Tuesday, January 29, 2013

I am recommending the purchase of the March 840-850-860 call butterfly for a 0.10 debit or better.  Ideally, you would want first to short two March 850s for a current 0.45 apiece; then, to immediately buy one March 840 call for 0.60.  That would give you a 1:2 vertical spread for a 0.30 credit, reduced by whatever you pay for a single March 860 call (currently offered for 0.30) to complete the position.  This is a low-cost, low-risk play on the very bullish, 848.29 target I flagged in GOOG a while back.  The impetus for the trade came from a question asked during this morning's weekly tutorial session for webinar grads. Please report any fills in the chat room so that I can establish a tracking position for your further guidance. _______ UPDATE (7:00 p.m. EST): Chat-roomers pursued this opportunity so diligently that I am going to track it even though no one seems to have bought the spread for the suggested 0.10.  Most reported fills for less than 0.20, so our tracking position will record four @ 0.20.  Theoretical risk on this one is about $40, commissions included, but it could produce a profit of as much as $4000 if GOOG rallies a measly 15% between now and mid-March, when the calls expire.  For now, do nothing further.

Some Japanese minister was saying the other day that 95 yen to the dollar would be a reasonable objective for the BOJ. But is it do-able?  The chart shows that the central bank may be up to the task. Even with the Swiss now fully engaged in the devaluation wars, Japan has done a quite creditable job turning its currency into ca-ca.  Although it seems doubtful that a collapse to below par can be engineered without a nasty bounce along the way, we'll be better able to gauge  BOJ's odds for success when we've seen a B-C correction on the weekly chart.  It's high time you learned how to do this stuff yourself. Click here to get started.

The list of touts has grown quite lengthy, but you should review them now, since several potentially important rally targets loom in the middle distance. It's been quite a while since we had an itch to short Goldman, but we may get our chance.

Surging stocks have us bears on the run, according to a story played prominently in Monday’s edition of The Wall Street Journal: “Investor Sentiment Is Improving, Making It Harder for Wall Street’s Pessimists to Hold Their Ground”.  Oh really?  We’d thought we were simply enjoying the show. It’s not as though permabears are always short the market, or that we don’t understand that stocks can sometimes veer sharply higher for no apparent reason. In fact, we trade the uptrends when they look promising (as the current one does, up to a very certain point), and we try to short every “Hidden Pivot” rally target that looks capable of producing, if not The Mother of All Tops, at least a tradable swing high that could endure for a few days.  And when those trades work out well, we treat ourselves to a good cigar, or take the Missus to dinner and a show.  We can wait. That’s because we don’t work on Wall Street, where the rare bearish analyst is as welcome as a rattlesnake at a picnic. “I’m getting a lot more pushback than I usually do,” avers Gina Martin Adams, a Wells Fargo analyst who has forecast a 7.5% drop in the S&P 500 this year. Imagine what kind of blowback she’d get if she declared that her long-term target for the Dow is under 1000. We did that ourselves during an interview some years ago on a Bay Area TV show.  When the interview was over and the mics were switched off, the moderator asked whether he’d heard us correctly. Yes, we replied. And we were never invited back. Hard to blame him. Who wants to hear about Dow 800 when the proletarian mind is fixated on Dow 15000?  We’d be the first to agree that, at 800,