July 25th, 2014
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So, was it thinking machines that put stocks into a death dive last week, or was it primal human fear?  Either way, there’s a neurological disease at work and therefore little likelihood of a cure.  Even worse, since these diseases tend to be degenerative, we should expect something still more disruptive in the future. Ham-handed regulations won’t be able to stop it, either.  Let the exchanges install all the circuit breakers they want; supply will out someday, catastrophically overwhelming demand when buyers go AWOL. This is inevitable when you create a global electronic trading network connecting ten billion » Read the full article


TODAY'S ACTION for Monday

Bullish Benchmark for the E-Mini Dow

by Rick Ackerman on May 10, 2010 3:59 am GMT

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Rick's Picks for Monday
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Early Sunday evening, index futures were caught in a vicious short-squeeze that bids fair to recapture all of last Thursday’s losses.  It would seem to be drawing its energy from the latest — and rather large, even by American standards — European bailout package.  The loan guarantees just announced amount to some $560 billion, offered to the EU’s most troubled economies. This PR hoax could have legs, but from a trading standpoint it will lay an egg if it fails to push the E-Mini S&Ps above  1136.00.  That is Thursday’s recovery high, and it lies somewhat above the 1130.75 peak achieved so far this evening.  The futures are currently trading for 1122.50, equivalent to a 140-point rally in the Dow above Friday’s settlement price. _______ UPDATE (2:32 a.m. EDT):  DaScumballs are doing what they’ve been doing so very deftly since March 2009:  lifting index futures as high as they can get away with on razor-thin Sunday night volume.  From a Hidden Pivot standpoint, DaBoyz can get away with as much, perhaps, as 1170.75.

Comex June Gold ChartFriday’s robust thrust fell ten dollars shy of a 1224.70 target, subjecting Gold to a little more bullying than usual Sunday evening.  We can ignore it as long as the futures hold above 1189.20, but anything below that number will create a mildly bearish impulse leg on the hourly chart. If there’s opportunity brewing for night owls, it would likely come from the 15-minute chart (shown).  The modest downtrend has a midpoint pivot at 1195.80 that you can bottom-fish with a three-tick stop-loss, and another Hidden Pivot at 1188.90 that deserves the same treatment.  Both lie just below “structural” supports whose breach will be read by most traders as breakdowns. _______ UPDATE (2:21 a.m. EDT):  A rally Sunday night invalidated the two downside targets but created two new ones. The first is a midpoint support at 1198.60 that has already been breached; the second, a ‘D’ target at 1190.70 that you can bottom-fish with a stop-loss as tight as four ticks. If it’s hit, look for more selling down to 1187.70, my worst-case low for today and another spot to try bottom-fishing with as tight a stop-loss as you can abide. _______ FURTHER UPDATE (8:57 a.m. EDT): The futures have exceeded  1187.70, bottoming so far at 1184.40 and hinting of still more weakness to come. They’d need to pop above 1206.50 today to undo the damage.

SIN10 – July Silver (Last:18.335)

by Rick Ackerman on May 10, 2010 3:47 am GMT

A print exceeding 18.910 today or tomorrow would kick the buying into high gear, creating a bullish impulse leg of daily-chart degree that would turn December’s watershed high at 19.420 into a sitting duck. Anything less, however, could strand Friday’s spike, leaving buyers to cool their heels in the wake of Friday’s spirited charge. More immediately, there are two spots where night owls might try bottom-fishing with a stop-loss as tight as three ticks:  18.235; or somewhat more conservatively, at 18.165.  (Please note that numbers in boldface brown are usually ‘D’ targets of downtrends, while brown number in a lighter type-face are midpoint pivots.  Uptrending targets and midpoints are similarly given in green, although I will sometimes use brown and green to highlight price points that are important though not Hidden Pivots.) _______ UPDATE (8 a.m. EDT):  June Silver bottomed at 18.215, two cents below the higher target but well above the lower.  I’ll record nothing done officially, but please note in any case that upside to as high as 19.415 over the near term has been signaled. Key resistance lies at 18.815, the Hidden Pivot midpoint associated with the target. 

YMM10 – E-Mini Dow (Last:10694)

by Rick Ackerman on May 10, 2010 3:55 am GMT

As of around 10 p.m. EDT Sunday, the futures looked bound for 10670, a shortable Hidden Pivot (albeit a relatively risky one; a more conservative short can be initiated at 10712). That would represent a 335-point gain over Friday’s close, and although it would not recoup last Thursday’s loss completely, it would handily exceed the day’s recovery high, creating an impressive bullish impulse leg in the process. _______ UPDATE (9:09 EDT):  The rally now measures to as high as 10937, well above last Thursday’s pre-swoon high of 10865.  A pullback in the meantime to (precisely) 10569, the target’s sibling midpoint, would telegraph the next thrust.

