October 31st, 2014
Published Daily
HP Seminar Information page.

Rick’s Picks Weekend Edition

by Rick Ackerman on September 5, 2009 12:01 am GMT

Ultimate Bottom Lies Far Below

Because we never shared investors’ wild enthusiasm for Cerberus, its near-collapse in recent days hardly came as a shock. The once-huge private-equity firm specialized in distressed assets at a time when even the bluest of blue-chip companies – the name Lehman Brothers springs to mind – have fallen into mortal peril literally overnight. Cerberus’s biggest gambles were in GMAC and Chrysler. The latter company’s future looked as bleak to us five years ago as it did in May, when the automaker went belly-up. What could…

Read the Rest of the Article | Comments

***

Treasury Default Not So Unthinkable

Although we can be certain Americans and their government owe far more than they will ever be able to repay, the question of how this debt eventually will be discharged is the economic conundrum of the day. Some think hyperinflation is the only way out, since it would allowing debtors to repay all that they owe with worthless bank notes that would be in copious supply. However, this is hardly a solution, since those on the receiving end – i.e. the lenders — would be ruined, as would the bond markets, banks and all other…

Read the Rest of the Article | Comments

***

Bank Scare a Ruse to Shake the Tree

A run on a major U.S. bank?  Who could have been spreading such scurrilous rumors? They surfaced yesterday in the Rick’s Picks chat room, and elsewhere, not long after we’d done some personal banking ourselves in an online account at the very same bank. We experienced no delays or problems with the transaction, notwithstanding reports of a “default situation” and “elevated” buying of put options on the shares of the bank.  We were able to confirm that there had indeed been a flurry of put-buying, but the action was not so frenetic as to suggest that the bank was in any serious trouble.

Read the Rest of the Article | Comments

***

Surfing the Trend in Silver Wheaton

We occasionally recommend option trades designed so that even the village idiot could hope to make money on them. These minutely detailed “Pick of the Day” selections are intended to make back one’s annual subscription cost at the very least, but also to help traders get over whatever trauma they may have suffered trying to profit with puts and calls. This is quite a feat, even for us — and we’ve been at it for more than 35 years. Truth to tell, it…

Read the Rest of the Article | Comments

***

With $1000 Looming, Gold Fever Is Back

We’re no fans of head-and-shoulder formations, since they are everywhere the amateur chartist might want to find them. But there is something to be said for the bullish reverse head-and-shoulders pattern that gold futures have been tracing out for the last year-and-a-half. The pattern is shown in the chart below, and it is predicting that December Gold, which settled yesterday at 997.70, its highest close since February, is about to run up to $1060. Trouble is, just about everyone we know thinks gold is about to pop to 1060, give or…

Read the Rest of the Article | Comments


TODAY'S ACTION for Friday

Too Sexy to Pass Up

by Rick Ackerman on September 4, 2009 3:06 am GMT

 Member-only content. Please Login or get a free trial of Rick's Picks to view.


Rick's Picks for Friday
$ = Actionable Advice + = Open Position
Hidden Pivot Calculator   Education Page
All Picks By Issue:

SLW – Silver Wheaton (Last:13.04)

by Rick Ackerman on September 4, 2009 2:30 am GMT

All our ducks are in line now that we’ve successfully legged into the December 12.50-15.00 call spread eight times for a net CREDIT of 0.15 per.  The short sale of some December 15 calls for 0.45 yesterday morning clinched it, allowing us to capture premium in this series when the options were fat and juicy. Let’s put in a stink bid of 0.20 to cover the December 15s, good through Wednesday. It would be worth our while to get ’em in at that price if we can do so within the next few days. Our goal would then be to re-short them on  rally. _______ UPDATEWe weren’t able to cover the short December 15 calls, since they never traded below 0.35.  However, with the stock pushing toward $13 our position is looking better than ever.  We have a chance to make as much as $2120 with SLW trading $15 or higher at expiration, but even if SLW plummets we’ll still make at least $120.

