Gold's hysterical, engineered short-squeeze this morning has thus far failed to surpass the 1268.00 'external' peak whose breach I'd said was critical to the bullish case for the near-to-intermediate-term. The so-far high, achieved just moments ago, is 1260.00, and although that hardly precludes our benchmark being achieved, we'll remain cautious until such time as this actually occurs. Incidentally, like nearly all gold rallies we've seen in recent months, this one would have been extremely difficult to catch, even for the nimblest, most astute 'camouflage' trader. _______ UPDATE (12:50 p.m. EST): A nearly $50 surge from yesterday's low has failed by just 0.60 to surpass my 1268.00 benchmark, but this is hardly reason for despair. Although it suggests that bulls are less than omnipotent, at least at this stage of a potentially major move, we shouldn't be too quick to write them off with skepticism. Yes, it's true that nearly everyone now expects imminent tightening via a tapering of QE. Although that would have bearish implications for bullion, we should remain open-minded to a possible 'surprise' in the form of an announcement that some new, ostensibly inflationary policy will be tried. That could be bullish for bullion, and we should therefore reserve our skepticism, even if today's upthrust missed being a 'blitzkrieg' by a few measly ticks.
Tuesday, December 10, 2013
Clearly, the Whole World Was Betting on a Santa Rally
– Posted in: Free Rick's PicksA recalcitrant, pooch-screwing stock market refuses to kick off the 'Santa rally' everyone appears to have expected. Instead, Mr Market has made roadkill of bullish bettors, especially those who used out-of-the-money calls as a vehicle. There may still be a play, though, if my hunch is correct about a powerful short-squeeze somewhat ahead of next Friday's option expiration. For my further thoughts on this -- and a possible strategy when there are just figurative seconds left on the clock -- check out today's Netflix tout.
NFLX – Netflix (Last:369.40)
– Posted in: Current Touts Free Rick's PicksHolding a soon-to-expire options position in this high-flier has given us an acute sense of the drag on the stock market as the year draws to a close. The thieves who manipulate NFLX in particular have been pretty brazen about bull-trap openings, and every rally over the last two weeks has faded in the stretch. Under the circumstances, we can be fairly certain that 'everyone' was looking for a holiday season rally, and that, like us, many used high-beta NFLX as their vehicle of choice. My hunch is that the rally will come, pushing this stock to $400 or so by expiration, but that it will come too late to save our spread. By this logic, a very steep rally will get under way perhaps next Wednesday, possible in the afternoon. Accordingly, we might look to buy some cheap out-of-the-money calls with just a couple of days left on them next Tuesday or the following morning. Meanwhile, continue to offer half of the eight December (21st) 400-410 call spreads to close -- but for 0.50 now. They feel like dead meat to me at this point. _______ UPDATE (November 11 at 11:10 a.m. EST): With the stock up $7.50 at the moment on top of yesterday's strong gain, the spread is do-able for 0.50, but I'll wait for reports of fills in the chat room before I make it official. That would leave us with four spreads and a total position cost of $120. For now, offer one more spread to close for 1.20. ______ UPDATE (December 12 at 10:26 a.m.): Sell four December 400 calls to close for 0.48 or better. This order supersedes all others given above and will leave us with a bull ratio spread. _______ UPDATE (10:28): The calls went to 0.54 bid, so I'll record
ESZ13 – December E-Mini S&P (Last:1807.00)
– Posted in: Current Touts Free Rick's PicksWe were using an 1814.00 rally target yesterday, but I lacked the imagination to foresee that this glue-horse would fail to muster the implied four points of upside. Now, another Hidden Pivot has popped up that looks even more compelling. It lies at 1814.25, and because the original target remains viable as well, the implication is that there will be double stopping power thereabouts. Accordingly, I'll recommend shorting a single contract at 1814.25, stop 1815.25. There should be no illusions about catching a major top here -- this is just a trade, is all. But the target looks to me like the sort that cannot fail. Scalpers will be on their own if the order fills and gives way to a pullback of at least 3.00 points. Please note that this gambit could trigger overnight, denying regular session traders an opportunity to lay 'em out. ________ UPDATE (8:05 a.m. EST): An ostensibly modest rally target continues to remain out of reach, notwithstanding our eagerness to get short there. We should conclude the obvious: That for the time being, nothing but weakness lies underneath. Absent the conditions needed to trigger a short squeeze, DaBoyz will have to take the futures lower before they can run them higher. I continue to think that the rally will come, but no earlier than the middle of next week, when December out-of-the-money calls have been thoroughly killed. In any case, the short from 1814.25 is kaput.
