August 21st, 2014
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[Ever consider stuffing money in your mattress to guard against a banking collapse? Here’s a guest editorial from our friend Erich Simon that suggests you might be better off taking your nest egg and buying…a bunch of mattresses. We’re not sure whether Erich’s point is being made tongue-in-cheek, but we are convinced, after an exchange of several e-mails, that he is a true connoisseur of bedding and accessoriesRA]

I just shelled out $2,400 for a traditional, coil-spring twin XL mattress set. Apparently I am not alone with mattress horror stories. Is the new mattress worth $2,400? I don’t know, but it’s got a 10-year warranty. Only problem with that is a $2,400 replacement mattress in ten years will be a smidgen of what I just received.  Adjusted for Net Present Value and the ongoing bleed of “quality metric,” probably a lot less, so for all intents and purposes my purchase will have depreciated down to sub-zero. Of course, if I were buying the hedonic of a new computer ten years out I would no doubt improve on existing “capacity.”

A mattress is a better barometer than a computer or a traditional store of value, including gold. Mattresses consume scarce resources like cotton and petroleum. Mattresses are something everybody needs, and they wear out and have to be replaced. Mattresses are not purely “frivolous tangibles” and speak to the Means of Production (MOP) in our factoried society. They are price-pointed to exhaustion on the demand side. Labor costs, like everything else, while in the short term can fall from layoffs, will only continue to rise as increases in the minimum wage are passed through the pipeline. » Read the full article


TODAY'S ACTION for Friday

Goldman’s Death Dive?

by Rick Ackerman on December 2, 2011 7:32 am GMT · 1 comment

Although we shouldn’t get our hopes too high, technical evidence presented in today’s tout for Goldman Sachs suggests that the stock could be on its way to oblivion. A further fall of $31 from current levels seems plausible in any case, so let’s stay on top of the stock for now, the better to leverage the move.


Rick's Picks for Friday
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ESZ11 – December Mini S&P (Last:1247.75)

by Rick Ackerman on December 2, 2011 7:59 am GMT

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USZ11 – December T-Bond (Last:140^29.)

by Rick Ackerman on December 2, 2011 10:11 am GMT

December T-Bond (USZ11) price chart with targetsThe 140^14 correction target drum-rolled here yesterday has been exceeded by eight ticks, or a quarter of a point. Ordinarily, because the pattern associated with that target is so clear, we might infer from even so small an overshoot s that significantly lower prices impend. In this case, however, we’ll reserve judgment for now, since there was an important low at 140^02 (November 13)  helping to pull the futures down.  Which is to say, the “magnetic” attraction of that low overpowered the Hidden Pivot support.  Now, the  December contract would need to hit 142^04 today to get out of immediate jeopardy, since that’s what it would take to generate a bullish impulse leg on the hourly chart.

GCG12 – February Gold (Last:1749.40)

by Rick Ackerman on December 2, 2011 10:31 am GMT

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SIH12 – March Silver (Last:33.245)

by Rick Ackerman on December 2, 2011 10:37 am GMT

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$AAPL – Apple Computer (Last:100.57)

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

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$+TLT – Lehman Bond ETF (Last:116.20)

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.

$SIU14 – September Silver (Last:19.615)

by Rick Ackerman on August 19, 2014 2:02 am GMT

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$DIA – Dow Industrials ETF (Last:168.82)

by Rick Ackerman on August 19, 2014 1:50 am GMT

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$SLW – Silver Wheaton (Last:26.58)

by Rick Ackerman on August 7, 2014 4:58 am GMT

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