July 29th, 2014
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We got short at the top on Friday, but how long will Mr. Market let us enjoy the ride? Our vehicle, QQQ put options, nearly ran off the road on Tuesday when the Dow began the day with a 125-point rally. A pullback in the early going shaved that gain by two-thirds, but by early afternoon bulls were beating on the highs, threatening to send bears into a new round of short-covering. The pessimists got a reprieve, however, when something spooked the market late in the session, sending the Industrial Average into a 225-point dive that left it 66 points lower on the day.  It was not a session for the faint-hearted. Still, the outcome boosted the value of our put position, leaving Rick’s Picks subscribers in good shape to try to lock in a profit no matter what the stock market does as 2011 draws to an unpredictable close. » Read the full article


TODAY'S ACTION for Wednesday

First leg of butterfly spread

by Rick Ackerman on December 14, 2011 6:00 am GMT

I’m tracking the purchase of some Jan 134 calls yesterday in SPY — a first step in legging on the 134-137-140 butterfly.  SPY is falling too hard for me to be comfortable, but we’ll stick with the position nonetheless, since it would give us reason to root for a rally for a rare change.


Rick's Picks for Wednesday
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GCG12 – February Gold (Last:1640.00)

by Rick Ackerman on December 14, 2011 4:55 am GMT

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SIH12 – March Silver (Last:29.145)

by Rick Ackerman on December 14, 2011 5:06 am GMT

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QQQQ – Nasdaq ETF (Last:55.08)

by Rick Ackerman on December 14, 2011 5:20 am GMT

We hold two Jan 54 puts and two Jan 53 puts with a profit-adjusted cost basis of,  respectively, 0.76 and 0.57. I’d suggested shorting December 54 and 53 monthly puts against them for the same price, but I’ll now recommend instead that you short January calls three strikes below what you own for the same price or higher.  Thus, if you hold eight January 54 puts for 0.76, you should try to short eight January 51 puts against them for at least 0.76.  I estimate that the Cubes would need to fall to around 54.80 (Note: I’ve raised this number) within the next week or so to get the offer filled.  Our current, minimum downside objective is 54.87, a Hidden Pivot midpoint.  _______ UPDATE (10:42 a.m. EST):  I am recommending that you complete the spread immediately by hitting the 0.69 bid or the 0.54 bid in, respectively, Jan 51 puts or Jan 50 puts. Once you’ve completed the spread(s) as suggested, this reverse-Santa Rally position will offer great odds, since, although either spread will produce a profit of $300 if Santa drops dead (so to speak), the most we can lose in theory, commissions aside, is $7 on each Jan 54-51 put spread and $3 on each Jan 53-50 put spread. _______ FURTHER UPDATE (1:24 p.m. EST):  The Cubes fell a bit lower after the trading alert was disseminated above and in the chat room, and it would therefore have been possible to short either the Jan 51 puts or the Jan 50 puts for somewhat more than we paid for the long side of our position.  Officially, however, I will record a short sale at the prices suggested above.  That will give a cost basis of 0.07 ($7) for the Jan 54-51 puts spread, and 0.03 $3.00) for the Jan 53-Jan 50 put spread. Thus, in theory — and almost surely in practice, the most we can lose, based on two spreads at either pair of strikes, is, respectively, $14 or $6.  The potential gain would be $600 for either position, predicated on the QQQs trading $50 or lower come January 20.

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.

SPY – S&P (Equity) (Last:123.35)

by Rick Ackerman on December 14, 2011 5:33 am GMT

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ESH12 – March E-Mini S&P (Last:1223.25)

by Rick Ackerman on December 14, 2011 5:56 am GMT

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Bears found themselves trapped on the opening yesterday for the umpteenth time since the bull market began, setting up a short-covering panic that turned what began as natural weakness in the broad averages into steroid-powered strength.  DaBoyz simply pulled their bids at the bell, allowing the relative smattering of market orders that had built up over the weekend to have an inordinate effect. Into a bid-less vacuum, stocks dove the equivalent of 120 Dow points, exhausting pent-up orders in about 45 minutes. Once sellers were spent, it was child’s play for the smart money to effortlessly squeeze the futures back up to where they had begun the day — plus a little. Moreover, since there was but a shallow correction from the end-of-day highs, bears remained tactically on the ropes at the close.

For our part, since subscribers could have gotten short from as high as 1984.25 based on a Hidden Pivot rally target disseminated last week, some may have elected to swing for the fences by staying short. However, although the trade could have produced a profit of as much as $1200 per contact, the possibility that we were getting the jump on the Mother of All Tops was never more than remote. If you still hold a position, please let me know in the chat room and I will furnish further guidance.  Strictly speaking, a short would have survived yesterday’s nasty dipsy doodle if it had been tied to an impulse leg-based stop-loss on the hourly chart.

