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The rally appears to be targeted on a Hidden Pivot resistance well above, at 1108.25, but it’ll first have to clear a midpoint resistance at 1081.25 that stopped yesterday’s bunny-hop cold. The upthrust was not as feeble as it first appears, however, since, as you can see in the accompanying chart, it took out a look-to-the-left-peak that is well concealed within a three-day supply zone recorded weeks earlier. My hunch is that an ‘X entry will work for getting long, but I am unwilling to risk the implied 3.75-point stop-loss. Instead, if the trade triggers, I’ll suggest cutting the risk down to size by using whatever camouflage may be afforded by a lesser chart; or by using a “time stop” to exit the trade if it doesn’t take off right away. If ‘X’ is triggered before the opening bell, however, you should simply get long conventionally and follow Lindsay’s rules. As you will likely have inferred, this trade is for experienced Pivoteers. _______ UPDATE (9:47 a.m. EDT): The trade could not have worked out more perfectly for night owls, since it precisely matched the one I’d sketched out in the chart. Entry was triggered at 1077.00 around 3:30 a.m. , and four hours later, without having tripped a trailing-stop exit from the 1080.75 midpoint on up, the futures topped a single tick from the 1088.50 target. The threoretical gain per contact would have been $550.
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Hollywood sound editor Michael Redbourn has been nominated for two Emmys, but he’s also a blogger with some interesting opinions on an eclectic variety of subjects. We asked him to write on a topic of his choosing for Rick’s Picks, and he came back with some disquieting facts concerning the approximately $500 billion cost of caring for America’s illegal aliens. For a look at the facts and figures, along with extensive links, click here.








Why BP Put Options Are a Sucker’s Bet
by Rick Ackerman on July 13, 2010 3:27 am GMT · 13 comments
Put options on BP may look like a tempting play here, but we wouldn’t touch them with a ten-foot pole. The company’s shares have rocketed nearly 40% since late June, making them appear ripe for a retrenchment. Don’t bet too heavily on it, though. The puts are so pricey at the moment that you could probably get better odds buying scratch-off cards at the liquor store. August near-the-moneys, for one, are trading with an implied volatility of around 70, meaning the stock would have to plummet by at least 11% before August 20 for bearish speculators to merely break even. Stranger things have happened, of course, but anyone who made essentially the same bet on Friday, just ahead of yesterday’s powerful short-squeeze rally, would have seen a third of his stake go up in » Read the full article