Going back to July, the Dow’s current correction, now five days old, ranks as one of the biggies. I use that word facetiously, since in percentage terms the pullback at yesterday’s lows amounted to a piddling one-and-a-half percent from the record high of 12167 recorded on October 26. As you can see in the chart below, the correction is about halfway to the oversold zone, stochastically speaking, so it could conceivably continue for another day or two.

Someone in the Rick’s Picks chat room  asserted that the current doldrums would very shortly give way to a huge short-squeeze that has been building for a while. As evidence, he cited some interesting on-balance volume figures for IBM – specifically, a positive OBV spike to two million shares on the close. “Specs are betting on a drop,” he noted, “but the commercials seem to be positioning for a rally. They are betrayed by the positive OBV.”

Coincidentally, IBM is one of two stocks we’ve been using to position ourselves for a possible stock-market explosion. Our strategy is essentially a backspread that would automatically make us longer if stocks rise and shorter if they should fall. The tradeoff is that we assume premium risk on some close-in IBM call options as well as some January put options on another vehicle. You should visit the chat room tonight if you want the explicit details of this strategy, since they are spelled out in text dialogue that will remain accessible to all subscribers through tomorrow.

Concerning Gold, we seem to have caught a beautiful entry point on a couple of stocks and have remained well on top of the rally since. December Gold’s $11 thrust yesterday brought it within a stone’s throw of our minimum target, but it is above that number that things will become interesting. That’s because the next Hidden Pivot above the immediate target lies significantly higher, and it would become our minimum objective on a breach of the lower number.

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Last Call, San Francisco!

There are still some seats left at the two Hidden Pivot seminar scheduled -- in San Francisco on November 11-12; and in Sydney, Australia on  December 2-3.  You can  request a registration form and further details by clicking here.  Please specify which session you are interested in.

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Information and commentary contained herein comes from sources believed to be reliable, but this cannot be guaranteed. Past performance should not be construed as an indicator of future results, so let the buyer beware. Rick's Picks does not provide investment advice to individuals, nor act as an investment advisor, nor individually advocate the purchase or sale of any security or investment. From time to time, its editor may hold positions in issues referred to in this service, and he may alter or augment them at any time. Investments recommended herein should be made only after consulting with your investment advisor, and only after reviewing the prospectus or financial statements of the company. Rick's Picks reserves the right to use e-mail endorsements and/or profit claims from its subscribers for marketing purposes. All names will be kept anonymous and only subscribers’ initials will be used unless express written permission has been granted to the contrary. All Contents © 2006, Rick Ackerman. All Rights Reserved. www.rickackerman.com 

-- Posted Friday, 3 November 2006 | Digg This Article