by mistake. This could have made a crucial difference, since there was a rally to 842.25 before the recommended trade was triggered. Happily, I heard from two subscribers who took the trade anyway, but one noted that he’d been filled on only two contracts of a 20-contract bid. Such are the problems of buying and selling on targets that happen to coincide exactly with actual tops and bottoms. For today, based on the 1.00-point breach on Friday of a hidden pivot at 850.75, we are projecting follow-through to at least 869.75. You can short there until the final hour with an 870.25 stop-loss, but you’ll be on your own thereafter.

MAR BONDS (113.04): We’ll adjust our rally target downward, from 115.30 to 115.07. It will remain viable so long as the futures do not fall below 111.27.

$ OEX (429.87): Based on Friday’s analysis you could have gone long on Friday when the index touched 426.14. If you did, take profits on half the position on the opening, then scale out the rest to a target of 441.46. A trailing stop of 2.90 points is advised.

QQQ (25.17): Like numerous other vehicles tracked herein, the cubes slightl y exceeded a hidden-pivot resistance in the closing hour of Friday’s session. This implies the rally will continue, probably to at least 26.20, a hidden pivot.

APR GOLD (351.80): The futures will struggle to hold their own if non-bullion stocks extend Friday’s rally. Thursday’s low at 349.80 is the closest obvious support, but we cannot predict with any great confidence whether it will endure if tested. Alternatively, a close above a hidden pivot at 360.80 would set the futures on course for a run to 379.20.

MAR NASDAQ 100 (1015.00): A rally to 1062.00 is possible over the short term, but the futures will first need to get by a hidden pivot at 1028.00 – still our immediate upside target. It is a bullish sign that the March contract was able to exceed intraday a lesser pivot at 1019.75.


***

IBM (79.95): The nearest impediment is a hidden pivot at 80.51, but if Big Blue can get by it, especially in the first 15 minutes, we’d rate it an odds-on b et to reach 82.86 straightaway.

INTC (16.78): No change. Our minimum upside projection remains 17.26, but anything above it would make Intel an odds-on bet to reach 18.03.

C (33.20): The scuzzballs who manipulate this stock for a living showed some of their old derring-do on Friday, grabbing shorts by the cajones at the lows of the day, then tightening their grip relentlessly for the next 90 minutes or so. Since, in the process, Citi managed to stick its nasty little head above a 33.31 pivot, we’re inclined to think the rally will continue today -- to a minimum 34.28, another hidden pivot. You can short there according to your own plan, but we would not advise doing so in the final hour, nor would we risk more than 3 cents on the initial stop-loss.

+ GG (11.60): We hold 200 shares for an average 4.65. A promising rally was aborted by strength in non-bullion shares. Now, if the stock can’t get traction at 11.34, a hidden pivot, it is likely to slip down to the n ext at 10.45.

+ DROOY (3.77): We own 600 shares for an average 4.38. The closest support worth noting is a hidden pivot at 3.61 that has already been tested once. If it is touched again and fails, Durban would likely fall to around 3.40 before bottoming.

RGLD (24.13): Friday’s low fell within 4 cents of our worst-case target for the short-term, 21.48. If the support is exceeded today, look for the decline to continue to at least 21.12, a Fibonacci-based level.

+ MSFT (24.61): Still no change. We hold eight April 30 calls with a cost basis of 0.60. A run to 25.77 or higher is possible on the next surge, but it’ll take a 28 print over the next week or so to drive our calls toward profitability.

$ + EBAY (78.35): We hold two March 80 calls for 1.20 and were offering two March 85 calls short against them for 0.90. Today only, let’s offer a single March 80 call to close for 2.50. Also, on a g-t-c basis, offer a single March 85 call short for 1.20. This series w ill explode if eBay can get to 82 or so by Wednesday. Come to think of it, you can also bid 0.40 for six of the March 85s today, contingent on the stock trading 78.00 or higher. If you buy any, cancel the short offer for the single March 85.
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Alt 06.03.2003, 11:35   #43
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Buffett's 'Comeback'
by Rick Ackerman

