December Corn looks like it’s staging for a 10% rally, the technical basis for which is shown in the accompanying chart. Although camouflage opportunities are not readily apparent on the ‘hourly,’ I’ll recommend zooming down to perhaps the 30- or 15-minute bars if you’re eager to improvise a camouflage entry at these levels. An entry signal has already been tripped on charts of larger degree, but the futures have not yet taken off. Please note as well that there is specific Hidden Pivot risk you should be aware of, since there’s a weak corrective abcd pattern also at work with a 675.50 midpoint support and a 658.25 ‘d’ target. (60m, A=698, B=663.25, and C=693.) _____ UPDATE (12:51 p.m. EDT): The futures have taken a header this morning, smashing the midpoint support identified above and trading as low as 665.50. The 658.25 target remains valid for bottom-fishing, but it should only be attempted using the “camouflage” technique. If you’d rather try to get long with a straight bid and a very tight stop-loss, try it at 652.50, a ‘d’ Hidden Pivot target derived from the July 19 peak at 703.75. That’s my maximum downside objective for the near term, although it’s possible the futures will turn from above it and you’ll miss the trade.
From the monthly archives:
July 2011
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In this impromptu session conducted Thursday morning, we looked for real-time trading opporunities in the E-Mini S&P, the Mini-Russell, Silver Wheaton and some other vehicles. These sessions are open to all Rick’s Picks subscribers, although this recording is being made available to the public. Subscribers can be notified when the impromptu sessions are about to begin, and receive trading alerts intraday, by signing up on the “Contact Us” tab at the top of this page. A free trial subscription is also available by clicking on the link near the upper left-hand corner.
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With SLW under heavy selling yesterday, we initiated the long side of our butterfly spread, buying four September 42 calls for 1.32 and four September 50 calls for 0.26. Now, we’ll look to sell eight September 46 calls short for 0.79, presumably on a day when Silver Wheaton shares are doing better. A sale at that price would give us four “free” butterflies, and therefore no risk. For comparison, if we were to short the September 46 calls at their current price of 0.50, the resulting butterfly position could do no worse than lose $58 per spread, or a total of $232 (plus commissions). The maximum profit, based on a short sale at 0.50, would be $300 per spread — so we’d be getting 3-to-1 odds against an SLW rally into the mid-40s between now and September 16. I think we can do better, and that’s why we’ll hold off shorting the September 50 calls for the time being.
Those who monitored the trade will know that things could have turned out far worse if we’d chased the options. The September 42s trade as high as 1.90 yesterday, and although the 1.32 we paid for them was not the best price of the day, it’s only 18 cents above the intraday low. As for the September 50 calls, even with SLW shares getting shellacked, they fell no more than a nickel below where we’d bought them after trading as high as 0.35. Regarding the stock, as I noted during yesterday’s Hidden Pivot tutorial session, we should brace for more downside to at least $36, where a familiar trendline comes in as potential support. Although it’s hard not to notice the perfect head-and-shoulders formation that SLW has traced out since late 2010, I’d suggested not worrying about it for now, if only because it is so obvious. Someone in the chat room mentioned that SLW has been a pretty good mine canary, and I would agree. The stock does seem to have a knack for sniffing out trouble before it occurs.
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We’ll Take 13-to-1 Odds Against a Weekend Deal
by Rick Ackerman on July 29, 2011 2:20 am GMT · 29 comments
Bullion and the broad averages went their separate ways yesterday, each reflecting the failure of our elected leaders to break the deadlock over a debt ceiling. Perhaps we can save Wall Street’s speculators some anxiety by reminding them of what the outcome will be – i.e., a political compromise that will leave in place nearly all of the problems that the debate over America’s fiscal policy was supposed to settle. Given that nothing of substance is coming, we should expect stocks, gold and silver to resume the uptrends they were in before the news media started to confuse the picture with loose speculation about lowered credit ratings, a U.S. default, the curtailment of government services, massive public-sector layoffs and a whole bunch of other things that were never, ever going to happen. » Read the full article