Wednesday, December 19, 2012

Acquiring ‘Free’ Call Options in Apple

– Posted in: Tutorials

With the goal of legging into bullish ‘butterfly spread’ in Apple, we took a close look at the stock’s intraday charts as well as the options grid. AAPL was trading for around $530, but our strategy was tied to expectations of a quick rally to at least $600. Under the circumstances, acquiring a January 590-600-610 butterfly makes sense. Our goal is to do this at no cost, or perhaps even for a small credit, leaving us with no risk. Is this possible? Indeed it is, for reasons that should be clear to you after you’ve reviewed this recording.

USH13 – March T-Bond (Last:146^09)

– Posted in: Current Touts Rick's Picks

My outlook for T-Bonds has been bullish for quite a while and remains so down to 2%, but we should nonetheless take note of some bearish impulse legs that have developed recently on the daily chart (see inset).  So far, they amount to a mere duel with a more powerful, bullish impulse leg begun from 144^24 in late October. We'll have a better idea of bears' earnestness when we see how they interact with the 145^00 downside target of the small pattern shown. A breach of that hidden support by more the 3-4 ticks would hint of more weakness to come, while a breach of the 144^24 low would sent up a warning flare.

HUI – Gold Bugs Index (Last:432.84)

– Posted in: Current Touts Rick's Picks

The Gold Bugs Index looks very likely to fall to at least 402.46, the 'D' target of the pattern shown. The p midpoint support of this authoritative pattern lies at 433.38, and because it has already been exceeded by six points, it is probably just a matter of time before the implied 8% drop gets under way. Bulls would get a reprieve and perhaps a new lease on life with an impulsive rally that exceeds the two labeled peaks, but anything that falls short of that would likely be just noise.

SLW – Silver Wheaton (Last:35.34)

– Posted in: Current Touts Rick's Picks

It's time to write off the December 40-45 calls spreads that we legged into for free back in September.  They could have produced a profit of as much as $4000 if SLW had rallied even moderately since then; alas, even with perfect timing and a great trade, we were able to do no better than break even this time. I'd already pronounced our calls dead more than a month ago when the stock took a header to $35 as we were coming down the home stretch. It's tempting to write this stock off as a tease, but we'll continue to look for riskless buying opportunities as before, since sooner or later, it's going to have its day. One place we might look to get long is at 35.32, the midpoint support of the pattern shown.  While everyone and his mother will be testing the water just above the two obvious lows (see inset), we will have a far more precise spot in mind to look for the turn. As always, we'll try to hold entry risk down to literal pennies per share if we do the trade. ________ UPDATE (6:59 p.m. EST):  Mr Market may be powerless to negate Hidden Pivots, but he has a funny way of screwing with them when a good opportunity presents itself.  Yesterday, for instance, moments from the closing bell, he summoned the gumption to bump up against the 35.32 pivot noted above, and to fondle it in full view of all of us who were monitoring the support.  While I'm not inclined to play this particular game, initiating a trade as the NYSE clock strikes 1600 hours, some of you may have gone long based on the tout above.  If so and the trade survives, please don't hesitate to ask in the chat room

GOOG – Google (Last:708.13)

– Posted in: Current Touts Rick's Picks

Google apexed yesterday a mere 39 cents above a 728.71 target easily identified on the hourly chart (see inset).  That could be it for now, but if the stock moves still higher on Wednesday, the 734.60 target shown, which uses the next-lower point A, is a logical place to expect a short-term top.  It would be tradable, of course, but I'll leave it to you camouflageurs and Pivoteers to figure a way to board if the opportunity should arise. ________ UPDATE (December 24, 11:20 a.m. EST):  Buyers have found traction this morning 11 cents from the 707.49 target of the pattern shown.  This Hidden Pivot was surely tradable, but if it's breached even slightly expect the weakness to continue down to at least 703.80, a target that fulfills the lower B-C pairing.

PCLN – Priceline (Last:704.98)

– Posted in: Current Touts Free Rick's Picks

I missed a trick when I pronounced this vehicle doomed after it slid through a 609.47 midpoint a few days ago. There was a perfectly serviceable alternative midpoint pivot at 606.05 that in fact predicted Priceline's powerful bounce within 40 cents. I've labeled the two respective B-Cs so that you can see for yourself.   Notice that the lower of them -- the one that actually worked -- yielded a hidden support at exactly 606.05 (the red line), foretelling the bounce we saw from 606.45.  The lesson here is that Priceline's ups and downs are as predictable and tradable as that other $600 supposed giant-killer, Google.  One final note:  camouflageurs should see in this chart an interesting buying opportunity at the moment arising out a very short k-A segment. Can you  find it? _______ UPDATE (December 24, 11:29 a.m. EST): Use the p and D targets of the pattern shown, respectively at 605.39 and 572.14, if you're fixing to get short or bottom-fish.  _______ UPDATE (January 3 at 2:44 a.m. EST): The stock appears bound for 668.10 after trampolining from a shakedown low at  601.50 on New Year's Eve day.  The p midpoint resistance associated with that target is 647.89, but don't expect it to show much stopping power. ______ UPDATE (January 15 at 11:38 p.m. EST): The stock overshot my target by 23 cents before DaScumballs pulled the plug and let this vehicle fall $14.  They then proceeded to goose the stock back up to 665.79, presumably with even more ambitious targets in mind.  The stock, as you can see, has been perfectly predictable and not the least bit scary, so camouflageurs should be licking their chops right now.  _______ UPDATE (January 22 at 4:32 p.m. EST):  The stock is bound for 719.93, the Hidden Pivot target, on the daily

ESH13 – March E-Mini S&P (Last:1436.75)

– Posted in: Current Touts Rick's Picks

We gauge the strength of rallies and declines not only by how easily they push past Hidden Pivot 'p' and 'D' targets, but by how long it takes them to do so.  In this case, it took the E-Mini S&Ps four days to blow past a 1437.75 target (basis the December contract) that we discovered -- and which some of you shorted -- during last Wednesday's tutorial session. The impulsive thrust will have bullish implications for the near term, but not powerfully so.  If the futures had pushed decisively above the 1437.75 pivot within hours of first encountering it, we might have inferred that the obligatory Christimas rally was going to be a real doozey. As things stand, however, because it took four days and a running start to achieve this modest feat, we should expect more of a wafting effect into year's end as portfolio managers take advantage of the absence of sellers, including bears now in retreat. Most immediately, the rally would appear to have a lock on the 1447.75 target shown. It's not far above, and I would strongly recommended shorting there, if only for a scalp-trade. 'Camouflageurs' should seek to initiate the trade on the 5-minute chart or less, using a stop-loss of no more than five ticks per contract. If you're not familiar with the technique, get short simply by offering at 1447.75, stop 1448.50. In either case, you'll be on your own if the order fills. Of course, it is suggested that you maintain the 1:3  risk:reward that I recommend for all trades from start to finish.  Please note that this one is likely to fill at night if the futures rally only moderately from the day-session settlement price. ______ UPDATE (2:27 p.m. EST):  In the soporific flux of an especially tedious day, the

Bears Will Have to Wait Until January

– Posted in: Free Rick's Picks

It doesn’t take much buying power to get a Christmas rally going -- only the seasonal absence of sellers, along with a steady flow of short-covering by bears who have thrown in the towel on December. Both factors are in evidence now, although not powerfully so, and we should therefore expect portfolio managers to make hay while no one is watching or cares.  This could set up bears for a big score in January, since it is a given that any agreement on Capitol Hill that purports to get us past the so-called fiscal cliff will be political theater with no impact on the toxic growth of U.S. debt nor the economy's slide into recession.