The current issue of Time contains an interesting article on Warren Buffett, whom the magazine’s editors feature in a headline as the "Comeback Crusader." We wonder if they are aware of the irony of applying this label, since, by airing Buffett’s presently contrarian but rarely off-target views, it is the magazine itself that is making a comeback -- to the world of reality. Time and many other publications that lionized Buffett during the go-go days seem to have lost interest in him for the last couple of years, perhaps because Buffett turned bearish on them and stuck to his guns. This did not exactly enhance his star quality at CNBC, which, to attract a mass audience, has always leaned heavily on frothing-at-the-mouth, showboating permabulls like Abbey Joseph Cohen, Larry Kudlow and Ralph Acampora. By airing a Buffett interview at any time during the last few years, the network risked cratering viewer interest fro m the first: "Tell us which stocks you like right now, Mr. Buffett?" "Frankly, Ron, I don’t see any stocks that represent good value, at least not the kind of value that we typically look for at Berkshire." "Okay, well, um, are there any stocks that you think would become good values if they were selling at lower prices?"

It will be interesting to see how long CNBC et al. can put up with Pimco’s Bill Gross, another major-leaguer who evidently has decided to tell it like it is, and who over the past six months has waxed nearly as bearish as MarketWise Black Box’s dour editor. Bearishness is tolerable when it comes from the ostensible lunatic fringe, or from newsletter gurus who occupy the lower rungs of celebrity in the investment world. But when it is the world’s most successful bond investor who is saying the economy stinks, and that there is not even a glimmer of light on the horizon – which is essentially what Gross has been saying, and for quite a while -- it’s a lot harder for investors and the n ews media to ignore the message, or to shoot the messenger. Both Gross and Buffett deserve plenty of credit for coming out of the closet. They did not make their fortunes by being pessimists, but by betting heavily and correctly on long-term, fundamentally bullish trends. It is testimony to the perhaps unprecedented power of this bear market that two of the most successful money managers of all time are fearful that it has much further to go.

__________________________________________________________________________________


[The + symbol means we have an open position, while $ means there is actionable advice.]

DJIA (7775.60): We nailed yesterday’s bottom, 7661.32, to within 54 hundredths of a point, so it’s possible some of you were able to load up there, using a very tight stop. Today, assuming the last-hour rally continues, we expect the Dow to rally to at least 7789.82. If it does not top there, it would strongly indicate the beginning of a bullish trend that could run for at least another 2-3 days.

E-MINI S&Ps (830.00): Like the Dow, the S&P futures ended the day slightly below a hidden-pivot resistance that could stop the rally, 832.50. We wouldn’t suggest shorting there, but please note in any case that a move through it would portend further strength over the near-term.

$ MAR BONDS (116.08): Yesterday’s peak fell just a single tick shy of the rally target we’ve been using for a while, 116.13. That could be it for the short-term, but if the futures head still higher (even slightly), our minimum target would be 117.17. If you went short based on our forecast, use a 116.14 stop overnight and Thursday.

OEX (420.30): The nearest resistance worth noting lies just above – a hidden pivot at 421.55. As with several other vehicles we track, any progress above that price would suggest the rally may have at least another 2-3 days to go.

QQQ (24.55): Upside targets are unchanged -- 25.80, or if any higher, 26.13.

APR GOLD (353.20): Yesterday’s erroneous target elicited a torrent of e-mails from subscribers, but here’s the straight skinny: A close today or tomorrow above 355.70 would imply the futures are on their way up to at least 363.40.

$ MAR NASDAQ 100 (989.00): To simplify the outlook, and because the bearish case is too boring to milk, I’ll deal only with the bullish assumption, -- that the futures are on their way up to at least 1037.50. You can trade with the trend any way you please , but any short attempted from 1037.50 – presumably early next week -- should be stopped at 1038.50.


***

IBM (77.73): If IBM is holding above 78.60 ninety minutes into today’s session, we’d make it an even-money bet to reach a minimum 80.95 by no later than Monday.


INTC (16.98): There are three hidden pivots immediately above that we can use for targets if the tape is strong. They lie at 17.68, 17.79 and 18.00. If a target is exceeded even slightly, you should assume the next will be reached.

