Wednesday, September 19, 2012

We hold two Oct-Sep 700 calls spreads for $10 and eight Dec-Oct 620 puts spreads whose cost basis has been reduced by profit-taking to 10.90. Exit the call spreads at will today for 14.50 or better (and please let me know in the chat room or via e-mail if and when you fill this order). If successful, we'll use the imputed $900 profit to further reduce the cost of our put spreads to 9.90.   _______ UPDATE (10:59 a.m. EDT):  With AAPL continuing to hover near the 700 strike as expiration approaches, the call spread we paid $10 for has been an easy sale today for 14.70-14.80. However, I'll wait to hear from subscribers who did the trade before I make it official. _______ UPDATE (September 19, 2:57 p.m. EDT):  The spread was an easy sale today for 14.90, but because it is my practice to use the worst fill reported by a subscriber, the official price will be 14.50.  Accordingly, we hold eight Dec 620-Oct 620 puts spreads with a cost basis of 9.90 that has been adjusted to reflect $3380 in theoretical profits recorded for this position thus far.  Besides the call spread noted above, the source of those gains included covering four September 615 puts for $37 apiece that we had shorted earlier for $620 apiece.

Early Wednesday morning, the E-Mini S&Ps were stealing up on an 'external' peak that night owls can use to get long via camouflage.  Even if you don't plan to trade this one, check out the tout, since it explains why bulls are not even breathing hard after achieving a Hidden Pivot rally target nine months in coming.

On the 240-minute chart (see inset), the 1265.75 rally target I've flagged had been nearly nine months in coming.  It was exceeded by 2.25 points last Friday, and although I would not have expected even that much of an overshoot from such a perfect but obscure pattern, the 'hit' was close enough for us to infer that the Hidden Pivot target worked. Three days later, the pullback has been noticeably shallow, with 'dueling' impulse legs on the intraday charts indicating that bulls are not about to cede ground easily. If they push above the high today or tomorrow, look for an easy move, for starters, to 1483.75, the HP target of a pattern whose coordinates are shown in purple.  To get long, I'd suggest using a 'b-c' pullback from just above a 1460.50 high that can be found on the 30-minute chart.  It occurred on 9/14 at 3 p.m. EDT.

We needn't join the panicked, confused and vexed trying to figure out what caused Monday's dive, since it left a guileless impulse leg on the hourly chart.  The midpoint support lies at 94.79, exactly 32 cents beneath yesterday's low.  That number should serve as a minimum downside target for the near term, but if it's breached by, oh, more than 25 cents, we should expect more weakness to the 'D' sibling at 92.36.  Use the 5-minute chart for camouflage if you attempt to get short -- but also for bottom-fishing at either 'p' or 'D'.  Keep in mind that even the most fetching patterns in this particular vehicle require a margin of error of at least 21 cents.  _______ UPDATE (September 20, 3:40 a.m.): The collapse from Friday's 100.42 high has gone far enough to give predictive form to the large, bearish pattern shown. It's p midpoint support lies at 85.94, and so we'll use that Hidden Pivot as our minimum downside objective for now.