DIA – Diamonds (Last:94.46)

by Rick Ackerman on September 4, 2009 2:49 am GMT

I usually ignore hot tips, but a pen-pal of mine, Phil C., sent me a breathless note predicting that the Dow would rally 100-150 points this morning, forming a top from which it will collapse when traders return after Labor Day.  Putting aside the details, this sounds so absolutely right to me that I’m inclined to speculate modestly.  Mr Market loves to spring dirty, nasty surprises whenever possible, and what could be nastier — or more surprising — than a tsunami to greet us as we return from summer’s final fling?  To get short, we can use the midpoint resistance at 95.07 shown in the chart, buying two September 93 puts (DAVUO) if and when the Diamonds get there. _______ UPDATE (11:52 a.m.): Stocks are only modestly higher today after an other-then-depressing unemployment report, so a short-squeeze to the levels where we’d wanted to get short seems unlikely. We’ll do nothing officially, but personally I’m going to take a couple of puts home with me over the weekend. My hunch is that the best prices of the day will obtain near the close. (Note: I bought some September 93 puts — DAVUO — for 0.86.)

SIZ09 – Comex December Silver (Last:16.130)

by Rick Ackerman on September 4, 2009 3:13 am GMT

The futures pushed slightly above a 16.265 pivot that had served as a short-term, minimum upside objective. The overshoot hints of further upside progress, presumably to the next Hidden Pivot resistance worth noting, 16.640.

$SIZ14 – December Silver (Last:16.410)

by Rick Ackerman on October 31, 2014 4:15 am GMT

More downside over the near-term to at least 15.865 (see inset) looks very likely, so traders should position from the short side. The opportunity may be past by morning, but night owls can use an entry trigger on the lesser charts (i.e., 5-minute bar or less) to get aboard. I’ve highlighted the relevant ABC pattern, which appears at the rightmost edge of the chart.

$AMZN – Amazon (Last:299.07)

by Rick Ackerman on October 31, 2014 3:58 am GMT

 Member-only content. Please Login or get a free trial of Rick's Picks to view.

$DIA – Dow Industrials ETF (Last:171.60)

by Rick Ackerman on October 29, 2014 12:03 am GMT

 Member-only content. Please Login or get a free trial of Rick's Picks to view.

$PCLN – Priceline (Last:1144.22)

by Rick Ackerman on October 29, 2014 12:02 am GMT

 Member-only content. Please Login or get a free trial of Rick's Picks to view.

$+SNIPF – Snipp Interactive (Last:0.2490)

by Rick Ackerman on October 28, 2014 2:47 am GMT

 Member-only content. Please Login or get a free trial of Rick's Picks to view.

$GCZ14 – December Gold (Last:1224.60)

by Rick Ackerman on October 23, 2014 1:56 am GMT

 Member-only content. Please Login or get a free trial of Rick's Picks to view.

$+AAPL – Apple Computer (Last:107.34)

