September 2nd, 2014
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Which Recovery Story Are We to Believe?

by Rick Ackerman on September 18, 2009 2:05 am GMT · 3 comments

Is the economy recovering?  Nowhere is there more confusion on this topic than in the pages of the Wall Street Journal. Anyone scanning just the headlines might think we’re on the cusp of a solid rebound: retail sales are up, home sales are starting to move, and the Fed chairman thinks the worst is behind us. It is only when one burrows into the newspaper, particularly the op-ed pages, that a more sobering picture emerges. The facts well behind » Read the full article


TODAY'S ACTION for Friday

Mini-indexes weakening somewhat…

by Rick Ackerman on September 18, 2009 2:51 am GMT

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Rick's Picks for Friday
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ESZ09 – E-Mini S&P (Last:1061.25)

by Rick Ackerman on September 18, 2009 2:38 am GMT

In after-hours trading, the futures appeared to be struggling to reach the 1062.75 midpoint of a minor corrective pattern projecting as low as 1056.50. Either of these Hidden Pivots can be bottom-fished with a stop-loss as tight as 1.00 point, but if the trend reverses Thursday night or Friday morning, hitting 1070.00 before 1063.75, bears had better get out of the way. My immediate target thereupon would be 1073.00, but with a good shot at 1085.00 if it’s exceeded by more than 1.00 point.  [Note: The interpolated over/under numbers for the December contract are, respectively, 1065.25 and 1059.00.] ______ UPDATE (10:14 a.m.):  The futures have rallied from an overnight low the fell in-between the two levels of corrections targets given above. The move was impulsive, so that the pullback now in progress must be viewed as such rather than as the start of a significant downtrend. It would take a 1047.50 print to reverse bulls on the hourly chart.

GCZ09 – Comex December Gold (Last:1010.20)

by Rick Ackerman on September 18, 2009 2:48 am GMT

The futures look pretty neutral right now. Notice in the chart how yesterday’s downtrend played out to within a single tick of a crystal-clear target on the 3-minute chart. Now, if the recovery rally hits or exceeds its target, bulls would be back in charge. _______ UPDATE (10:22 a.m.):  Gold’s rally stalled a single tick above the 1019.40 target shown in the chart, and although I had said this would put bulls back in charge, I jumped the gun.  In fact, Gold needed to have exceeded the Hidden Pivot — exceeded it by more than a single tick, anyway — to suggest there’s enough buying enthusiasm to take the futures to a new threshold.

AAPL – Apple Computer (Last:180.80)

by Rick Ackerman on September 18, 2009 7:26 am GMT

Apple’s “story” has dimmed slightly with the recent announcement of dramatic price cuts for the firm’s high-capacity iPods.  The news would probably be easily absorbed if the stock were trading at half its current price, but the rally in fact has looked like it needed a rest for the last 50 points. Accordingly, we’ll use a Hidden Pivot target not far above, at 193.87, to try and get short. We’ll have a better idea of whether the stock will actually reach that number once we’ve seen how far it pulls back from yesterday’s high.  Anything exceeding 182.82 would indicate possible trouble. _______ UPDATE: 188.90 is as high as buyers could muster on the last rally peak.  The target is still valid in theory, but we’ll put this trade aside for now, since it can only distract.

$CLV14 – October Crude (Last:93.76)

by Rick Ackerman on August 28, 2014 1:13 am GMT

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$PCLN – Priceline (Last:1260.77)

by Rick Ackerman on August 28, 2014 1:00 am GMT

If the lunatic stocks are about to lead the broad averages higher, we should see Priceline bounce sharply from the 1259.21 midpoint support shown. Yesterday’s low came within 38 cents of this Hidden Pivot — close enough for the target to be considered fulfilled. Any further slippage, however, and its ‘D’ sibling at 1224.45 will be in play. This would imply that the stock market itself is likely to go nowhere, or possibly down, in the days ahead.  The stock would become shortable on a decisive breach of the red line (i.e., a breach of perhaps 0.30-0.60 cents), but if you plan on getting short for the potential $35 ride south, you should initiate the trade on the 5-minute chart or less, using a corrective pattern that would subject you to no more risk theoretically than perhaps 0.15 per share. If the trade works and you are still short when 1224.45 is reached or closely approached, reverse the position and buy at the target aggressively using a tight stop.

