August 23rd, 2014
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[The commentary below elicited quite a response, so I'm letting it run for a second day. Wednesday's commentary will feature two very important trading tips for permabears who have been trying for years without success to short the elusive Mother of All Tops. If you're interested in learning the "parlor trick" that we used on Friday to get short the QQQs ourselves within a hair of the intraday high, click here. And if you'd like to have these daily commentaries delivered to your e-mail box free of charge, as will as free access for a week to all of Rick's Picks services and feratures,  click here. RA]

Who’d have believed that the word “hypothecation” would grab the financial world’s shakers and movers by the balls last week, whirl them round-and-round, then dash their cynical pretenses of “saving” Europe against a stone wall?  Click here to read the article on this topic at ZeroHedge if you haven’t done so already. And then send it to everyone you know. We did, with a warning that the collapse of the banking system is no longer merely possible or likely, but unavoidable. The article takes pains to explain why in terms that even the layman can understand. It will undoubtedly have created quite a stir not only among the broad readership of web sites that linked it, but among those charged with the task of further delaying Europe’s financial collapse. The spinmeisters and policymakers have been doing their utmost to obscure the details of the supposed rescue effort, since the better those efforts are understood, the more absurd they become. » Read the full article


TODAY'S ACTION for Tuesday

Dollar Looks Poised to Surge

by Rick Ackerman on December 13, 2011 5:30 am GMT

The Dollar Index looks set to pop above 80, an event that would have dramatic implications for the dollar carry-trade. I will write at greater length about this later in the week, but for now you should check out the DXY tout and the chart that accompanies it, since it shows how all hell might be about to break loose in the form of a runaway dollar.


Rick's Picks for Tuesday
$ = Actionable Advice + = Open Position
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ESH12 – March E-Mini S&P (Last:1236.50)

by Rick Ackerman on December 13, 2011 4:35 am GMT

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QQQQ – Nasdaq ETF (Last:56.52)

by Rick Ackerman on December 13, 2011 4:58 am GMT

Nasdaq ETF (QQQQ) price chart with targetsWe hold two Jan 54 puts and two Jan 53 puts whose cost basis has been profit-adjusted downward to, respectively, 0.76 and 0.57. I’ve suggested shorting December 54 and 53 monthly puts against them for the same price, yielding risk-free calendar spreads, and that’s what we will do officially. We may try something else if the selloff begun yesterday stalls, though, since it will take a pretty nasty downdraft to get our short offer filled.

However, you might also consider emulating a chat-roomer who reported legging into $2 vertical bear spreads by shorting January 52 puts against the January 54 puts he already held. Because he did so for a net credit, the position will make money regardless of whether the QQQs rise or fall. However, it will also give him a risk-free bear play into the New Year, with a $200 profit assured if the Cubes fall below 52 by January expiration.  For now, my minimum downside target is the 54.87 midpoint of the pattern shown.  You can leverage this number as you see fit, but my hunch is that it will foster a tradable bounce from within no more than four ticks of 54.87.

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.

GCG12 – February Gold (Last:1658.80)

by Rick Ackerman on December 13, 2011 5:13 am GMT

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SIH12 – March Silver (Last:31.100)

by Rick Ackerman on December 13, 2011 5:16 am GMT

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DXY – NYBOT Dollar Index (Last:79.52)

by Rick Ackerman on December 13, 2011 5:26 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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