Wednesday, May 22, 2013

Back by popular demand! I'd mothballed our speculative long in this stock because it had become too depressing to watch it languish each day.  However, the position is still 'live' and -- who knows? -- we could even get a play if Wall Street's quasi-criminal silliness gets out of hand.  We hold 32 July 195 calls with an average cost of 0.14, and our goal is to short July 200 calls against them for at least as much as we paid.  For now, though, we'll keep our fingers crossed, doing nothing that would get us in any deeper.  _______ UPDATE (May 29, 3:55 p.m. EDT):  Goldman shares are showing surprising pluck today, up $2.30 at the moment at $163 with the Dow off more than 100 points. I'll formalize the trade recommendation above with the suggestion that you offer 32 July 200 calls short for 0.15, good-till-canceled.   If the order fills we'll have a virtually riskless shot at making as much as $16000 if Goldman forges higher over the next seven weeks.  ______ UPDATE (May 30, 11:07 p.m.):  The July 200s traded yesterday for 0.15 and some fills were reported in the chat room.  Any others, before I track the spread officially? _______ UPDATE (May 31, 10:01 a.m. EDT):  July 200 calls have traded as high as 0.17 this morning, so I'll consider the spread done 32 times for a 0.01 CREDIT.  Do nothing further for now, since this position cannot lose.

Recent price action has been so tedious that one could forget that we're now using a long-term rally target that lies somewhere between the ionosphere and the cosmos. Camo traders should continue to position from the long side, but that said, even squeezing a couple hundred bucks out of this rabid dog's ups and down each day has been challenging.  The 1679.25 rally target given here yesterday (see inset) still obtains for the near term, so there's 13 points of immediate upside potential, however tortuously it is realized.

Wall Street did not exactly take Apple out to the woodshed following yesterday's revelation that the firm has paid little or no taxes on foreign income of $75 billion. The stock flinched, down $2.73 on the day, but investors seem to recognize that revising 275,000 pages of tax code to force Apple to pay its fair share will require many years of wrangling on Capitol Hill.  And who's to say that the effort would not leave other loopholes just as easily exploited by the Sunnyvale behemoth's clever lawyers and accountants? Technically speaking, however, the news seems to have sapped some of Apple's vital juices, since the stock failed for the second consecutive day to decisively exceed a small but nevertheless significant 'external' peak at 445.36 (see inset). That feat, trivial though it may seem, will remain crucial to the short-term picture. If and when it is achieved, expect the stock to rise to a minimum 449.9o, a Hidden Pivot target. If the pivot is easily surpassed, look for the bullish momentum to continue till week's end, at least. Camo traders should position from the long side, using the 15-minute chart for leverage.

Repeat after us: There is zero chance the Fed is going to tighten…zero chance…zero chance…zero chance.  We’ve made this point so often here that it is has practically become a mantra at Rick’s Picks.  It has also been amplified, refracted and explicated – though not hotly debated – in our forum, where there are apparently few who expect any change in Fed policy. As how could there be?  For even the slightest hint that easing is about to taper off, let alone end, would bring on the Second Great Depression faster than you can say “Hooverville!” The prospect of hard times might have superficial appeal, since the legacy of the 1930s with respect to art, architecture, cinema, public works, automobiles and other monuments to creativity and human endeavor is quite impressive. But the downside is that the illusion of prosperity would be gone, and with it much false wealth that could never withstand the discipline of unrigged markets.  Also gone – overnight – would be the global banking system, buttressed as it is by a nearly quadrillion dollar edifice of hyper-leveraged derivatives.  Subject that sum to even a few more basis points of vig and you’re talking about trillions of dollars that would have to be coughed up in real money. Fat chance. The foregoing is in response to a CNBC story out Tuesday evening under the headline Bernanke Expected to Deliver Dovish Message.  This is about as dog-bites-man as news gets – a space-filler intended to pump up the press-release version: Bernanke will testify before Congress today.  Here’s the opening paragraph:  “Federal Reserve Chairman Ben Bernanke is expected to maintain his dovish tone when he speaks to Congress Wednesday, and he is likely to dispel any notion that the Fed is ready to cut back on its easing policy.”