GS – Goldman Sachs (Last:143.13)

by Rick Ackerman on May 10, 2010 5:19 am GMT

If Goldman drifts lower over the next 5-7 days, we’ll look to bottom-fish down at 136.11, the lowest Hidden Pivot target that can be derived from the intraday charts. If I can come up with a way to initiate the trade using a limit bid for some near-the-money call options, I’ll feature the trade as a Pick of the Day for all. _______ UPDATE (May 16):  Scratch Goldman from the list of stocks we’ve been watching lately, since it has become too, too boring to deserve our time and attention. My minimum downside objective is now 135.35, and I’ll set an alert there, since the support will be worth bottom-fishing if it’s ever reached — which it will be.

$+ESU14 – Sep E-Mini S&P (Last:1979.25)

by Rick Ackerman on July 25, 2014 12:02 am GMT

The futures have sold off moderately after making a marginal new high on Thursday.  Even though they could be carving out an important top here, I adhered to a tight stop-loss nonetheless because that’s the way I do things, always following my discipline.  However, if you held onto the short from 1982.50 and want me to establish a tracking position for your further guidance, please let me know in the chat room. It is already implied that you’ll need a pullback to at least 1973.50 before implementing a trailing stop, since  you’ve already weathered a 3.00-point swing against the position.

As GDXJ was working its way south from around $43, my bearish forecast called for a washout low at exactly 40.42, a Hidden Pivot support of great clarity. I’d suggested buying down there ‘aggressively’ and with an ‘absurdly’ tight stop-loss.  This advice would have paid off handsomely for anyone who followed it, since the stock trampolined 64 cents yesterday off an actual low of 40.43, a penny from my target. Since a subscriber reported doing the trade as advised, I’m establishing a tracking position for the further guidance of all who may have gotten long. (He reported having bought 1000 shares off a 40.44 bid, but I’ll assume a more conservative 400 shares.)  Accordingly, I’ll recommend exiting half the position on Friday’s opening if you haven’t done so already.  We’ll impute any profits thereof to the cost basis of the 200 shares that will remain.

$+PCLN – Priceline (Last:1238.98)

by Rick Ackerman on July 24, 2014 12:54 am GMT

A subscriber reported success yesterday legging into the 1340/50/60 August 16 call butterfly that I’d advised. He did so 32 times at no cost, as suggested, but it took a $10 move in the stock between legs to get filled so advantageously. His maximum profit would be $32,000  with the stock trading at 1350 come August 16.  Since he owns the position without cost, no loss is possible even if PCLN should all to zero or rally to $1000. We’ll do nothing further for now, but I’d suggest that those of you who were unable to buy the spread keep trying.  We’ll shoot for a partial profit if the stock rallies $40-$50 in the next few weeks but otherwise do nothing further. I’ve reproduced a chart that shows why our expectation of a $120 rally from current levels, to a 1358.18 Hidden Pivot target, is not exactly farfetched.  To that end, a pop above the 1270.59 midpoint pivot would be most encouraging.

$+TLT – Lehman Bond ETF (Last:114.32)

by Rick Ackerman on July 23, 2014 5:36 am GMT

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$EURUSD – Euro/USD (Last:1.34623)

by Rick Ackerman on July 23, 2014 12:01 am GMT

I haven’t tracked currencies that closely, but because they tend to move very precisely to Hidden Pivot targets, traders should consider exploiting them whenever possible. Notice how EUR/USD has broken beneath a midpoint Hidden Pivot at 1.34841 after noodling around near that pivot for a few hours on Thursday. This suggests that it is bound for D=1.34197, at least.  You can bottom-fish there with a stop-loss as tight as 3-4 ticks.  Notice as well that there are two slightly higher possibilities for point ‘A’.  The correction targets they yield lie, respectively, at 1.34114 and, worst case, 1.33992.  I expect these numbers to work very precisely, so use them in whatever way suits you best.  Note as well that a last-gasp rally to p=1.34738 after EUR/USD has fallen a bit would be short-able. _______ UPDATE (July 24, 5:35 p.m. EDT):  Yesterday’s short-squeeze feint topped precisely at a midpoint Hidden Pivot (see inset, a new chart) that was originally support but which is now resistance. This price action confirms the pattern we’ve chosen as well as its ‘D’ target at 1.34197. At least one subscriber has confirmed getting short in the chat room.

