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COMMENTARY for Tuesday
TODAY'S ACTION for Tuesday
Rick's Picks for Tuesday
Let’s start building a calendar spread again, legging into the buy side first. I’d like to start with March 15 calls, but since there are none, we’ll work on the December 12.5s (SLWLV). Bid 0.50 for four, 0.45 for six more, and 0.40 for another six, all good-till-canceled. Once we lay in our inventory, we’ll look to short September or October 12.5 calls against it. _____ UPDATE (1:22 p.m.): The calls were un-buyable at our price earlier in the session because Silver Wheaton began the day with a wicked short-squeeze. However, the stock has since retraced most of this feint, allowing more than 500 December 12.50 calls to trade at the top of our ladder. Assuming four calls bought for 0.50, we are now bidding 0.45 for six more and 0.40 for another six, both good-till-canceled. _______ FURTHER UPDATE (August 26, 12:12 p.m.): The December 12.50 calls traded down to 0.39 today, so we are filled on the order. We hold 16 calls with an average cost of 0.45. Do nothing further for now.
We hold two September 95 puts for 1.76 that we bought when the Diamonds rallied yesterday morning to within a single cent of our Hidden Pivot target, 95.82. Continue to offer two Setpember 92 puts short against them for 1.40, good-till-canceled, but stop yourself out of the existing position if DIA touches 95.70 today. ______ UPDATE (1:15 p.m.): Although option volatility got crushed on this morning’s rally to nowhere, using a 1.70 stop-loss, we still managed to exit the puts for about what we’d paid for them. At this rate, we can painlessly pick tops for the next two years if that’s what it takes to nail the Big One.
Pay attention at your peril, since Gold looks like its trying to drive those who care most about it crazy. Yesterday’s rally failed by a smidgen to hit our bullish tripwire, and that’s why we should continue to use such benchmarks to filter out false signals. Scalpers can bottom-fish at 937.50 tonight, provided 946.20 has not been exceeded to the upside. Looking at the hourly chart, we’d need to see a thrust to at least 968.10 by mid-week to turn it bullish. Above that price, there would still be risk of a stall at 978.00, a Hidden Pivot, but a close above it would announce the test of $1000 we’ve all been patiently awaiting. Regarding downside risk, I see none worth mentioning at the moment.
Since Chuck Cohen has divulged some of his favorite “juniors” in the commentary section, let’s actualize the information with some buy recommendations based on Hidden Pivot correction targets. On the hourly chart, there’s a midpoint support at 0.1266 that we can use for now. Bid there, or slightly above, for 5000 shares. I’d suggest keepng the bid out of sight until such time as the stock trades below 0.1300, assuming it does.
We hold the January-October 130 put spread four times for 3.40 but were unable to buy a round lot of stock yesterday on our terms as a hedge. Let’s try another approach today, bidding 3.10 for a single October 175 call, day order.
The Hidden Pivot target at 1034.00 given here yesterday caught a very short-able top within a single point. I recommended partial profit-taking yesterday below 1026.00, but I’ll track two short contracts for the guidance of anyone who stayed short as I suggested. Imputing the theoretical gain so far to the contracts that remain gives us a cost basis of 1042.00 for each. Cover one at 1022.00 and use a 1030.00 stop for both, o-c-o (one-cancels-other: this means that if you are unable to cover the one contract at 1022.00, it should also be tied to the stop at 1030.00. _______ UPDATE (8:49 a.m.): The overnight low was 1018.25, allowing one of our two short contracts to be covered at the suggested price (i.e. 1022.oo or better). Imputing the 15.75-point theoretical profit to the remaining contract gave it an adjusted cost basis of 1057.75. It should have been exited on the 1030.00 stop-loss, yielding a theoretical trading profit of $1385 for the four-contract position that we established yesterday.
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Take any dozen good reasons for being bearish right now and they still don’t equal the bullishness of the chart shown. The undeniably compelling rally objective is 13085, a 4.8% move from current levels, and one can only surmise that the dusting the 12158 midpoint received on the last pullback (12/28) all but clinched a finishing stroke to the higher number. Moreover, it implies that bears shouldn’t get their hopes too high even if, in the next few days, the Dow plummets 324 points to retest the midpoint support. As of now, that would signal not weakness, but a screaming opportunity to get long. Hard to believe, really, but that’s what the charts say.
SIDE BETS for Tuesday
Let’s put a stink bid into today at 34.87, for 200 shares. That’s a penny above a ‘D’ correction target on the 5-minute chart.
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Diamonds, E-Mini S&P Dance to Our Tune
by Rick Ackerman on August 25, 2009 12:01 am GMT · 1 comment
The Diamonds and the E-Mini S&Ps followed our script precisely yesterday, allowing Rick’s Picks subscribers to get short from the intraday highs in both. Because the E-Minis were raising some hell Sunday night, we allowed for a rally to as high as 1046 on Monday – equivalent to about a 200-point thrust in the Dow Industrials. However, we saw an opportunity to get short at a lower target, a Hidden Pivot at 1034.00, and put out the following trading recommendation: ”…a lesser target at 1034.00 can be shorted by scalpers with a 1.25-point stop-loss provided it’s hit in the first hour and 1020.50 hasn’t been exceeded » Read the full article