May 2014

ESM14 – June E-Mini S&P (Last:1915.00)

– Posted in: Current Touts Rick's Picks

The potentially very important rally target that I alluded to in 'Today's Action' is shown in the accompanying chart. Like so many other interesting charts that come to my attention, this one surfaced serendipitously last night in response to a question asked during the final hour of the Hidden Pivot Webinar.  Notice that the intraday high at 1918.00 occurred just three ticks above the target, a Hidden Pivot at 1917.25 that had been six weeks in coming. In retrospect, and even with Apple on a holy tear, the target was speculatively shortable in small size. This is notwithstanding the fact that I almost never advise taking a position in the final hour.  Looking at this chart with mechanical detachment, I'd say that if the futures rally just three or four points above the target, it is kaput.  The pattern is so pretty and precise that it should work with that kind of precision. However, an overshoot wouldn't mean the Hidden Pivot has not 'worked' -- only that the rally is sufficiently powerful to turn even the hardiest of Hidden Pivot resistances into chop suey.

Is Something BIG About to Happen?

– Posted in: Free Rick's Picks

So absorbed was I yesterday in the task of leveraging AAPL's wilding spree that I overlooked a potentially very important development in the S&Ps.  For its part, Apple, trading around $636 at the moment, looks unstoppable for the next 25 points, magnetically locked on a Hidden Pivot rally target at 660.26.  The E-Mini S&P futures, on the other hand, peaked two ticks above a rally target so clear and compelling that it has the potential to end the bull market begun in March of 2009.  Clearly, one or the other will win, and my hunch is that it will be Apple. The stock is a crucial market bellwether, and its rallies are sometimes strong enough to drag the entire stock market with it. We shall see. Regardless, I would suggest at least a small bearish bet on the opening -- perhaps the purchase of some out-of-the-money puts in the Diamonds. This would effectively create a straddle for subscribers who bought bullish butterflies in AAPL yesterday. For night owls who trade futures, there has already been one low-risk opportunity to short the E-Mini S&Ps using 'camouflage'. The relevant pattern can be found on the 5-minute chart, with an entry signal at 1916.00 that came at exactly 10:05 p.m. Eastern. For what it's worth, every dog in the neighborhood was barking like crazy Thursday night. Have the heavens perhaps moved into a position that augurs a world-shaking crisis?  We may be about to find out.  For a free peek behind the subscriber wall and access to the Rick's Picks chat room -- no credit card necessary -- click here.

AAPL – Apple Computer (Last:633.40)

– Posted in: Current Touts Free Rick's Picks

I'm tracking two bullish spreads acquired yesterday by subscribers while AAPL was in the throes of yet another hysterical short squeeze.  The spreads were suggested as follows: 1) buy the June 21 655/660/665 butterfly 32 times for 0.20 or less; and/or, 2) buy the June 6 657.5/660/662.5 butterfly 100 times for 0.03 or less. Those who reported doing the spread evidently did not follow my price guideline, instead paying, respectively, 0.25 and 0.08 for the positions.  The difference may not seem like much, but it's enough to reduce our edge considerably. Even so, I'm optimistic that the positions will still make money. The trade was based on a rally target at 660.26 that I had proffered earlier. The stock's manic spree on Thursday brought it $13 close to the target, making it look less like a longshot. Two days earlier, we had risked small change shorting an ostensibly significant target at 623. It was derived from a long-term pattern on the weekly chart, but when it was easily brushed aside, that argued for getting long rather than short. Butterfly spreads offer a relatively cheap and low-risk way to bet on directional moves.  In this case, if AAPL rallies an additional 25 points between now and next Friday when the June 6 position expires, the first spread would have a theoretical value of 2.50, or about 30 times what we paid for it. Thus, 10 spreads purchased for $80 (plus commissions) could be exited for as much as $2500. We are not likely to realize that maximum value, however, since the options that we are short in this butterfly-- the June 6 660 calls -- cannot be covered for zero, even if the stock is trading at or just below the 660 strike five minutes before they expire.  The second position,

SIN14 – July Silver (Last:19.040)

– Posted in: Current Touts Rick's Picks

By slipping below an important midpoint-pivot support at 19.133 this week, the futures have signaled more weakness over the near term to at least 18.260, the Hidden Pivot target of the pattern shown. This forecast is not chiseled in stone, but if bulls are going to turn things around they'll need to muster a push exceeding 19.175 today or tomorrow to get it rolling.