$NFLX – Netflix (Last:421.86)

by Rick Ackerman on July 28, 2014 4:32 am GMT

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$GCQ14 – August Gold (Last:1303.80)

by Rick Ackerman on July 28, 2014 4:06 am GMT

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As GDXJ was working its way south from around $43, my bearish forecast called for a washout low at exactly 40.42, a Hidden Pivot support of great clarity. I’d suggested buying down there ‘aggressively’ and with an ‘absurdly’ tight stop-loss.  This advice would have paid off handsomely for anyone who followed it, since the stock trampolined 64 cents yesterday off an actual low of 40.43, a penny from my target. Since a subscriber reported doing the trade as advised, I’m establishing a tracking position for the further guidance of all who may have gotten long. (He reported having bought 1000 shares off a 40.44 bid, but I’ll assume a more conservative 400 shares.)  Accordingly, I’ll recommend exiting half the position on Friday’s opening if you haven’t done so already.  We’ll impute any profits thereof to the cost basis of the 200 shares that will remain. _______ UPDATE (July 27, 9:48 p.m. ET): Exiting 200 shares on Friday’s 41.20 opening leaves us with a tracking position of 200 shares whose imputed cost basis is 39.66.  Exit another 100 shares on today’s opening and tie the rest to an impulse leg-based stop-loss on the 15-minute chart.  At the moment, that would imply bailing out on an uncorrected dive touching 41.73. ______ UPDATE (July 28, 11:46 a.m.):  We got sleazed when DaBoyz opened the stock on the so-far low  of the day, 42.40.  The good news is that such shakedowns usually occur because the smart money is trying to buy the stock.  In any event, I am tracking a 100-share position with an effective cost basis of 37.25.  For the time being, let it run.

$+PCLN – Priceline (Last:1238.98)

by Rick Ackerman on July 24, 2014 12:54 am GMT

A subscriber reported success yesterday legging into the 1340/50/60 August 16 call butterfly that I’d advised. He did so 32 times at no cost, as suggested, but it took a $10 move in the stock between legs to get filled so advantageously. His maximum profit would be $32,000  with the stock trading at 1350 come August 16.  Since he owns the position without cost, no loss is possible even if PCLN should all to zero or rally to $1000. We’ll do nothing further for now, but I’d suggest that those of you who were unable to buy the spread keep trying.  We’ll shoot for a partial profit if the stock rallies $40-$50 in the next few weeks but otherwise do nothing further. I’ve reproduced a chart that shows why our expectation of a $120 rally from current levels, to a 1358.18 Hidden Pivot target, is not exactly farfetched.  To that end, a pop above the 1270.59 midpoint pivot would be most encouraging. ______ UPDATE (July 28, 7:46 p.m. EDT): Yesterday another subscriber reported legging into ‘free’ butterfly spreads as suggested. Keep trying for at least one more day if you haven’t yet acquired a stake, since the spread will remain cheap as long as PCLN doesn’t blast off.

$+TLT – Lehman Bond ETF (Last:115.40)

by Rick Ackerman on July 23, 2014 5:36 am GMT

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$EURUSD – Euro/USD (Last:1.34302)

by Rick Ackerman on July 23, 2014 12:01 am GMT

I haven’t tracked currencies that closely, but because they tend to move very precisely to Hidden Pivot targets, traders should consider exploiting them whenever possible. Notice how EUR/USD has broken beneath a midpoint Hidden Pivot at 1.34841 after noodling around near that pivot for a few hours on Thursday. This suggests that it is bound for D=1.34197, at least.  You can bottom-fish there with a stop-loss as tight as 3-4 ticks.  Notice as well that there are two slightly higher possibilities for point ‘A’.  The correction targets they yield lie, respectively, at 1.34114 and, worst case, 1.33992.  I expect these numbers to work very precisely, so use them in whatever way suits you best.  Note as well that a last-gasp rally to p=1.34738 after EUR/USD has fallen a bit would be short-able. _______ UPDATE (July 24, 5:35 p.m. EDT):  Yesterday’s short-squeeze feint topped precisely at a midpoint Hidden Pivot (see inset, a new chart) that was originally support but which is now resistance. This price action confirms the pattern we’ve chosen as well as its ‘D’ target at 1.34197. At least one subscriber has confirmed getting short in the chat room.  _______ UPDATE (July 27, 10:43 p.m.):  Friday’s low occurred at 1.34206 — 0.00009 above our 1.34197 target.  Shorts should have covered there, but if you were able to bottom-fish the low and catch a piece of the 144-tick rally that ensued, please let me know in the chat room and so that I can establish a tracking position for your further guidance.

September E-Mini Nasdaq (Last:3965.00

by Rick Ackerman on July 15, 2014 4:21 am GMT

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The Dollar Index turned higher yesterday an inch from a correction target that had been three weeks in coming (see inset). This portends a bullish change for the intermediate term.  The actual target is 79.74, and there is always a chance it will be breached. If so, there’s an alternative target at 79.62, but if it fails as well, especially without a fight, the implication would be more slippage to as low as  78.91, where a key low recorded in early May would thereupon beg to be tested. _______ UPDATE (11:17 p.m. EDT): Yesterday’s low occurred at 79.74 exactly. If the dollar is about to reverse and move higher, it will have to happen here, and now. _______ UPDATE (July 9, 2:33 a.m. ET): The dollar rallied strongly for a few days, but it is still not out of the woods because the move narrowly failed to clear an important ‘external’ peak at 80.38 recorded on 6/26. _______ UPDATE (July 16, 6:55 p.m.): DXY came within an inch of a clear and important Hidden Pivot rally target at 80.60 yesterday (see inset, a new chart). However, it will have to push past it to imply that the rally from the July 1 low (which had been predicted to-the-penny) is more than just a flash-in-the-pan.


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