Monday, July 7, 2014

There's an important promising rally target not far above, at 171.67, and although we can try to ride the last segment of the implied thrust to that number, the more appealing trade lies in getting short when DIA gets there. To facilitate the trade, I'm going to attempt something a little different this time, legging into a butterfly spread by buying far-out-of-the-money puts first. Specifically, I'll be focusing on put options that we can buy in quantity (i.e., 50) for 0.05 or less.  This would give us initial exposure of perhaps $250, but if we catch a top of at least short-term importance, we'll stand a good chance of legging on the rest of the spread so that we are left with no risk whatsoever.  Even more important is that doing the remainder of the spread will be relatively easy if DIA tops at our number. _______ UPDATE: (July 9, 2:25 a.m.): We'll put this one aside for now, since DIA's recenty topped missed reaching the target by 1.20 points. This is bearish on its face, so our trading bias should be negative for the time being.

There is at least $27 of immediate upside potential in Priceline's daily chart, since that's the distance between Thursday's settlement price and a clear-as-day midpoint Hidden Pivot resistance at 1270.59.  I cannot predict how the stock will open Monday morning, but if there's weakness, I'll recommend bidding for some 1267.50-1270.00 call spreads. Specifically, you should try to buy it for 0.20 or less.  I'll be in the chat room to assist in this task if things don't go our way, and I may even suggest using a spread strategy -- legging on some butterflies, for instance -- to get a cheap play on a PCLN moon shot to the 1358 target associated with the midpoint pivot noted above. _______ UPDATE (July 7, 6:35 p.m. ET): Our plan was a non-starter yesterday, since Priceline bucked a weak stock market to surge $20 in the early going.  The very bullish targets noted above remain valid, but we'll remain buyers only on weakness, so stay tuned. _______ UPDATE (July 8, 11:50 a.m. ET): Priceline's impressive plunge -- $42 so far this morning -- has left the rally targets given above theoretically intact, but practically speaking they are probably  toast. The fact that the reversal has occurred without the stock's having quite reached the midpoint resistance at 1270.59 is a potentially bearish development for the long term.  From a Hidden Pivot perspective, Priceline's daily chart is in 'dueling mode', with the edge still going to bulls. However, the daily chart says wait till 1146.48 is reached to the downside before you attempt bottom-fishing (A=1378.96 on 3/6). You'll see that if that midpoint Hidden Pivot doesn't hold, PCLN could fall to D=1000.63. _______ UPDATE (July 10, 10:43 p.m.): None of the recent downstrokes have breached prior lows, suggesting that still deserve the benefit of the

Two weeks of asphyxiating tedium have not altered the likelihood that the September will cruise to at least 22.110 once the midpoint-pivot resistance at 21.370 has been dispatched. My gut feeling is that the finishing stroke will occur precipitiously, implying that traders will have to be very nimble if they expect to climb aboard once the red line has been surpassed. _______ UPDATE: Zzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzz.

- Rick Ackerman, former San Francisco PSE market maker When the Federal Reserve will tighten: I worked some numbers over the weekend in order to refine my forecast for Fed policy. One prediction that has stood the test of time is that any real tightening by the central bank is as likely as a Martian invasion. Turns out that when you crunch the latest data available, a Martian invasion winds up being 1.835 times as likely as any Federal Reserve tightening now or in the future. The formula I used to handicap this bet is proprietary and somewhat esoteric, so I won’t go into it here. But the bottom line is this: Anyone who believes that deliberate tightening is even remotely possible, let alone likely, is delusional. Of course, many of the deluded are bound to argue that the Federal Reserve has already begun tightening via the “taper,” a gradual reduction in its sham purchases of Treasury paper and mortgage-backed securities that commenced with dubious earnest last winter. However, the tapeworm represents the sort of “tightening” that Fed-watchers, pundits, eggheads and the news media can wrap their delusional brains around, since it dovetails conveniently with the absurd myth that the Fed knows what it’s doing.  In fact, most of those who interpret economic news -- crypto Marxist-cum-Nobelist Paul Krugman chief among them -- couldn’t hold down a CETA job assembling doorstops. These are the same economic bozos, after all, who bought into Greenspan’s crackpot notion that inflated home prices constitute “wealth,” and that capital investment supposedly was expanding at a time when household savings growth in the U.S. was negative. Managing Our Expectations To put the tapeworm in proper perspective, it has amounted to the withdrawal so far of perhaps forty billion dollars’ worth of Treasury funny money per month