Monday, December 12, 2011

Bullion Getting Pounded, Although Not Yet Stocks

– Posted in: Free Rick's Picks

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.

SIH12 – March Silver (Last:31.540)

– Posted in: Current Touts Rick's Picks

Friday's gratuitous rally has given way to Sunday night's perhaps other-than-gratuitous selling, producing an immediate downside target at 31.455 that is the exact low so far. If it's breached, expect the weakness to continue to at least 30.520, its 'D' sibling.  That number can be bottom-fished either via camouflage or with the tightest stop-loss you can abide.  Keep in mind that the 28.425 target of a larger pattern identified here a while back is still very much in play.

GCG12 – February Gold (Last:1670.40)

– Posted in: Current Touts Free Rick's Picks

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.

ESH12 – March E-Mini S&P (Last:1250.25.)

– Posted in: Current Touts Rick's Picks

When the bell rang to end the week, the futures were scraping up against a rally target at 1253.50 that had been disseminated here mid-day. They've come off that high Sunday night, creating a bearish impulse leg with immediate potential to 1245.75. Sellers were stalled precisely at the 1248.50 midpoint sibling of that number, but if it's decisively penetrated without 1251.25 (aka point C) having been exceeded to the upside, the target itself would become on odds-on bet. Alternatively, you should jump on the bull trade if the futures deliver something like the camouflage perfection I've sketched out hypothetically in the chart.

QQQQ – Nasdaq ETF (Last:56.18)

– Posted in: Current Touts Free Rick's Picks

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