July 24th, 2014
Published Daily

Anatomy of a Sweeeeet E-Mini S&P Trade

by Rick Ackerman on January 17, 2013 12:01 am GMT · 15 comments

A trading “tout” disseminated to subscribers the night before caught the exact low in the E-Mini S&Ps Tuesday morning, allowing subscribers to climb aboard for a ride worth 12 points so far. That equates to a theoretical gain of $600 per contract. The graphic below (click on it to sharpen and enlarge the image) shows not only the original recommendation as it appeared on the home page late Monday night, but intraday updates that went out to subscribers as Tuesday’s session evolved. The purpose of the updates was to provide further guidance to subscribers who had reported doing the trade.  Rick’s Picks shuns P&L claims, by the way, since they rarely seem to match the results subscribers achieve following the advice of some guru.  Our policy is to provide “tracking guidance” for a recommended trade, but only if at least two subscribers report having filled the order.  And if their prices differ, we use the worst price reported as our theoretical cost basis for the position.

In the case of the E-Mini recommendation, several subscribers weighed in with fills shortly after the index futures touched 1456.50, the number highlighted above in brown. Technical jargon aside, and as you can see for yourself, the advice was pretty straightforward: Take a speculative stake if the futures fall to 1456.50. The likelihood that this would indeed occur was signaled the night before when the futures slightly exceeded the target’s midpoint “sibling,” labeled as a red “p” in the chart immediately below.

Typically, we advise taking a small partial profit early in a trade if the opportunity should arise. The relaxation this brings is the best tool we’ve found to help a trader manage the risk of a trade from that point forward.  In the trade detailed above, based on the two guidance alerts sent out intraday, subscribers would have exited three quarters of the position by the time the futures reached the 1667.75 ‘D’ rally target shown in the chart below. Our theoretical gain on the position at that point would have been $1150. Imputing this sum to the single contract that remains has effectively lowered its cost basis to 1433.50.  Thus, subscribers who followed our guidance exactly are now holding a single contract that they can manage as they please.

Incidentally, we use a trick that anyone can easily master to position stop-losses. It’s called the “impulse-leg rule,” and the way it works is that one exits a trade if it goes awry by exceeding two prior highs or lows in the “wrong” direction.  These highs and lows can be tiny ones found on the lesser intraday charts, dictating delicate stops . But if you’re swinging for the fences, you can use highs and lows on charts of greater degree, such as the hourly or even daily, to produce wide, robust stops.

A Reason to Stay Bullish

One reason we were on the alert for a bullish entry opportunity is that we’ve been using a 1494.50 rally target for the E-Mini S&Ps for nearly two weeks. That is also the reason why we suggested that subscribers hold onto whatever piece remains of the position they initiated at yesterday’s low.  For the record, and also for your possible interest, Rick’s Picks has forecast a potentially important bottom in Apple at exactly 447.55. If it gets there, the stock will have fallen 36% since peaking in late September at 705.  If you want to see how precisely our Hidden Pivot System works, watch for a possible interim bottom at 461.64, a well-defined Hidden Pivot support that is not quite as important as the one at 447.55.  For a free week of Rick’s Picks, including access to the chat room, click here.

Take the Hidden Pivot course at your leisure, in recorded one-hour segments. The real-time Wednesday Tutorial sessions, the HP Tutorial video library and a confirmed seat at the next live Hidden Pivot webinar on August 21, 2014 come as part of the package.



{ 15 comments }

Anthony F January 16, 2013 at 8:04 am

Rick Ackerman vs DeMark…
R.A. possible Apple bottom at 447.55
DeMark (CNBC – fast money guest/Market studies)
says the bottom is in at $ 495, then a 22 % rally
This is going to be very interesting!
http://www.cnbc.com/id/100382535
also,
DeMark Sees S&P 500 Falling 5.5% After Peak Near 1,500, (R. A. up-target 1494.50) !
http://www.bloomberg.com/news/2013-01-10/demark-sees-s-p-500-falling-5-5-after-peak-near-1-500.html

&&&&&&&

Sadly, it looks like only one of us can be right about Apple. For the record, I’ve just posted the following in the Rick’s Picks chat room:

“AAPL: Some of you may have noticed in the chart accompanying today’s tout that the Hidden Pivot midpoint associated with my 461.64 target [an alternative bottom posted for the benefit of paid subscribers] lies at 508.32. As always, an upward retracement to that number should be regarded as an excellent opportunity to get short via camouflage.”

