Tuesday, May 8, 2012

Most of today's touts are actionable, including an options play in the QQQs that is suitable for traders with relatively little experience (i.e., the order can be parked with a broker). Forex traders might want to take note of a potential opportunity in the Dollar Index, which is stealing up on a bullish tripwire that can be leveraged in 'camo' fashion.

We don't ordinarily trade this vehicle, but if you play the currencies, you ought to be aware of the subtly bullish 'camouflage' pattern taking shape on the daily chart. There are many ways to trade it, including shorting the Euro when DXY's 'x' entry trigger is hit; or buying the June Dollar contract.

A crystal clear downside target at 528.80 practically dares  Da Boyz to spring a trap on bears just beneath the obvious structural support at 555.00.  In the past, DaDirtballs have never been able to resist the temptation to short-squeeze this monster each time it falls to a low where many traders and investors will have fled in a cold sweat.  Accordingly, camouflageurs looking to get long should zoom down to the 3-minute chart to look for the first northbound ABC pattern if AAPL should fall below 555.00. _______ UPDATE (May 8, 11:39 p.m.): We'll back away for now, since the stock looks like it's fixing to screw the pooch for a while near the 573.33 midpoint support-cum-resistance associated with the 528.80 target given above.

A downside target at 28.810 remains my minimum price objective for the intermediate term, but a place to contemplate aggressive bottom-fishing as well. More immediately, you could try getting long via camouflage near the 29.875 hidden midpoint support of the pattern shown.  If it gets bashed, we be looking at more downside over the very near term to at least 29.520, the pivot's 'D' sibling.  Keep in mind that theoretical entry risk for this vehicle should never exceed $70 per contract. This implies that 'camo' trades will usually be initiated on charts of 5-minute degree or less. _______ UPDATE (22:25 p.m. EDT):  The futures caught a tradable bounce from 29.550, three cents above the pivot, but it proved fleeting.  The subsequent relapse down to an intraday low of 29.135 has further shortened the odds that 28.810 will be reached.  Bottom-fishing will be warranted there, and you should start looking for the turn from around 28.835.  Camouflage will be needed in order to hold theoretical risk on entry below $70 per contract.

Yesterday's dud changed little in the short-term picture. A cautiously bullish bias is warranted, based on the impulsive pattern shown. It projects to 1653.40, just above a trendline we've been monitoring for weeks. The midpoint resistance lies at 1642.80, and a close above it would shorten the odds that the higher number will be reached soon.  Camouflageurs should use the 30-minute chart to find a 'b-c' pullback worth leveraging. Several descending peaks traced out yesterday should serve nicely, since gaps between them are relatively small. This will lend 'camo' cover to impulsive moves not likely to be read as breakout by our competitors. _______ UPDATE (1605.60):  A 1574.30 downside target noted here last Friday is my minimum downside objective for the near term. Strengthening the case for more weakness is that the low of this morning's plunge easily breached a clear Hidden Pivot target at 1602.50.  Bottom-fishing at 1574.30 via camouflage is heartily recommended, but be aware that further downside to 1564.70 would become likely if that number is breached by more than $1.

Occasionally we benefit when we cast our lot with the scumballs who fill market orders on the opening rotation.  Such was the case yesterday, when we exited a single August 68 put for 3.76 -- the high of the day -- off a 3.50 offer. The purpose of this gambit had been to make  enough to pay for a year's subscription to Rick's Picks, and to do so using a strategy simple enough for traders of all levels of experience to employ.  This we did, producing a theoretical gain sufficient to cover the price of a renewal -- with enough left over to buy yourself a decent cigar.  Let's plan on doing it again soon -- i.e., if and when this vehicle comes down to 63.63, 10 cents above the 'D' target of the pattern shown.  Bid there for four June 65 calls, but stop yourself out if they trade for 20 cents less than you paid. ______ UPDATE (2:14 p.m. EDT):  The 63.53 target shown in the chart was a bullseye.  As a result, we were able to buy four June 65 calls a few pennies off the low.  I'll use 1.03, the highest price reported in the chat room, as our cost basis. For now, offer two of the calls to close for 1.22, day order.

The world's bourses needn't have freaked Sunday night merely because Europe's elections effectively ratified fringe socialism.  Here in the U.S., cooler heads prevailed in the quasi-criminal redoubts of Sunday-night trading. It was left to these off-hours scalawags to save the day, and so they did -- with larcenous bids so far below the market that even Armageddon could not have forced prices much lower.  The effect was to exhaust sellers before the opening bell on Monday, clearing  the way for an 80-point rebound that must have left the world with the impression of America as a fortress against the dark forces of economic fear and doubt that have roiled Europe. Nevertheless, we'll trust the rally only insofar as we are able to monitor its vital signs each step of the way (much as we have been doing in Apple). Thus is our interest likely to mount as the futures begin to roll down into a telltale 'C-D' leg. I've sketched this in the chart, filling in a hypothetical midpoint pivot that can tell us whether the rally from Monday's bear-trap low has been mere bravado.  It'll be a great place to try bottom-fishing via camouflage in any case, but if the trade doesn't produce a satisfying win, look out below, since the 'D' target of the pattern will be in play.  Stay tuned for detailed guidance. If you would like to be alerted to trading opportunities in real time, check the 'E-Mail Notifications' box on your account page.  Click here for a free 7-day trial to Rick's Picks

Europe’s doomed experiment with the politics of austerity went down in flames over the weekend as voters across the region veered sharply to the left in savaging incumbents. Elections in six European nations on Sunday promised to end any pretense of fiscal sanity. However, it remains to be seen how quickly and drastically the new leaders will act to further unbalance their nations’ books, ostensibly in the name of economic growth. Whatever they decide, there’s a Catch-22 that could make any promises of budget-busting relief for pensioners and public workers impossible to keep. Recall that even the socialists in Greece’s parliament were forced to support austerity measures a few months ago, because without such measures the country would have been unable to borrow enough cash to meet payroll. In fact, despite several bailouts in the last two years, Greece remains so close to the edge financially that even hard-core socialists might find themselves forced to play ball with the bankers. The “middle way” for them, as has been the case all along, will be to talk austerity while practicing fiscal profligacy. Eurobank president Draghi offered a preview of how this would be done, cribbing a page from Goebbels’s handbook. At a “whisper campaign” meeting in Barcelona over the weekend, he was quoted as saying (whispering?) that Europe could hammer out a “growth compact” to go along with deficit reduction. Like Bernanke, he evidently thinks people are stupid enough to believe such claptrap. But even if it is unworkable as policy, it will used to “manage expectations” in the same cynical way that the Fed chairman manages them. Draghi’ s task will be more difficult, however, because he will be at odds not only with Germany’s conservative bankers, but with a German press that harbors no useful idiots like Nobelist Paul