Thursday, February 19, 2009

This Bailout’s Not for You…

– Posted in: Current Touts

A few months ago we considered telling readers to skip a mortgage payment or two, just in case the government decided to bail out hardship cases. We scrapped the idea, though, out of concern that some of you might take us seriously and risk jeopardizing your credit scores. In retrospect, we can now confess that we were serious – or at least half-serious, since it seemed likely at the time that homeowners who had gotten in way over their heads would be the first to receive special treatment after the government figured out that “rescuing” multinational banks would do nothing to staunch the tide of foreclosures. Now, along comes President Obama’s Stimulus-of-the-Week. It would provide up to $275 billion in re-fi cash – good heavens, where does all that money come from? – for as many as five million home “owners” who either have little equity in their properties or who owe more than the properties are worth. One problem we can see with this approach is that, very conservatively estimated, there are probably at least 30 million mortgage-payers who are underwater. So how will The Government determine who gets bailed out? The rules would appear to favor queen-for-a-day types whose loans came via Fannie Mae or Freddie Mac. However, those with jumbo loans – i.e., the backbone of middle class affluence – need not apply. Hardship, Chicago-Style Not that anyone’s going to feel terribly sorry for such formerly robust exemplars of the good life as Steve Rosenberg, a Chicago stock broker whose story was told yesterday in the Wall Street Journal. He has been trying to refinance an $815,000 ARM for months, according to the Journal, but lenders are asking for an additional $150,000 of equity. With his income reportedly down by half over the past year, Rosenberg said

TBT UltraShort 20+ Year Treasury (45.85)

– Posted in: Current Touts Free Rick's Picks

There's an enticing Hidden Pivot support at 43.13, so let's try bottom-fishing there with a 3.80 bid for one June 45 call (TBTFS), good through Friday. I'll post further guidance intraday if it looks like we can improve on the price of the call, so keep your bulletin launcher activated if you want to be alerted in real time. We are going out to June on this order with the goal of shorting something against our call later. I've included a snapshot of an option calculator into which I've plugged a TradeStation volatility of 46.

April Gold (980.20)

– Posted in: Current Touts Free Rick's Picks

Congenitally eager buyers of gold in India, China, and nearly everywhere else in the world have no idea who Jim Cramer is, so don't worry that he may have put a curse on bullion with his recent endorsement of the stuff. Hey, even Cramer can be right now and then. This evening, there is little I can add to the technical picture detailed here earlier. 995.00 is still the most significant point of hidden resistance between here and $1,000, with 992.30 a close second, but neither is worth much for trading purposes. On a breakout, beware of a possible stall at 1006.10, since that's as high as I can project for the very near term using the weekly chart.

E-Mini S&P (783.25)

– Posted in: Current Touts Free Rick's Picks

The futures used every minor pivot support they could grab to avoid sinking into the abyss yesterday, and now there's just one left: 773.00. Its appeal is mediocre as a place to attempt bottom-fishing, but it might work if it's hit on a swoon during the night session. The action looks too subdued at 11 p.m. to suggest that such a downdraft is likely, but you can never be sure.