$ C (33.17): If City can hold above a hidden pivot at 33.61 today it would be signaling further upside, to a minimum 34.92. If that target is hit before the final hour, you can short 200 shares there, stop 34.97. You’ll be on your own thereafter.

+ GG (11.23): We hold 200 shares for an average 4.65. If non-bullion stocks continue to rally, corresponding weakness in Goldcorp should bring it down to a hidden pivot at 10.75, at least. W e won’t suggest bottom-fishing there, however, since it is coincident with a conventional support created by February 25’s low.

+ DROOY (3.56): No change. We own 600 shares for an average 4.38. DROOY will need to close above a hidden pivot at 4.02 to get some breathing room. Once that has occurred, the stock would be an even-odds bet to reach a minimum 4.79 over the near term.


RGLD (15.70): Yesterday’s rally somewhat exceeded our most bullish expectations. The nearest resistance above is a hidden pivot at 15.85, just 10 cents above yesterday’s high. If that number is exceeded even slightly, however, it would portend further upside, to a minimum 16.04, before the stock will be ready to pull back for a day or so.

+ MSFT (23.44): We own eight April 30 calls with a 0.60 basis. Nothing further is advised for now, but we’ll need a decent rally – it would be the first in nearly five months – to allow us to sell some premium against our dwindling "apes."

$ + EB AY (78.87): We hold two March 80 calls for 1.20 and are offering two March 85 calls short against them for 1.20, g-t-c. eBay continues to show impressive relative strength, and another two days’ worth of support from the tape will probably get us filled on those short calls.
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Alt 15.03.2003, 21:17   #44
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Achtung

Two Iraq Scenarios
by Rick Ackerman

Gary North’s Reality Check is always interesting and provocative, but his latest, in which he advances a peace scenario “brokered” by the Saudis, perhaps exceeds the limits of our hopefulness. In North’s scenario, the Saud family issues a statement to the effect that Saudi Arabia will withdraw all of its deposits in American banks if America invades Iraq. The Saudis would further stipulate that the deposits not be transferred to banks in nations that have voted with the U.S. in the Security Council, and that, henceforth, Saudi Arabia would no longer accept dollars for oil, only euros. Talk about shooting oneself in the foot! This would be more like turning a shotgun on one’s navel. North concedes that this ultimatum would sent the dollar plummeting 15 percent against the euro in a single day, but he implies the greenback would rebound smartly once the U.S. came to its senses and Colin Powell announced on television how very delighted he was with the progress of Hans Blix’s inspection crew (“…and guys, please take all the time you need!”)



There is a chance this gambit could work, and it might even sound appealing to those who are hoping most fervently that we avert a war with Iraq. But a risk that North neglects to mention is that the dollar might not rebound – that it could get knocked off its pegs and bring the whole global edifice of dollar derivatives tumbling down. There are other problems as well, but in detailing them I will defer to a B lack Box subscriber, Hawaiian Peter Lee, who offers a penetrating analysis as well as a scenario of his own that seems far more plausible than North’s. He writes as follows:



Too Much to Lose



“North's scenario has crossed my mind in some form or other in the past as a sort of wishful and wistful intellectual exercise. Would that it could happen! But it won’t, for a number of reasons. One is that the U.S. would and could put enormous pressure on any producer nation having the temerity to refuse to accept fiat $$. Institutions like the BIS and IMF would refuse to cooperate and would bring their own tremendous political and economic power to bear. (They have too much to lose in prestige and power.) And the Saudis - corrupt, fat, morally depraved - have no reason and no ability to face down their American masters. They, too, have too much to lose if the U.S. were to withdraw military and political support from them in the face of their defiance. Their people would not support them because they do not trust them, and it would take too long to explain a matter of power politics via finance to them (the people) as a method of standing up to the U.S. The mullahs would p robably see it as a ploy to make the House of Saud richer and more powerful internally. The Sauds lack the physical, intellectual and moral courage to do the deed.



