Monday, April 8, 2013

BBY – Best Buy (Last:22.94)

– Posted in: Current Touts Rick's Picks

The rally has reached the point of hysteria, driven by the prospect of 1,400 Samsung mini-stores in Best Buy showrooms.  That's great news, of course, but not nearly sufficient to clinch a turnaround for one of the last big-box retailers. Keep in mind that I was quite bullish on the stock when the company detailed its recovery strategy early in 2013. I even remained optimistic when the man who created it, a hotshot from Starbucks, quit after just a couple of months. But with the share price at current heights the burden of proof falls heavily on bulls.  From a Hidden Pivot standpoint, the forecast is not rocket science:  If the stock smashes through the 25.33 midpoint resistance where it ended last week, odds would favor a blowoff to 29.18.  ______ UPDATE (April 12, 1:51 a.m. EDT):  Sellers have taken charge and seem intent on driving the stock down to at least 23.84, the midpoint support of the pattern shown.  If the pivot fails, however, we could see more downside to as low as 22.79 -- a 13% correction from the recent high. I'll recommend bottom-fishing at the lower number via camouflage, or with a 22.85 bid, no stop. _______ UPDATE (April 15, 6:43 p.m. EDT): Because I'd advised buying without a stop-loss, we are long 400 shares with a 22.85 basis.  For now, use a fixed stop at 22.69, making it o-c-o with an order to exit 200 shares at 23.80.

JYM13 – June Yen (Last:1.0089)

– Posted in: Current Touts Rick's Picks

The yen has had two sharp rallies since we first discussed the prospect of a collapse to 95. However, after last week's news that Japan plans to double the money supply, no one should doubt the BOJ's determination to compete and win in the global Olympiad of currency devaluations.  More immediately, we should see at least a token bounce from the 1.0140 downside target shown in the chart. (It was breached by 0.0021 points on Friday, but that's not enough to be significant from our perspective.)  In a bigger picture, referencing the monthly chart, a further drop exceeding 1.0028 would extend the ongoing impulse leg through a third 'external' low.  This would be an enormously powerful thrust that promises to beget not only a spectacular bear rally, but a kamikaze follow-through leg to the downside. _______ UPDATE (April 9): So much for the bounce from what had looked like a good support. Now 1.0149 is presumptive resistance, and any rally to it should be shorted using camouflage that holds theoretical entry risk to six ticks or less.  _______ UPDATE (April 10, 2:59 a.m. EDT):  Yesterday's rally topped at 1.0148.  If you shorted there, please let me know in the chat room so that I can establish tracking guidance. You should have covered at least half the position on the pullback, which reached a so-far low of 1.0070.

An Emerging Paradox

– Posted in: Free Rick's Picks

Index future and gold were quiet early Sunday night, belying the powerful tensions that are beginning to emerge as investors confront the paradox of high share prices in a weakening economy. For more on this, check out today's analysis of June T-Bonds.

USM13 – June T-Bonds (Last:147^30)

– Posted in: Current Touts Free Rick's Picks

The June contract has blown past some important prior highs with the ease we'd anticipated. The rally is parabolic at this point and suggests that, at least for the foreseeable future, market forces will not seriously challenge the Fed at its game. I'd said this would be bullish for stocks, and that would be true if the perception still ruled that absurdly low interest rates will somehow benefit the economy going forward. This delusion may be dying, however, wounded anew by the stock market's inability on Friday to rally on news that the U.S. economy had created just 88,000 jobs in March. Meanwhile, the complexity of factors that have been interacting to send the U.S. dollar and T-Bonds higher, and gold lower, may be growing too difficult to analyze with much confidence. Under the circumstances, perhaps the best we can do is study the technical picture diligently while avoiding the temptation to think it's possible to divine the meaning of it all in a political and economic world where insanity rules.

DIA – Dow Industrials ETF (Last:145.31)

– Posted in: Current Touts Free Rick's Picks

We shouldn't get our hopes too high about shorting April 130 puts for a juicy premium over the 1.50 we paid, effectively, for the Junes.  This has been our goal for a while, but the stock market's relentless rally has made this tactic a non-starter. That said, respite could come soon in the form of the 148.76 target shown. With news about the actual state of the economy beginning to overwhelm the spinmeisters' lies, stocks appear especially vulnerable at these heights. If you want to be alerted in real time to any change in our position, be sure to check the 'E-Mail Notifications' box on your 'My Account' page.