Tuesday, August 25, 2009

The Hidden Pivot target at 1034.00 given here yesterday caught a very short-able top within a single point. I recommend partial profit-taking 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 sol 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 buy back the one contract at 1022.00, it should also be tied to the stop at 1030.00). 

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 to the downside first." As it happened, the 1034.00 target was hit 57 minutes after the opening bell. The futures didn't fall immediately, and in fact went a point higher, to 1035.00, missing our stop-loss by a single tick. They meandered sideways for the next few hours; then, about midway into the session they dove to 1021.25, yielding a theoretical profit of as much as $637 per contract. In an intraday bulletin, we told subscribers to take partial profits below 1026.00 and to hold onto at least a small piece of the initial position for a possible home run. A similar opportunity played out in the Diamonds, where we told subscribers to look for a shortable top at 95.82. Here is the recommendation exactly as it went out Sunday night:  "Opportunity beckons, since the Diamonds are closing on a Hidden Pivot resistance at 95.82 that looks likely to cause a stall.  Buy two September 95 puts (DAVUQ) if and when the stock gets there. I estimate they'll be selling for around 1.76 if you want to park a limit order with your broker..."  This recommendation could not have worked out more perfectly, since DIA topped

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.

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.

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 _____ 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 ____ by mid-week to turn it bullish. Above that price, there would still be risk of a stall at ______, 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.

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.

I've laid out a strategy for those of you who stayed short the E-Mini-S&Ps, since this short position has the potential to turn into a big winner -- especially considering that our initial risk was only $63 theoretical. We'll also be attempting to bottom-fish in two mining stocks: Goldcorp and Moneta Porcupine.

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 _____ calls. Bid 0.50 fo 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 _____ calls against it.