“The only hope is the long run, starting with settlement of accounts with the gold dinar (keeping in mind that this would start only among Muslim nations, and also that these nations represent a miniscule part of world GDP - but it's a start) sends a message to other nations which have to accept fiat $$. You can bet that the Chinese & other Asian nations are already well aware of the dollar's vulnerability, and the start of something by the Muslims may well snowball over time. (The Chinese by the way have written much in their long history about the use and abuse of paper money, having in fact invented it.)



Suppose Saddam Flees

“My Iraq scenario goes like this: Saddam knows that his military is pathetically weak. When, not if, the invasion starts, he skedaddles across the border to say, Syria, in order to escape death and minimize civilian casualties (remember, some of the dead will be his faithful supporters - there are an estimated 2 million Baathist Party supporters). Syria, or any other Muslim country, cannot turn him away as a guest and refugee from an illegal invasion (assuming no U.N. sanction). From Syria, or wherever, Saddam then preaches to the rest of the Muslim world the message of Western aggression, oppression, thievery, rape, etc. He will be listened to by the masses as the unjustly usurped, legitimate leader of Iraq, and he will be much more effective as a Muslim leader as a result.”



Note on Crude

Crude update: We predicted here a while back that crude oil prices would top near $45 – well above current levels. A recent selloff has brought the April contract down to 33.85 following recent life-of-the-contract highs of $40 per barrel. We think the correction has run its course, since Friday’s lows came close to touching a 33.51 pivot. Accordingly, we expect prices to start heading higher again, presumably toward our hidden-pivot target at $44.90.



STILL SHORT…


We never cease to be awed by the technical savvy of some of our subscribers. Here’s a fascinating and timely market analysis from one of them, a seasoned chartist who also is an alumnus of the MarketWise Trading School here in Broomfield. He has been short, but earlier this week had broached the possibility of reversing the polarity of his positions to take advantage of a seemingly imminent bullish turn. However, on Thursday he wrote as follows:



“I did nothing. That's right. I'm still short. It's not easy getting rich. It's even less easy when you only get to make one trading decision a day -- and then only after the action is just about over. I'm writing, of course about the most serious shortcoming of mutual funds. If only there were Exchange Traded Funds that went short or I could short in my IRA's ----------- but then I must remember that I was able to achieve over 100% in my IRA last year and that far surpassed my results as a ‘Master Trader.’



Why, though did I endure the pain without trying to amputate? Because the damage has been done and in spite of this being the actual date I've be forecasting since last October as the beginning of a rally through July 4 -- I'm not convinced we have achieved the near term bottom. Certainly it would have been nice to be in cash going into today and yes, serious damage was done on the half point per box PnF charts I've been viewing and suggesting to others -- but since I couldn't exit mid day I'm going to now require confirmation that the move I've been predicting is truly underway.



More Downside

Here's why I'm not yet convinced:



1. Options expire in seven days. Today could well be the typical pre expiration rally that has been moving earlier and earlier in the month for years. Last month we had a significant rally on 2/13 off the low of the day and then two more long white candle day s -- only to wind up going nowhere thereafter.



2. You know I watch the one day dollar volume of OEX calls and QQQ calls. The OEX players almost always get it wrong when at extreme of call/put ratios -- but the QQQ trading usually gets it right -- short term. This is probably because the pros use the QQQ calls, for instance, move the market up and squeeze the shorts and put holders. Today there was a buck and a half of calls to every buck of puts -- but the real sign this was from the pros is that the total dollar volume off QQQ options was 69% of the OEX volume -- and that's at 4 to s ix times normal.



3. Breadth today was only nominally positive on the NYSE and also NASDAQ compared to a 270 Dow rise, 28 point SPX hike and a whopping 60 point NDX surge.



4. Worse, my Bullish Percent charts were unchanged as to signal -- but some like the HiLo for the NYSE actually turned down.



5. Broad Market measures were muted compared to the NDX. The NDX rose over 6% but the Value Line only 3 ½ percent and the Small Cap Index didn't even make percent.



