Wednesday, January 30, 2013

While it's always possible that Apple has hit bottom, you should check out the chart before jumping in aggressively. A 394.93 downside target proffered here earlier still looks compelling, as does the objective of shorting any rally that reaches the 494.59 midpoint pivot of the pattern shown. There is almost certain to be a struggle if Apple gets there, and so the trade would need to be initiated via camouflage. The good news -- or at least, short-term-bullish news -- is that the red line looks magnetic and can probably be used as a minimum upside-correction target from here. 

A 1551.12 target proffered in today's $INX tout finds its equivalent at exactly 155.67 in the equity-based SPY chart shown here.  It is a place where we should plan on shorting aggressively, and although we'll leave ourselves an out as always in case it doesn't work, this trade deserves a little more leeway.  The target is unlikely to be reached today, but we should plan on buying four March 155 puts for around 2.35 if and when SPY gets within 0.20 points of the target. That price is a guesstimate based on the current price of the March 150 puts.   We can fine-tune the bid when the opportunity firms, but my explicit intention is that we not pay up more than a few cents, since every penny counts when you're on the buy side of a put trade. ________ UPDATE (March 11, 1:40 a.m. EST):  With March puts expiring in a week, you could have bought April 155 puts instead for around 2.40 on the opening.  The Marches traded between 0.99 and 0.84, but I'll wait until I hear from traders in the chat room before I establish a tracking position.  For now, however, I'm recommending that you stop yourself out of any puts acquired if they trade 0.20 below the purchase price. Alternatively, if they trade for 0.30 more than you paid, cash out of half. ______ UPDATE (March 18, 1:05 p.m. EDT):  Only one fill was reported in the chat room, and because it was stopped out, I'm dropping guidance for the trade.

A chat-room denizen posted a dandy SPX chart yesterday showing a target at 1502.76 that looked both precise and compelling. The index had yet to punch through the resistance, but it clearly was not backing off. In the end, buyers bulldozed their way higher, scoring their seemingly umpteenth gain in the last umpteen days.  When such a beautiful Hidden Pivot gets schmeissed, as this one did, we should look to the larger charts to explain it. Notice in the daily chart reproduced alongside that there is yet one more rally target even more daunting than the one breached yesterday. It lies at exactly 1551.12, and you don't need me to tell you we'll want to short the bejeezus out of it when the S&Ps get there. Which they will. We'll use a tight stop-loss even though it seems inconceivable to me that buyers will make much headway above the resistance, at least the first time it's hit.  We'll do the actual trade using equity options, so check out today's SPY tout for detailed instructions. _______ UPDATE (February 5, 10:26 p.m. EST):  I'm going to retire this tout to an inside page for now, since the target is well above.  You should set a price alert around 1545 nonetheless, since we'll want to take advantage if bulls get close.