February 2011

Shorts held after Monday's close could have been closed out for a very small gain above 126, although getting long on the same cue would have required the patience to wait several hours for the first camouflage opportunity. From here the futures look bound for at least 12261, a Hidden Pivot that can be shorted with a stop-loss as tight as five ticks.  If it's blown away, look for the rally to continue to 12308.  (Both of these targets are easily found on the 15-minute chart.) Night owls looking to board for the expected ride north will find camouflage difficult to find, since the futures are at new highs for this Mother of All Bear Rallies.

AOL’s $315 million buyout of the Huffington Post has to rank as one of the most recklessly extravagant dot-com deals in history, rivaling the Time-Warner/AOL merger in stupidity if not in dollar value. Not that that would stop a few hard-core fans from blogging the deal as though it were the Second Coming.  Here’s what one of them, Jason Pollack, had to say, taking the prize for retch-inducing obsequiousness:  “The Huffington Post has been dramatically ahead of the curve in modifying their site to fit with the latest social trends. Last night they were rewarded handsomely for their brilliance.”  Yeah, sure.  Handsomely. Three-hundred-and-fifteen-million bucks! Hell, give us a measly one million and in three years we’ll build you an online presence with an audience that will rival Huffington’s in size. And unlike Huffington, which only recently began to make any money at all, we could ramp up advertising revenues relatively quickly to pay for expansion, avoiding their mistakes and stealing their best clients. The talent to do this has never been cheaper.  Having come from the newspaper business ourselves, we can attest that Pulitzer-winning reporters, some of them close personal friends, are a glut on the market. News editors we know have been looking for work for as long as seven years. And a few former managing editors have thrown in the towel. Need some celebrity-types to contribute regular think-pieces and commentary?  No problem.  Many will do it for nothing simply because, like TV actors who work for scale on Broadway, they are egomaniacs who crave the exposure.  What does it take to attract Huffington-size audience?  In a word, sleaze.  If you haven’t visited the site recently or used Google news to find the top stories of the hour, you might still think of Huffington as the premier outlet for news, tidbits

Check out the chart accompanying today's Silver tout, since it shows how compressing the view can bring into sharper relief Hidden Pivot targets that might not have been apparent in a roomier display.

We are long 800 shares @ 14.91 against eight February 33 calls shorted for 1.94.  My apologies for botching the instructions yesterday, transposing an important detail referring to "higher" or "lower" in trying to explain when to buy eight February 36 calls.  I saw no references to this error in the chat room and will therefore assume either that no one did the trade, or that there was little interest in it. Officially, however, we'll try again, using a slightly different tactic:  Bid 0.41 for eight February 35 calls, day order. ______ UPDATE (4:03 p.m. EST):  In the chat room just now, I've recommended covering our short February 33 calls for around 2.40,  since SLW will blow to at least 36.81 if and when it gets past the 35.28 midpoint pivot where it has stalled today. I will also recommend closing out the 800-share position at 36.81 (take 10 cents' discretion), good-till-canceled, since I'd like to start fresh, allowing new traders to get aboard.  Since we've covered the Feb 33 calls for 46 cents more than we received for shorting them, that will raise our cost basis on the stock to 15.35.  To be candid, in making position adjustments with puts and calls over the last month or so, I've traded the stock very poorly -- especially when I had you buy Jan 34 puts when SLW spiked to an all-time high at 42.34.  The entry could not conceivably have been better timed, but the puts were way too far out-of-the-money to begin with, and we blew them out at the worst possible time -- for a pittance when the stock made a last-gasp feint to 40 before tanking all the way down to 28.85.  If we can get out at the 36.81 target, that would represent a theoretical profit of a little more than

This may sound counterintuitive, but a Hidden Pivot target can sometimes become clearer if you scrunch the chart. I've done so here, and the resulting target at 30.060 looks compelling. Coincidentally, as I was preparing this tout, the futures were trading precisely at the 29.400 midpoint associated with the target.

Monday's dirge changed nothing in the short-term forecast, which calls for a blast to as high as 1379.80 over the near term.  This is predicated on an easy push past that Hidden Pivot's associative midpoint, 1362.00.  Camouflage artistes can look at charts all the way up to the 15-minute bars for an opportune entry signal.

Yesterday's hundred-point rally missed my target by a single point, which means that officially we did nothing. Unofficially, however, and as I took pains to detail in today's commentary, I managed to talk shorts who front-ran the order into bailing out of what would have been a profitable position.  Notwithstanding my discussion at the time of why the bull would be re-energized if buyers got past the target, the fact remains that they didn't.  That should tip our bias negative for the very short term, so if you had the cool to hold the short position, I'll suggest using the creation of a bullish impulse leg on the 15-minute chart as a signal to stop yourself out. As of 11:15 p.m. EST, with the futures trading at 12108, that would take a print at 12126.  By implication, if you're looking to get long, a camouflage opportunity could conceivably become manifest at that time.

I pored over the hourly chart to see if there was a pattern analogous to the one that allowed me to project Tuesday's top in the Mini-Dow within a single point.  For what it's worth, there was no such pattern, but it would have required a point 'A' low at exactly 1241.75.  (I determined this simply by working an ABC down-pattern from yesterday's high, 1320.00.)  Looking ahead, we are still relishing the thought of shorting a potentially very important Hidden Pivot at 1356.00; day trades should hew to a bullish bias until then. Most immediately, the futures appear bound for at least 1330.00, a Hidden Pivot whose provenance is shown in the chart. Note to Pivoteers:  Today's analysis has the potential to test my fondness for the one-off 'A'.  If it doesn't work, the futures should blow past my target and top at another, 1335.25, a Hidden Pivot you can short with a 1.00-point stop-loss.

We sometimes forget that trading can be more humbling, even, than golf.  Who could have imagined we’d predict the Dow’s intraday high within a point, only to blow the short trade we’d advised from that high?  That’s what happened, mainly because, when the trade started to go our way, we lowered the stop-loss by a hair to all but eliminate the theoretical possibility of even a small loss. Here’s the way it played out:  Anticipating a 100-point rally in the Dow on Monday, we put out the following recommendation to subscribers Sunday night, referencing the March E-Mini Dow contract: “The futures look bound most immediately for 12142, a Hidden Pivot shown in the chart.  The target looks not only like a high-odds bet as a minimum upside price objective, but also a good place to attempt shorting with a stop-loss as tight as 12151.”  The chart we used to project the high is shown below, and although for proprietary reasons we have not labeled all of the coordinates employed to predict the exact top, you can learn how to do this nifty little parlor trick yourself by taking the upcoming, six-hour Hidden Pivot webinar. For further information, including a detailed description of the Hidden Pivot Method, click here. Getting back to yesterday’s price action, the Mini-Dow futures got off to the strong start we’d expected, and so we opened up an impromptu virtual meeting room for Rick’s Picks subscribers to give them precise advice in real time for getting short at the target. At the time, the Mini-Dow contract had traded as high as 12130, getting within 11 point of the target. They tiptoed still higher, to 12141 – a point beneath the target, and that’s where we “declared” ourselves short.  The entry was not merely hypothetical, however, since someone in