Smells Like a Squeeze



This smells like a professional short squeeze and bear market oversold bounce that could be quickly retraced or at least suffer Fibonacci reversals of 1/3 1/2 or 2/3 before the real countertrend rally gets going. Watch the Naz. I still think it will go down first and then bottom first. I said last night I won't try to pick the bottom. I'll be happy to switch long after I see the bottom is confirmed. Even though I have long predicted today to mark a significant bottom that bottom might not occur until the March 28 - April 2 window. Stay tuned. I'm not always right. I've been wrong before. But I don't mince nor hedge my words. -- SBR

_____________________________________________________________________________


[The + symbol means we have an open position, while $ means there is actionable advice.]



DJIA (7859.71): No change. An 8158.03 print will be necessary to signal a probable end to the grinding correction of the bull cycle which commenced last October.



JUN E-MI NI S&Ps (834.25): The E-mini would need to top January 29’s peak, 866.25, to get back in bullish gear for 3-5 weeks. If it succeeds, the pullback could generate a follow-through leg to as high as 930 or so.



JUN BONDS (115.16): Last week’s high of 117.05 came within less than half a point of a longstanding upside target at 117.17, so we have inferred that the current correction could last for a while – perhaps 2-3 weeks or more.



OEX (424.07): No change. The threshold for triggering a bullish signal for the intermediate term lies at 441, just above the January 29 top. More immediately we expect the OEX to head up toward the first visually obvious resistance zone, 430-435, the range where numerous distributions took place since late January.



QQQ (25.72): Friday’s rally was not nearly so powerful as the previous day’s, but it was nonetheless sufficient to push the cubes past a bullish threshold at 25.84. If they are above 25.75 after the first 30 minutes, we’d infer immediate upside potential to at least 26.15. A breach of that hidden-pivot resistance, however slight, would suggest still higher prices, to a minimum 26.94. Short that last inflection point only if you’ve made money being long on the way up.



APR GOLD (336.60): We wrote recently of a bullish, reverse head-and-shoulder pattern on the long-term charts, but our instincts tell us to go with a more bearish interpretation for the near-term that derives from our hidden-pivot methodology. Seen in this light, the correction appears to have further to go – to a minimum 312.20. The good news is that, wherever this pullback ends will become the launching pad for a run at life-of-the-contract highs near $400. In the meantime, watch for a struggle near 336.40, since that is where the damaged pivot lies.



$ JUN NASDAQ 100 (1037.00): Friday’s penetration of a 1037.50 peak made back in January implies the rally will continue. If the futures are trading above 1039.00 after the first hour they’d be an odds-on bet to reach a hid den pivot at 1055.00. Short there with a 1056.50 stop only if you’ve exited a profitable long position at or near the target. You’ll be on your own thereafter, but we would advise using a 2.50-point trailing stop below 1048.00, and a 1039.00 target.





***



IBM (79.00): The stock will have to top 81.30, a peak made on January 30, to give the bull “legs” into April. Once above 81.30, IBM would be a lead-pipe cinch to reach a minimum 82.42, a hidden pivot.



$ INTC (17.17): Just a small change. Intel has just a little ways to go, to 18.02, to touch a bullish tripwire that could buoy the stock for the next 2-3 weeks. Since that number is also a hidden pivot that could reverse the rally for a few days, let’s try to get short there by bidding 1.05 for two April 17.50 puts (NQPW), contingent on the stock trading 18.04 o r lower.



C (33.75): Citi’s handlers will need to push the stock above the February 5 peak at 34.66 to convince us they’ve got sufficient moxie to dent a major supply zone ranging from 36 to 38.



+ GG (10.36): We hold 400 shares for an average 7.20. No further action is contemplated fo r the moment. If the stock can get above a Fibonacci level at 10.78 it would be a positive sign for at least the near term.



+ DROOY (2.84): Just a small change. We own 600 shares for an average 4.38. The stock will need to close above 3.06 today to turn short-term stochastic influences moderately buoyant.



RGLD (14.05): Royal’s rally was not strong enough to turn short-term stochastic influences favorable, but the stock could do so today with a close above 14.16. If it fails to reach this declining threshold over the next 2-3 days, a relapse to around 12 would become increasingly likely.



+ MSFT (24.86): We’ve temporarily returned MSFT to the list to keep track of eight April 30 calls that we’d given up for dead. Stay tuned.



