Yesterday, Rick appeared on The Keiser Report. Rick and Max discussed Goldman’s death dive and MF Global’s crimes against the markets. Rick’s segment begins 12 minutes and 55 seconds into the video.
Gold and Silver were getting pounded in the middle of the night, although index futures were down only enough to suggest that Da Dirtballs were shaking out sellers. Their by-now-familiar trick is to make certain that the contracts they’ve stolen from widows and pensioners in the wee hours can be short-squeezed higher with almost no resistance before the opening bell. The (small) gamble is that sunrise will not bring word of Europe’s demise.
With the E-Mini S&P hitting our rally target in the final moments of Friday’s session, we bought four QQQ Jan 54 puts or Jan 53 puts, respectively, for 0.96 or 0.74. These are keepers, since just about anything could happen between now and January 20 when the options expire. Do nothing further for now. _______ UPDATE (11:02 a.m.EST): In the chat room a moment ago, I suggested cashing out half of the puts at current prices: 1.16 for the Jan 54s, 0.91 for the Jan 53s. That leaves us with two puts at either strike and a profit adjusted cost basis for each, respectively, of 0.76 and 0.57. Let’s spread off the risk by turning the positions in calendar spreads, shorting a December put for each Jan 54 put or Jan 53 put you currently hold. Do so in a 1:1 ratio, and shoot for putting on the spread for “even” or better. What this means is that you will short the puts for the cost basis of the puts you now hold, selling December 53 puts for 0.57 (currently trading for around 0.09) and December 54 puts for 0.76 (currently trading for around 0.18).
Although the course of action suggested above may seem very conservative, it is essential that we nail down partial profits on option positions when possible, particularly on puts that have “come in.” In the several decades that exchange-listed puts have been offered, instances in which put holders enjoyed more than three consecutive pleasurable days have been non-existent. I would dare say that at least 95 percent of all puts ever purchased “naked” have lost money for the trader.
Click here if you’d like to learn more about the Hidden Pivot Method, including how to identify and trade targets such as the ones used above, and to forecast trends with bold confidence.
The bad guys had gold on the run Sunday night, presumably bound for the 1672.30 downside target of the pattern shown. It would take nothing less than a pop to 1733.00 overnight or Monday to put bulls back on the offensive. The bearish target can be bottom-fished — preferably with camouflage, but if you want to take the easy (but somewhat riskier) path, because the pattern has such gnarly appeal, you can bid 1672.40 with a 0.50-point stop-loss. Nimble traders can also look for a turn at 1685.70, the midpoint support of the lesser pattern shown with purple ABC coordinates. Keep in mind that ‘camo’ shorts would be aligned with some even larger downtrends that point to either 1638.00 or 1633.10. _______ UPDATE (11:43 a.m. EST): Bottom-fishing at 1672.30 could have produced a small profit, but probably no worse than a scratch when the futures subsequently headed lower. There was a 12-minute bounce of $3.40 from 1672.60 at 8:42 a.m. (3-min); and a $3.80 bounce from 1672.00 that lasted just a few minutes. Since we were using an initial stop-loss of 50 cents, the bounce we’d anticipated need only have been $1.50 to give us a reason to take a partial profit on half the position.
More downside over the near-term to at least 15.865 (see inset) looks very likely, so traders should position from the short side. The opportunity may be past by morning, but night owls can use an entry trigger on the lesser charts (i.e., 5-minute bar or less) to get aboard. I’ve highlighted the relevant ABC pattern, which appears at the rightmost edge of the chart.
Apple’s gap yesterday through the 100.41 midpoint resistance (see inset) strongly implies that its D sibling at 105.64 will be reached. Although a pullback to the midpoint should be treated as a belated buying opportunity, I wouldn’t suggest chasing the stock higher. That said, the four labeled peaks are tailor-made for the Hidden Pivot trader who can employ the ‘camouflage’ technique for getting long. If you understand why, you should go for it! _______ UPDATE (8:13 p.m.): The broad averages pulled Apple back down to earth yesterday when the stock tried to go opposite weakness that surfaced around mid-session. This runs flatly counter to my speculative idea that AAPL might pull the broad averages higher. That’s still possible, since yesterday’s 104.11 peak fell 53 cents of a rally target that remains valid in theory. However, we’ll eschew speculation for now and simply watch to see whether the 102.44 Hidden Pivot support holds (see inset, a new chart). _______ UPDATE (October 23, 1:59 p.m.): Apple has rebounded sharply today, off a 102.90 correction low to a so-far high of 105.05 that’s 59 cents shy of our target. Most longs should have been exited by now. ______ UPDATE (October 27, 8:07 p.m.): Friday’s high at 105.49 came within 0.15 of the target flagged above. Bulls can continue to hold small long positions for a swing at the fences, but I’d suggest tying your shares to a stop-loss based on a downtrending impulse leg on the 15-minute chart. Currently, that would imply stopping yourself out if an uncorrected fall touches 104.52. _______ UPDATE (October 28, 8:44 p.m.): Still long? Be alert at 107.08, a Hidden Pivot target that looks all but certain to be reached but which could stop the rally cold. You should tighten your trailing stop there in any case. ______ UPDATE (October 29, 9:25 p.m.): The rally has shredded some challenging Hidden Pivots, but let’s see if it can bully its way past the 109.07 target shown. In any case, it is my minimum upside objective for the near term.