Thursday, February 5, 2009

Obama’s Honeymoon Officially Over

– Posted in: Current Touts

Hard to believe Obama is already knee-deep in ethical muck. Even Maureen Dowd has gone on the attack, albeit with 28-ounce gloves: “Obama [was telling schoolchildren] his favorite superheroes were Batman and Spiderman,” the New York Times’ third-ranking Bush-hater wrote on Thursday, but “his own dream of being the superhero who swoops in to swiftly save America was going SPLAT.” Is the honeymoon already over, the huge Inaugural throng on the D.C. mall just a faded memory? Our new President has been perhaps too conspicuously on the defensive, sounding even a tad unctuous in an interview with Brian Williams. Taking the blame usually works better if there is some question as to who should have received it in the first place. Obama sounded more presidential under fire from Fox’s Chris Wallace when he asserted on Tuesday, against a mounting protectionist tide, that “we can’t send a protectionist message”. For sure. But it will be interesting to see if the President stands his ground when unemployment climbs above 10 percent, as seems likely. His stimulus package has had a bumpy ride in Congress so far, but fat-cat Republicans aren’t the only ones having trouble finding the stimulus in it. One decidedly lean cat, Rusty Staff, a beleaguered mom-and-pop business operator who weighed in on the op-ed page of the ultra-liberal Boulder Camera yesterday, had this to say: “I spent four tedious hours poring over the stimulus bill recently passed by the House. I saw money for ATV trails, money for alternative energy research and development, money for climate change modeling development, money for broadband Internet installation in rural communities, money for weatherization, money for family planning clinics in other countries, and money – no, lots of money – for unemployment and food assistance benefits.” Who to Believe? Just so. Obama insists

TBT UltraShort 20+ Year Treasury (48.15)

– Posted in: Current Touts Free Rick's Picks

The sharp rally of the last two days pushed TBT to a peak at 49.28 -- not quite high enough to get us filled on our put order. However, the pullback looks like it is developing enough thrust to propel TBT above our original target at 49.59. so I'm going to recommend shorting at 50.55, a Hidden Pivot that looks capable of providing some stopping power. We'll use the March 50 put (TBTOX), which should be trading for around 3.00 (see option calculator). The price is just a guess, which is the best we can do with the target still more than $2 away, but we can hone it by observing changes in the reflected Feb 50 put bid as TBT gets within 15 or so cents of the target. Please note that buying put options in this vehicle is equivalent to initiating a long position in the underlying Treasury future.

April Gold (905.30)

– Posted in: Current Touts Free Rick's Picks

Yesterday's action was constructive, but the futures will need to close above 918.10 today in order to avoid squandering short-term bulllish potential that could take them to 945.90. That is the target of an uptrend easily visible on the hourly chart, and once it is achieved, a more important target we've been using at 952.30 will be in-the-bag. Alternatively, moderate weakness today could be expected to find support at 898.90, but settlement below that price would imply jeopardy thereafter to as low as 886.90. Worst case if sellers should surprise with a show of strength: 878.70.

March Crude (40.30)

– Posted in: Current Touts Free Rick's Picks

The futures look lower, bound for at least 38.39, a Hidden Pivot, but if they slip past it we should infer that a tradable turn from 38.13 is likely. You can bottom-fish either number with as tight a stop-loss as you please, but the lower pivot would be the more conservative place to try. Alternatively, it would take a print at 42.53 today to signal a likely reversal of the bear trend that has dominated since the January 26 top at 48.59.

Best Buy (28.01)

– Posted in: Current Touts Free Rick's Picks

The 26.82 downside target we were using caught the so-far low of the week within a single penny, allowing us to short two Feb 27.5 puts at the best price of the day, 1.90. This makes us long the Feb 30-Feb 27.5 put spread twice (or a multiple thereof) for a net credit of 1.30 per. The worst we can do at expiration is come away with a profit of $2.60 with the stock trading 30 or higher, but there is potential to make as much as $760 with BBY anywhere below 27.50. Since this position can't lose, we'll simply let it ride.