$GCQ14 – August Gold (Last:1311.60)

by Rick Ackerman on July 22, 2014 1:29 am GMT

The futures looked like they could go either way as Monday’s session drew to a close. However, the stall within 0.70 of the 1318.30 midpoint resistance I’d flagged implies that a decisive move past it would reach its D-target sibling at 1331.60. Alternatively, my worst-case target for the near term would be the 1278.20 Hidden Pivot support in the lower-right quadrant of the chart — or possibly even 1271.70 if any lower.  The accuracy of this target would be affirmed by a bounce, possibly tradable, from within two or three ticks of the 1302.00 midpoint support. ________ UPDATE (9:57 a.m. EDT):  Gold has bounced $14 this morning from a low just two ticks (0.20) from the 1302.00 midpoint pivot flagged above. Now, if the futures breach the support, we’ll know EXACTLY where they are headed. _______ UPDATE (July 23, 12:01 a.m.): Someone in the chat room said that because everyone seems to be bearish on gold right now, perhaps we should take the other side of the bet.  I’m a bit bearish myself, and thus this response: “Rather than take chances and let gold disappoint us for the zillionth time, we should simply stipulate that the August contract close above 1318.90 before we get excited. That’s the midpoint resistance, on the 180-minute chart, of a=1292.60 on 7/15; b= 1325.90 on 7/27; and c=13-02.20 on 7/22. At that point, I’d lay even odds of a move to at least 1335.50; above 1337.00, the futures would be a good bet to hit 1381.40.  Whatever happens, bulls will have to prove their case. _______ UPDATE (July 24, 1:20 a.m.):  Sellers paused for a relatively blissful nine hours yesterday just inches above the 1302.00 ‘hidden’ support I’d flagged, presumably to sniff the flowers before going back on the attack.

$SLW – Silver Wheaton (Last:26.43)

by Rick Ackerman on July 17, 2014 12:05 am GMT

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September E-Mini Nasdaq (Last:3965.00

by Rick Ackerman on July 15, 2014 4:21 am GMT

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$NFLX – Netflix (Last:452.00)

by Rick Ackerman on July 9, 2014 3:25 am GMT

Netflix’s so-far $37 selloff has followed a peak last week at 475.87 that slightly overshot a Hidden Pivot at 474.50 I’d characterized as ‘a big-picture target where an important top is even more likely.’ A chat-roomer who evidently took this prediction to heart reported buying puts last Thursday for 1.24 that he cashed out for 8.90 yesterday. This could be just the start of NFLX’s comeuppance for all those who inflated this gas-bag to undeserved heights. If you took a position and are still holding it, please let me know in the chat room and I will update guidance. For now, though, let me suggest that you take profits on half of any short position entered near the recent top. _______ UPDATE (July 10, 10:23 p.m.): Bears failed to achieve a Hidden Pivot target yesterday, presumably because DaBoyz shook the stock down so hard on the opening bar that it exhausted sellers prematurely. The missed target suggests that traders will enjoy decent odds bottom-fishing the midpoint pivot shown at 433.62 (see inset, a new chart) with a stop-loss as tight as 8 cents. If it’s hit, expect the selling to continue down to at least 423.05, a Hidden Pivot that can be bottom-fished with as tight a stop-loss as you can abide. _______ UPDATE (July 14, 11:07 p.m. EDT): A turn from 428.20, precisely between the two pivots flagged above, left our bid high and  dry.  The bull leg that has followed could be the start of a rally cycle with the potential to reach 486.86. First, though, let’s see whether buyers can tackle a midpoint pivot at 457.53 that is associated with the target. _______ UPDATE (July 16 at 6:47 p.m.): Let’s not overlook the downside — specifically, the 433.69 midpoint pivot and its D sibling at 411.67.  Bears can short the break for a move to either, and both can be bottom-fished with the tight stop-loss you can abide. ______ UPDATE (July 22, 12:15 a.m.): The stock turned higher from $2 above the midpoint support, implying that bulls are about to dominate once again.  Call prices are on the moon, however — way too expensive for a straight directional bet. Instead, I’ll suggest buying the August 2 – July 25 calendar spread eight times for 1.50, day order, contingent on the stock trading 451.00 or higher. Please report any fills in the chat room. _______ UPDATE (July 22, 12:05 p.m.):  With today’s huge air pocket, the stock obviously remains in the grip of DaBoyz. My assumption will always be that steep declines in NFLX are brazen shakeouts, engineered by strong hands to steal stock at fire-sale prices from weak hands. In this instance, the downdraft appears likely to hit 413.00 before DaBoyz run it up again. If and when that number is hit, you can bottom-fish there with the tightest stop-loss imaginable. (Note: I’ve revised the target downward by 0.96 since the original update. Also 435.25 is the midpoint pivot and therefore worth a tightly stopped short on a rally to it.)


This Just In... for Monday

The View from the Trading Floor

by Rick Ackerman on May 10, 2010 7:28 am GMT

Viewed from the trading pits, last week’s death dive looked like the end of the world to some denizens. Click here for the perspective of floor traders who had a ringside seat.


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