Wednesday, February 20, 2013

We hold a dozen June 130-March 130 put calendar spreads for 1.50, although the stock never got close enough to a 140.71 target to trigger a companion bid for March 137 puts. We'll sit tight with the position for now even though there are higher targets outstanding for some other vehicles that we trade.  Our goal is to roll the spread by selling April and May 130 puts in succession later on. With any luck, a slow decline in DIA will allow us to more than recoup what we paid for the June puts, effectively giving us free, leveraged exposure to whatever weakness develops.

I've recalculated the 14085 target as carefully as possible and come up with a new one, slightly higher, at 14098. It is short-able, but only via camouflage in a corresponding vehicle. (Note: We are already effectively short the Diamonds via some put calendar spreads.) The target is interesting because it would be odd for the Indoos to take such a puny last-gasp leap following a consolidation that has been developing for three weeks.  Stranger things have happened, though, and the target should be deemed sufficiently reliable in any case that its easy breach would imply that there is significant buying power remaining to be spent. _______ UPDATE (10:48 p.m. EST): I've set a chart alert at 13906.72, since that's exactly where the hourly chart would turn impulsively bearish today. _______ UPDATE (February 21 at 8:59 p.m. EST):  A low at 13834 generated the bearish impulse leg described above (see inset). That implies that the rally from yesterday's low is corrective and therefore short-able, presumably via camouflage.  We'll know whether buyers have been sapped of vigor once we've seen how the follow-through down-leg handles the p midpoint support. _______ UPDATE (February 25, 2:02 a.m. EST):  We'll back away for now, since the gratuitous ups and downs are getting a little freakish, if not to say fetishistically involved with 14000. This is how we've been expecting a top to be formed, since there are ten million of us oh-so-eager to get short.  However, if we do so at these levels, it'll be strictly on the basis of Hidden Pivot targets, of which there are no especially useful ones at the moment.

Although technically speaking it is presumptuous to say this, the stock market's cheerless, reflexive steps higher almost each and every day now feel like a march to the gallows.  Granted, there would seem to be no alternative to the by-now-relentless ascent of shares, given that they are being driven by a monetary blowout global in scope and unprecedented in magnitude.  Even so, hope springs eternal that this pernicious and presumably doomed dynamic will end soon, administering the shock that will jolt humanity back to the realization that there is no free lunch. For our part, we are looking to get short at a very specific price and in a certain way. Our strategic options are detailed in yesterday's tout, and so I'll suggest that you call it up from the archive if you are uncertain about how to proceed.  I am not divulging my target publicly to non-subscribers, since, the fewer traders paying attention to it, the greater the odds it will work precisely.

Last fall, Apple Inc. was on top of the world when its shares reached an all-time high of $705. That made it the most valuable publicly traded company, ranked ahead of Exxon.  Now, with the stock selling for around $460 and AAPL back in second place, it’s getting harder and harder to find someone with a kind word for the Cupertino giant. The news media in particular have turned on Apple with a vengeance, perhaps because they’re embarrassed at having been five months late diagnosing the firm’s declining fortunes. But anyone with half a brain – which perforce excludes mainstream newsmongers – could have seen it coming as early as September, when a whole slew of new Apple products hit the market, including iPhone5 and some iPad models that took display quality to a new level. Trouble was, there were no new products in the pipeline till spring -- and even then, no assurances that Apple’s next big thing, without the guiding hand of Steve Jobs, would be new and different, let alone revolutionary. So now Samsung is breathing down Apple’s neck, borne aloft by the kind of press that advertising can’t buy. A CNN story out yesterday bore the headline, How Samsung Is Out-Innovating Apple. Recall that it was just a few months ago that Apple won a lawsuit against Samsung involving some trivial design issues. We commented at the time that it was bad karma for a supposedly world-beating company to pick a fight with a competitor over such small things. Karma aside, Apple’s aggressive patent attornies didn’t discourage Samsung from taking the offensive with a few products that were very un-Apple-like. The so-called “phablet,” for instance. Essentially a phone combined with the much larger screen of a tablet, it was a product that many critics initially dissed.