Last week’s 900-point Dow rally may have stirred up some bullish excitement on the Street and at CNBC, but it looked to us like a fat pitch for anyone who’s been waiting patiently to get short. We’ll be looking to do so ourselves next week — with as little risk and stress as possible, using index futures and or equity put options – so click here if you want a free pass to Rick’s Picks as we attempt this. You’ll have access not only to detailed trading recommendations that are updated around-the-clock, but also to a 24/7 chat room that draws experienced traders from all over the world. We hold no open positions in index futures at the moment, incidentally, although we established a bullish tracking position in gold last week just as Comex futures were starting to take flight. » Read the full article
We hold a single contract with an effective cost basis of 1708.00. A trailing stop would have gone into effect on a rally to 1770.00, but because the last upthrust fell $3 shy of that target, we’ve taken a $45 ride south on a fixed stop. This was unpleasant but consistent with our intention of holding the position come hell or high water. Even so, I’ll now suggest using a fixed stop at 1716.10, since it would be a crime to take an actual loss on a position that at one point had shown a paper profit of nearly $6000 per contract. If we’re stopped out, we can continue to get long whenever it suits us, risking little or nothing in theory each time, until we finally catch the Big Ride we’ve been waiting for. FYI, today’s carnage targets 1716.40, $5 beneath the so-far low.
We don’t pay much attention to this vehicle other than at key turning points, but the short-term pattern shown looks like a lay-up for traders who see futures contracts as no more than bouncing dots on a chart, waiting to be exploited. There are actually two trade possibilities here: 1) a ‘camouflage’ short as USM slips below the 132^13 midpoint; 2) and a very tightly stopped long from within a tick or two of the 131^17 target. Good luck! Please report any fills in the chat room so that I can establish a tracking position for your further guidance. ______ UPDATE (3:17 p.m. ET): The short was tricky to initiate, but once aboard, your reward came quickly with a drop to a so-far low at 131^26. As noted above, the short should be covered and reversed near 131^17. ______ UPDATE (April 6, 3:57 p.m.): The low of Friday’s violent price swings was 131^21 — not quite close enough to have gotten you long easily. Although this could prove to be an important low for the short- to intermediate term, under the circumstances I’ll assume no subscribers were filled. _______ UPDATE (April 11, 1:03 a.m.): Next important stop on the way higher: 135^17.