So far this morning, the manic short-squeeze has pushed Apple as high as 506.75

– Rick

John Jay January 16, 2013 at 4:33 pm

Inflation update.
I checked the price for a pair of Levi 501s the other day at Macys and Sears.
OMG!
60 to 70 dollars!
They were about $36 last time I looked at full retail price.
OMG!
When did that big jump happen?
I buy that stuff at Ross or T J Maxx for 20 bucks so I haven’t checked full retail prices for a while.
I also bought a new pair of hiking boots for $110 that were about $75 when I bought the last pair.
Inflation is raging and I don’t know how much longer the Fed can get away with the bold lie that Inflation is sub 2%.

Anthony F January 17, 2013 at 7:02 am

Rick, It would be great if your impulse leg system proves to be right again. In that case I will send the results to “fast money/CNBC’ … and ask them to have
YOU as a guest instead!

redwilldanaher January 17, 2013 at 3:44 pm

Rick shouldn’t dignify that “show” with an appearance. As with any NBC product, that show is a disgrace. If you are interviewed they have a producer in your ear telling you to not sound so bearish or you’re done. No joke, I know this to be fact.

Chris T. January 16, 2013 at 7:05 pm

JJ:

on principle, I agree with that, but:

the real “normal” retail price has been replaced by the sale price.
These “sales” are now so frequent, that there is virtually no need to pay the so-called regular price.

All thanks to China, and off-shoring.

This does in fact NOT disprove your point though, because of the substitution BS pracitced by the BLS:

when they took beef/veal out of the basket and replaced with pork, to keep the visible signs lower, they did so by arguing that the functional value (nutritional profile) of the one was equivalent to the other.
True enough.

Of course they didn’t bother to tell anyone that had they substituted pork into the historical data as well, not just the current data, the numbers would have looked worse.

Same for clothing and China:
While the offshoring today helps mitigate the increase in prices, how much lower would those prices have been for those items 10/20/30 etc years ago, if all of our clothes had also been produced in China or other lowest-cost countries?

That’s why at bottom, off-shoring is just that entities’ coping mechanism to fight-off the worst of this decades’ old inflation problem.

Same for your lawn-service:
They IMPORT the people doing the work, because they can’t export the work obviously.
When was the last time you could speak English with that type of worker?

Of course the quality hasn’t been maintained, other than blowing dirt around and mowing lawns, you’re on your own.
Weeding? LOL
Maintenance? LOL
Taking down tree? Nope, need a specialist for that, and a second mortgage too.

BTW: this loss of quality is ubiquitous in services and food, and is VIRTUALLY never factored into the CPI., while of course they ALWAYS factor in “improvements” (which keeps the numbers lower….

John Jay January 16, 2013 at 7:32 pm

Chris,
How they play the game is to slowly jack up both the full price and the sale price over time.
Slowly the on sale price matches the old full price, and the leapfrogging continues.
Not to mention the shrunken package they use to add even more inflation.
I have seen this with cheese, sliced ham, candy, and bacon.
And the generic TP I buy is up 50% in about 18 months.
You can avoid the clothes inflation at the Ross type stores for now, but the selection there has been slowly shrinking, I have to really search a few stores to get what I want.
As for food, the local union staffed grocery store, Vons, I use is beating Walmart on a lot of prices now.
I don’t know how, or if it is a loss leader magnet.
But grocery prices are still way up at both places.
Anyway, 2% reported inflation is a joke, LA county house prices up 19% in 2012 according to the LA Times.
I still pay $3.85 for premium gas, oil change price is up about 30%, and so on.
All that fiat creation with a ZIRP accelerant is starting to lift prices in spite of Ben’s protestations.