by Rick Ackerman on October 22, 2014 8:18 am GMT

Apple’s gap yesterday through the 100.41 midpoint resistance (see inset) strongly implies that its D sibling at 105.64 will be reached. Although a pullback to the midpoint should be treated as a belated buying opportunity, I wouldn’t suggest chasing the stock higher. That said, the four labeled peaks are tailor-made for the Hidden Pivot trader who can employ the ‘camouflage’ technique for getting long. If you understand why, you should go for it! _______ UPDATE (8:13 p.m.): The broad averages pulled Apple back down to earth yesterday when the stock tried to go opposite weakness that surfaced around mid-session. This runs flatly counter to my speculative idea that AAPL might pull the broad averages higher. That’s still possible, since yesterday’s 104.11 peak fell 53 cents of a rally target that remains valid in theory. However, we’ll eschew speculation for now and simply watch to see whether  the 102.44 Hidden Pivot support holds (see inset, a new chart). _______ UPDATE (October 23, 1:59 p.m.): Apple has rebounded sharply today, off a 102.90 correction low to a so-far high of 105.05 that’s 59 cents shy of our target. Most longs should have been exited by now. ______ UPDATE (October 27, 8:07 p.m.): Friday’s high at 105.49 came within 0.15 of the target flagged above.  Bulls can continue to hold small long positions for a swing at the fences, but I’d suggest tying your shares to a stop-loss based on a downtrending impulse leg on the 15-minute chart. Currently, that would imply stopping yourself out if an uncorrected fall touches 104.52 _______ UPDATE (October 28, 8:44 p.m.): Still long? Be alert at 107.08, a Hidden Pivot target that looks all but certain to be reached but which could stop the rally cold. You should tighten your trailing stop there in any case. ______ UPDATE (October 29, 9:25 p.m.): The rally has shredded some challenging Hidden Pivots, but let’s see if it can bully its way past the 109.07 target shown. In any case, it is my minimum upside objective for the near term.


This Just In... for Friday

About My Option Strategies…

by Rick Ackerman on September 4, 2009 12:01 am GMT

The following questions about my option strategies came up in the forum, but I am republishing them here because they may be of interest to a wider audience:

What is the advantage of going long one call, and then locking in a given spread via shorting another call, versus “locking-in” the spread by going long on puts instead?

My answer below is more generalized, but to address your specific point, we should prefer to “lock in” a profit by shorting a wasting asset rather than buying one ourselves.  For most option traders most of the time, shorting calls is MUCH more profitable than buying puts.  Indeed, in the several decades I have been trading options,  I cannot recall a instance when put buyers were happy for more than three consecutive days.  Even those who owned puts ahead of the 1987 crash had just two days of sheer bliss to get rid of them.

Is it that in the latter scenario, one is long twice, and can thus get screwed twice by the pros? I always thought the latter scenario would be a good one in cases of low implied volatility, where the loss on one is mitigated, and the gain in the other is increased when implied volatility rises during larger underlying moves. (That may just be retail-customer theory, which the pros have long beaten. But what do I know? I’m still waiting for someone to start offering straight options on the VIX. Thanks!

&&&&&

The spreads I prefer are intended to provide a highly leveraged shot at big profits, but without the usual, horrendous time decay. This tactic is especially useful if we expect a stock to rise (or fall) over a period of several months. We also seek to take advantage of fleeting spikes that goose option volatilities to the moon. If, for instance, SLW opens on a gap this morning (it did), we may have a chance to short Dec 15 calls when they are hugely overvalued — sell them, perhaps, for even more than the 0.45 we’d intended. (They topped at 0.50 before receding with the tide.). And, of course, we do so with the expectation that Silver Wheaton will be strong in the coming months, but not so strong that the December 15 calls will go in-the-money. We may ultimately decide to exercise our December 12.50s, a step in building a long-term position. RA

The Real Unemployment Rate

by Rick Ackerman on September 4, 2009 4:38 am GMT

Were you aware that the Bureau of Labor calculates unemployment in various and sundry ways that are not shared with the press?  Neither were we — until we heard about ‘U-6,” which reckoned U.S. joblessness at 14.8 percent back in February.  We would assume it’s much higher now, but unfortunately February was the last month given.  Incidentally, if 1933’s rate of 24.7 percent had been calculated using today’s dubious metrics, it supposedly would have been lower by at least five to ten percentage points. Click here  for the link.


Hidden Pivot Webinar & Tutorials
The Hidden Pivot Webinar is one-day event is designed to teach you the risk-averse trading strategies Rick has taken to his seminars around the world. Once you have learned his proprietary secrets, you will approach trading and investing with enough confidence to make your own decisions without having to rely on the advice of others. The next Webinar will take place on November 13, 2014. For more information, or to register, click here.