XOM (34.39): XOM just missed triggering a bullish stochastic signal by failing to close above 34.40, but if it can finish today above 34.65 that would do the trick. The stock would then be on its way to at least 35.57, where it could stage for a shot at higher levels, in the range 37-38.



EBAY (83.91): We can enjoy watching this bird soar, but there is no compelling reason to chase it higher after taking profits last week on some March calls we’d held for quite a while. eBay remains the best stock to be long on our list in anticipation of the occasional but inevitable bear rally.
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Alt 20.03.2003, 08:53   #45
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Dawn in Baghdad
by Rick Ackerman

With all-out war perhaps just hours away, we should expect little in the way of decisive activity on Wall Street over the next few days. The U.S. is expected to hit Iraqi defenses with massive firepower in the opening days of the war, but the world-shaking question is how aggressively the enemy will retaliate. Your editor will be headed to Florida to teach some classes over the weekend and next week at MarketWise's Boca Raton facility. Black Box updates will be sent to you as warranted over that time, but until then, we would suggest that you use the pivots we have proffered below to trade cautiously, if at all.
_______________________________________________________________________________

[The + symbol means we have an open position, while $ means there is actionable advice.]

$ DJIA (8265.45): A modest rally brought the Dow to within 17 points of our target, 8294.71. If that number is breached and the index is holding above it after the first hour today, we'd infer it's on its way to a minimum 8339.58, a hidden pivot that you can short at your complete discretion until the final 90 minutes of the session. Risk no more than pocket change on the initial stop.

JUN E-MINI S&Ps (875.75): The intraday high hit our target, 877.00, precisely. Above it the closest rally resistance is a hidden pivot at 881.50, but if the futures close above that price they'd become an even-odds bet to reach a minimum 906.75 by early next week.

JUN BONDS (111.12): It would take a 109.14 print to turn the intermediate-term trend bearish, and 105.16 to signal the likely onset of a bear market.

OEX (444.84): We'll stick wi th the 448.09 target given here earlier as our minimum upside projection. With war imminent, no new positions are advised.

QQQ (26.70): Follow-through to at least 27.96 is likely if the cubes are holding above 27.14 after the opening hour.

APR GOLD (333.40): The trashing of a crucial hidden pivot at 336.40 implies a correction leg to as low as 312.20. Look for a struggle between bull and bear near that pivot over the next 2-3 days. It would take a close above 341.40 before next Friday to abort the short-term-bearish outlook.

JUN NASDAQ E-MINI (1080.50): Just a small change. A run to as high 1117.00 over the next 2-3 days is possible, but the futures will first need to close above 1092.00 either today or tomorrow.

***

IBM (82.00): Our immediate upside target of 84.15 is based on purely technical factors, but we remain skeptical that so powerful is brewing ahead of the war.

+ INTC (17.98): W e hold two April 17.50 puts for 1.05. Our forecast is for a slightly higher high – 18.72 – before the stock turns lower.

C (35.46): Based on yesterday's upside penetration of a 35.09 hidden pivot in the first hour, we no rate Citi an odds-on bet to reach a minimum 36.95 over the next 2-3 days.

+ GG (10.28): We hold 400 shares for an average 7.20. No further action is contemplated for now. If the stock can get above a Fibonacci level at 10.78 it would be a positive sign for at least the near term.

+ DROOY (2.83): We own 600 shares for an average 4.38. The stock will need to close above 3.11 today to turn short-term stochastic influences moderately buoyant.

RGLD (14.24): Just a small change. If the stock can surpass a hidden pivot at 15.52 by Friday, we’d infer it’s on its way to at least 16.80 in this minor rally cycle.

$ + MSFT (26.32): MSFT has be reinstated to our list so that we can track eight April 30 calls we’d given up for dead. We're o ffering four of them for what we paid, 0.60, g-t-c.

XOM (35.59): The rally somewhat exceeded our targeted minimum, a hidden pivot at 35.61. We expect the stock to consolidate here briefly before moving up into the range 37-38.

EBAY (87.87): We now expect this rally cycle, begun in October, to top at 92.74.
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