DK January 16, 2013 at 8:19 pm

John Jay,
Don’t forget substituting “ingredients” (most recently arabica for robusta coffee) and the means of manufacturing them… all the way down to the friggen’ honey bee population (Monsanto at it again – recent purchase of Beeologics).
Dark times, indeed.

gary leibowitz January 16, 2013 at 9:59 pm

Inflation is a moot point. If people reduce spending because of higher inflation earnings also gets impacted. It all shows in the quarterly numbers. The only offset to inflation is more borrowing or higher salaries. While borrowing has started to rise again salaries have not. The 70’s showed this relationship all too well. Since deflation pressures are still being exerted, higher food and cloth costs must be offset somewhere else. Until corporate america pays more to its workers we will stay in this relatively low inflation environment. The worse case scenario is all out deflation.

I might have jumped ship too early according to Ricks assumed SPX rise to 1494. I decided my 2 month gain should be locked in right here considering the debt ceiling debate will be more cantakerous than the fiscal cliff issue. Republicans will prevail this time around. There will be more concrete spending cuts. My time table for this whole 4 year rally to top out anticipates this will be the catalyst.

Rick Ackerman January 17, 2013 at 12:56 am

Ahhhh, yes: Q-U-A-L-I-T-Y. Children of the 1950s may remember when a ten-cent Hershey bars actually tasted like chocolate.

redwilldanaher January 17, 2013 at 3:48 pm

Which just proves that its all relative Rick. Kids eating this crap today have no idea how good things were or should be. Same with entertainment, education, and it goes on and on. Everything has been defined down while costing more.

When I actually cared about advanced degrees, I knew my focus would be on how those that insistent on absolute quality and value are constantly negatively impacted by the decision making of the masses of morlocks that effectively determine price and quality levels for the producers to sell down too…

Chris T. January 17, 2013 at 9:41 pm

“Don’t forget substituting “ingredients” (most recently arabica for robusta coffee)”

Indeed, though robusta is the cheap kind, mainly from Brazil, so its reversed.
from Rick:
“Ahhhh, yes: Q-U-A-L-I-T-Y.

Where it really matters is in the less visible things, as compared to the arabica vs. robusta comment.

A great example of this substitution to cheaper inputs is chewing gum:

There is virtually none left that is made only with sugar or even non-artificial sweeteners.

You all probl. remember those fat hunks of Bubbly Yum, etc from waaay back:
look at them now, much less mass.

The sugar that bulked them up has been reduced drastically, first to be replaced with HFCS (or “complimented”), but finally substituted with artifical sweeteners.
None of this is actually marketed as diet, its a sugar/art. sweetener cocktail.
Because on a sweeteness effect, any of the artifical sweeteners are cheaper than sugar, or even HFCS.

Taste? they don’t care.
negative health effects? don’t exist according to the major food companies and the FDA.

The only sugar-only gum I know of still widely available is Bazooka Joe, but even they add artifical crap, specifically the butylated synthetic anti-oxidants.
Shouldn’t be necessary at all, but probably prolongs shelf-life = less returns / lower costs.
There’s no fat in chewing gum….

redwilldanaher:

Always enjoy your posts, feel there is value added most of the time (like on a little back and forth we had a looong time ago).
Specifically, I really appreciate your comment:
“…those that insistent on absolute quality and value are constantly negatively impacted by the decision making of the masses of morlocks that effectively determine price and quality levels for the producers to sell down too…”

How true. I have observed this so often, but never was able to phrase it in that succinct fashion.

In fact, its the middle segment of all products, just like the middle-class itself (see my reply to gary l.’s assinine posts on the previous Rick’s blog), that get’s wiped out by this phenomenon you observe.

The middle class doesn’t want, or need, to buy the most shoddy/cheapest of anything, but that is all that remains, unless one goes up-market.
Unfortunately, that segment only caters to the Hampton’s set, and is out-of-reach of the middleclass for general purchases.
A sporadic, often ill-advised splurge, ok, but always?
No way.

Good examples are in all things home-furnishings:
furniture
rugs
lighting fixtures
even clothing

Just goole terms like:
St.Louis (stem-ware)
Rosenthal
as examples.

Across the board, its either Home Depot/Ikea/Walmart/etc or “5th avenue”.

The Italian furniture makers, French crystal, German porcelain, etc all suffer.
What middle class family can still affors real silverware, of the kind that used to be considered de-rigueur for a member of the bourgeoisie / petit bourgeoisie (of course using the words in its original meaning, not the Marxist derogatory term).