$+TSLA – Tesla Motors (Last:264.09)

by Rick Ackerman on August 26, 2014 7:35 am GMT

Tesla’s bullish rampage looks like it could hit 305.55 on the next big thrust.  Accordingly, I’ll recommend bidding 1.54 for the October 3/Sep 5  300 calendar spread 8 times, good till Friday. You should adjust your bid by 0.05 up or down for every 50 cents the stock moves above or below 262.50.  Please note as well that a pullback to the red line, a Hidden Pivot midpoint at 241.39, should be regarded as a buying opportunity, especially the calendar spread (albeit it at a much lower price). _______ UPDATE (August 26, 11:43 p.m. EDT):  Volatility has gotten crushed, and so you’re doing well if you buy the spread now for 1.34 (with TSLA at 262.00).  Since the spread price can fluctuate wildly from one day to the next, I’ll suggest that you recalibrate it hourly if you’re a buyer, using a spread price midway between bid and offer as “fair value.”  It has a delta value of around 9 at the moment, so you should adjust your bid for the spread by 0.01 for each 0.11 move in the underlying. _______ UPDATE (August 28, 9:45 p.m.):  With the Sep 5 calls melting away, the fair price for our spread must be recalculated several times daily by anyone seeking to buy it. It was a decent buy at Thursday’s close for around 1.20, but it could shed yet another 0.15-0.25 as the week ends.

$SLW – Silver Wheaton (Last:24.89)

by Rick Ackerman on August 25, 2014 12:05 am GMT

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$AAPL – Apple Computer (Last:100.89)

by Rick Ackerman on August 21, 2014 3:16 am GMT

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$+TLT – Lehman Bond ETF (Last:117.72)

by Rick Ackerman on August 20, 2014 4:59 am GMT

Subscribers are working two bullish calendar spreads (x16), but I would suggest increasing the size of the position if TLT corrects down to the 115.18 target  shown.   For now , we are long September 20 118 calls against short August 19 118 calls that we will roll into August 29 calls this Thursday and Friday.  We’ve already done the roll twice, reducing the cost basis of the spread to 0.04. This week’s roll will entail covering (buying back) the short calls and shorting a like number of August 29 calls, effectively selling the August 22 118/August 29 118 calendar spread.

It was marked on Tuesday at 0.17, off a 0.26 offer, but any price higher than 0.04 will effectively turn the position we’ll have  – long the Sept 20 118/August 29 118 calendar — into a credit spread.  This means we can’t lose – will make a profit no matter what TLT does.  Ideally, come September 20 , TLT will be sitting at 118, our spread will be trading for around 0.50, and we’ll be carrying it for a credit of perhaps 0.50.  The imputed profit would be  $1600 — not bad, considering our risk is already close to zero.

My long-term outlook for T-Bonds is very bullish, a view that goes sharply against a consensus which clings to the belief that interest rates – and the stock market — can only go up.  That is a bet we should be eager to fade. We may have a chance to do so at still better odds if T-Bonds continue to  sell off  on the manufactured idea that the Jackson Hole conference will open the floodgates for more stimulus and inflation. _______ UPDATE (10:38 a.m.):  The Sep 20/Aug xx calendar spread is recommended at this point only for those who did the original spread, since there’s not enough time left on it to roll its cost basis down to zero or less (i.e., a credit). If you are new to the spread, try buying the Nov 20/August 29 calendar for 0.90 with TLT trading around 115.80.  The spread has a delta value of 0.20, implying that being long one spread is equivalent to being long 20 shares of stock.  This means that, using a spread price of 0.90 as a benchmark, you should adjust the price you pay for it by one penny, up or down, for each 5 cents that TLT moves away from 115.80. ______ UPDATE (August 23): The strategies detailed above continue to rack up solid gains for subscribers that have come with minimal risk. If you have yet to take a stake, I would strongly urge you to do so, and to monitor reports in the chat room from those who are working the order. If there are any questions about how, and when, to initiate a trade, please don’t hesitate to ask me or others about it. _______ UPDATE (August 26, 12:01 a.m.): These spreads are working well, to put it mildly — especially for subscribers who increased their position size as suggested whenever TLT was weak.  Check my August 26 posts in the chatroom for further, detailed guidance.  In brief, I am suggesting covering half of the 118-strike spreads for 0.90 or better this week, and to roll the short side of the Nov 22 120/Aug 29 120 to Sep 5. _______ UPDATE (August 28, 12:43 p.m.): The August 29 118 calls look likely to finish in-the-money. To avoid being exercised, make sure you roll into the September 5 calls before noon EDT Friday.  Currently, with TLT trading 119.09, the September 5 118/August 29 118 calendar spread is a decent sale for around 0.28.  Keep in mind that the spread could widen, to our great advantage, if TLT pulls back, since the August 29 calls we are short will shed value more precipitously than the September calls that we continue to hold as the long side of our position. Even so, you could do worse than take the 0.28 now and run, since it would simply fatten the premium we have taken in on the weekly short, increasing our net credit.  With TLT rallying liking a moofoo, the weekly credits will be more significant to our final gain than the calendar spread itself at expiration.

+GDXJ – Junior Gold Miner ETF (Last:42.06)

by Rick Ackerman on September 2, 2014 12:03 am GMT

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SIDE BETS for Friday

A heads-up: TBT is approaching a bearish Hidden Pivot target at 43.39 that would offer a back-up-the-truck buying opportunity if it is reached. This would of course imply that the price of the underlying long bond is approaching an important top.


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