Monday, May 14, 2012

We hold two June 65 calls for 0.84 against three June 62 puts purchased Friday for 0.92.   With a total of 4.44 at risk, this position will make money above 66.50 or below 59.75 at expiration. We have five weeks to play with it, perhaps by turning it into a less-risky butterfly, but for now do nothing further. It may also be possible to exit with a profit before expiration if the QQQs move precipitously. _______ UPDATE (May 15, 1:14 a.m. EDT): On a good-till-canceled basis, offer  three June 58 puts short for 1.20.  This is stretching, but you never know. _______ UPDATE (May 18, 1:55 a.m. EDT): Let's stretch a little farther, raising the offer on the short puts to 2.10, day order. You should sell them 1:1 against June 62 puts already held.

The nasty correction begun five weeks ago from 33.360 has a little farther to go before it hits 28.100, (My apologies, since I originally gave this as 28.810. I have not been able to type this number correctly in my last ten tries.) This Hidden Pivot is compelling, and we should therefore plan on bottom-fishing aggressively.  This implies you can back up the truck -- but do your buying very tightly stopped or, better yet, with camouflage. Alternatively, bulls would signal a rampage with a print today at 29.815.  The chart shows the significance of this number, along with the ABCD symmetry that makes the 28.100 target so appealing. 

Nearly all ABC pathways lead lower at the moment.  Most immediately, two previously noted downside targets that lie, respectively, at 1564.70 and 1534.30 remain to be achieved. They look attractive for bottom-fishing via camouflage, since neither coincides with any obvious structural supports from previous lows.  Alternatively, if bulls are going to seriously turn things around, they'd need to hit 1614.30 intraday. That's a tick above an 'external' peak made last Tuesday on the way down.  It's nicely visible on the 15-minute chart. _______ UPDATE (12:17 a.m. EDT):  The future dove anew yesterday, leaving on the immediate horizon only the Hidden Pivot at 1534.30 to turn things around.  Camouflageurs should start looking for the turn from around 1535.80, with the goal of catching a long-entry trigger on the 5-minute chart or less. If at least two fills are reported in the chat room, I'll establish a tracking position for your further guidance.

[Gary Leibowitz frequently raises hackles in the Rick’s Picks forum with his mantra that business is great, stocks are underpriced, and -- at least for the time being -- the U.S. economy is going great guns.  Who knew that he is also expecting a global depression that will last for more than a decade?  In the guest commentary below, he explains why – but also why, with two caveats, gold is likely to be  one of the best places for investors to be for at least the next six years. RA] I must confess that I’d been a gold bear for many years. When I reevaluated my position, I surprised myself when my conclusions made a 180-degree turn. On average gold has an 18-to-20-year life cycle, which implies the bull run will run until 2018-20. The cycle doesn’t necessarily mean a huge run-up, but it does mean there should be very little downward pressure. The other factor that is encouraging is how most gold cycles, when there are strong signs of upward movement, terminate with an even larger and steeper rise near the end of the cycle. If history is a guide, we should therefore expect the most dramatic phase of the rally to occur six to eight years from now. My longstanding macro view has been that as debt became unsustainable, a severe deflation period would ensue. That argument still holds.  However, I did make some unsubstantiated assumptions that because of the severity of this debt cycle, the deflation cycle would be deep and long. As it turns out, that has never been the case. On average deflation has an 18-month window. It is during times of strong contraction that cash outshines all other investments. I also believe that gold will experience a downturn as well, but not as

The month of May began for this vehicle with a bearish impulse leg, and now it has added a week of pooch-screwing in preparation for a presumptive 'C-D' follow-through leg. So far, however, the corrective rally has not been sufficient to recharge the futures for another plunge. That would require a move up to at least 1375.00, if we assume that last Wednesday's 1339.25 low endures as a point 'B' for the pattern.  Once the futures have fallen to point 'X', we can attempt to get short via camouflage by using, perhaps, a chart of 5-minute degree or less.  For your further guidance, I've hypothetically sketched this out on the chart.  If at least two subscribers report that they've been filled in the way I've indicated, I'll establish a four-contract tracking position.