BTW: people like Gary think the bourgeoisie are the rich, when it only denotes(ed) the upper end of the middle classes, exactly those at Obama’s margin

gary leibowitz January 18, 2013 at 5:06 am

You stated in the last post that the poor have always been poor? What an absurd statement. Here is the real world answer to your ignorant post:

Excerted from recent article.
About 10.4 million such families – or 47.5 million Americans – now live near poverty, defined as earning less than 200 percent of the official poverty rate, which is $22,811 for a family of four.

Overall, nearly one-third of working families now struggle, up from 31 percent in 2010 and 28 percent in 2007, when the recession began, according to the analysis.
========================================
One third of working families is your definition of the poor always being poor?

I find I am talking in a vacuum when discussing the plight of 33 percent of working americans. Your answer is to dismiss a third of working families by stating its always been this way?

You complain about your taxes and such absurd argument about putting someone in Princton. How about in a state or city college? Wouldn’t think of it? Not good enough for the entitled?

I call out real data and you dismiss it as if it was always this way. Once again I am not talking about the rich, just the top 20 percent. I am sure you don’t consider the top 20 percent rich, do you?

gary leibowitz January 18, 2013 at 6:08 am

My naive, absurde arguments for the last 13 months have shown to parallel the absurd naive market movement. Every conceivable argument as to why we are falling off a cliff has been debunked. The AAPL argument that if it goes so goes the market has been blown out of the water. In the last 3 months it is down 20 percent, while the other indices are up over 3 percent. A 23 percent different! So much for as AAPL goes, so goes the market. In fact since its disproportional weight on these indices is clear, I would conclude the market would be in a steep rise by now, had AAPL just stayed flat.

Rick I do congratulate you on a great call of late. Looks like 1494 will be hit. Glad you have used your unbiased trading method instead of emotional expectations. I do agree that the world economy will have to “wake up” eventually and deal with the looming deficit and catch-22 dilemma. For now though its smooth sailing. The dilemma is rather straight forward. Shore up the deficit with spending cuts without tipping the economy into another deep recession. Can’t be done. Call me a loony liberal on this but Klugman had it right (sort of). Spend, spend, spend then worry about the deficit when the economy is healthy. In theory it sound reasonable, but in practice the world debt is just way beyond the point of no return.

redwilldanaher January 18, 2013 at 7:07 pm

You are a pathetic prisoner and collaborator Gary. You cheer on the status quo while you defend it. How’s that working out for the less fortunate that you appear to be so concerned with???

Klugman died by the way, while unfortunately Krugman still breathes.

Chris T. January 18, 2013 at 6:57 pm

Gary, you write:

“You stated in the last post that the poor have always been poor? What an absurd statement. Here is the real world answer to your ignorant post:”

LOL, LOL!

Absurd?
It’s called NATURE!

Can you please tell me what YOU, or for that matter, any human being is born with?
Absolutely nothing.

We enter this world poor.
Sometimes, SOME of us are lucky that we enter this world to parents, that happen to have something, but that is not OURS, its theirs.

Poor is the natural state of ALL human beings, you would like to deny this?

It is not being poor that is the aberration in human history.
In fact, of all the human beings that have ever lived (n no idea how many billions that would be, but I would guess >10 billion, seeing as about 6.3b are extant today), how many of these were not poor, vs. had little or nothing?

Yet you presuppose that it is the opposite, that having something, how ever much that is, is the baseline, from which those having little or nothing are the deviation.

UTTERLY and PROVABLY false thinking.

And your proof for it?
An arbitrary, government defined, RELATIVE measure.
Yet, very very many of those RELATIVELY defined as poor in this country, enjoy a standard of living that is unfathomable for close to a billion Indians, or Chinese, or favela dwellers in Rio, or just about all of black, sub-sahara Africa.

So, as you like RELATIVES, compared to these masses, our “poor” are nothing of the sort.

THis relative consideration is also true in a temporal sense:
Have you EVER visited a European castle or palace in the winter? Even the counts/dukes/kings of yore froze in their beds, had very limited food-choices much of the year, and so on.

QED

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