ESM14 – June E-Mini S&P (Last:1909.00)

– Posted in: Current Touts Free Rick's Picks

The latest E-Mini tout could have been worth as much as $1200 per contract to anyone who was paying attention and prepared to act. Specifically, with the futures trading around 1898.00 Monday evening, I suggested getting long for a rally to exactly 1913.50. I further recommended getting short at that target, a Hidden Pivot resistance, using an ultratight, three-tick (!) stop-loss at 1914.25. In the actual event, the futures rallied to an intraday peak at precisely 1914.00 yesterday morning, then dove to 1905.00 in the first hour. Here’s the actionable portion of the recommendation exactly as it appeared: ‘Traders should use the 1913.50 target shown as a lodestone on Monday. The opportunity to get long ahead of the move may pass with Sunday night's session, but you can try shorting there in any case with an initial stop-loss at 1914.25.’ If you think you could have handled those instructions, consider giving Rick’s Picks a try. You can sign up for a free two-week trial – no credit card necessary – by clicking here. Incidentally, the 1913.50 rally target was a month in coming, so I don’t expect it to be a pushover. My guess is that it will take at least 4-6 days for short-covering – the only source of buying power left in this grotesquely overextended bull market -- to chew through it. However, if the resistance were to give way in a mere 2-3 days – say, by no later than Friday – bears should dive for cover, since the easy move into record territory would suggest buyers revving up to cripple and maim shorts.

A Swiss Morsel

– Posted in: Free Rick's Picks

Check out the trade set-up in the June Swiss franc if you're hankering to try something different.  It can be executed using 'camouflage', but I've also provided instructions in the tout for using a limit bid and a very tight stop-loss.

SFM14 – June Swiss Franc (Last:1.1143)

– Posted in: Current Touts Rick's Picks

Both pivots shown look promising for bottom-fishing, so I'll recommend that you do so at the upper number with as tight a stop-loss as you can abide --no more than 5 or 6 ticks in any case. To avoid having the order go unfilled if the futures turn precisely from the 1.1095 target, place your bid a tick above it.  Keep in mind that if you use an initial stop-loss of six ticks ($72.50), you'll need to get at least three times that, or 18 ticks, in-the-black before implementing a trailing stop.  This is a single-contract trade, but you can step up the size to four if you use 'camouflage' to establish an entry price.  ______ UPDATE (Friday, June 6, 12:03 a.m.):  Although the hysterical rebound following yesterday's diving low was quite powerful, the damage was done when the futures crushed the 1.1095 midpoint pivot.  Now, unless 1.1260 is exceeded to the upside, a move down to 1.0930 remains my forecast. _______ UPDATE (June 10, 1:07 a.m.): Interpolating for the SEPTEMBER contract, the downside target lies at 1.0939.  Look for a potentially tradable rally from the 1.1023 midpoint support of another pattern, and a worst-case low for the near term at 1.0811 if both of those supports get schmeissed.

AAPL – Apple Computer (Last:629.93)

– Posted in: Current Touts Rick's Picks

So clear and compelling was our rally target on the weekly chart that Apple's ability to blow past it must be regarded as evidence that the bullish rampage will continue. Accordingly, we should use the 660.29 Hidden Pivot shown (see inset, a new chart) as a minimum upside target. Price action centered on p=620.31 has yet to develop sufficiently to validate the pattern, but the pivot can still be used to bottom-fish on pullbacks. Regardless, I'll recommend bidding 4.20 for the June 650 call calendar spread, buying call of the June 27 expiration and shorting calls of the June 6 expiration. You should bid for four spreads or multiple thereof, but only with the stock trading 625 or higher. This is a relatively cheap way to play a somewhat distant rally target.  Stay tuned to the chat room, since it may be necessary to adjust the spread price on-the-fly. Ideally, the stock will move higher but at a rate that will allow us to cover the short calls for next to nothing and roll into the next expiration week.  If everything goes more or less according to plan, we will be holding or June 27 650 calls when the stock reaches 660, but their cost basis will have been reduced to zero by premium received for calls we shorted against them on the way up. _______ UPDATE (May 29, 12:53 p.m. ET): A simple way to bet on a rally to 660 would entail buying the 655-660-665 butterfly. Going out to the June 20 expiration, this spread is currently do-able 'on the marks' for as little as 0.30. I'd suggest trying to buy it for 0.20 ($20) or less. It has the potential to go to $5.00 ($500) if the stock rises to 660 over the next three weeks. Would