Wednesday, July 30, 2014

Switching to the December contract, I'll suggest using the 1278.70 correction target shown if the selling should breach the 1296.60 midpoint support. Both of these Hidden Pivots looks enticing for bottom-fishing, since neither coincides with structural support from a prior low. Accordingly, you could use a stop-loss as tight as four ticks below a bid at either target.

Slippage beneath the red line (p) late in Tuesday's session implies the futures will now grope their way down to at least 1954.50 in search of traction.  This target is a pretty one, and I'd have no qualms about telling you to bottom-fish there with a three-tick stop-loss if it were hit intraday. However, because the target is being disseminated overnight and therefore will not be as fresh and mysterious when the futures get there, I'll advise a cautious approach that suits your style if you plan to bottom-fish. As always, the most logical short would be from p if the retracement rally now in progress gets there.  Trading concerns aside, if the downtrend smashes the support it would indicate that the selling is waxing. _______ UPDATE (2:18 p.m.): Today's hysterical, obligatory short-squeeze has come from 1956.50, cheating us out of an easy trade from the target I'd identified.  There'll be other opportunities, for sure.  However, because the turn has come from a low that didn't quite reach a clear correction target, bears had better give the rally wide berth.

Bond prices were diving when the  tutorial session began, ostensibly because of a fraudulent report that GDP had grown by 4% in the last quarter.  The market’s unwarranted reaction to this disinformation afforded us an unusual opportunity to buy call spreads in TLT at fire sale prices.  This lesson contains some of the most detailed instructions I’ve ever presented for “working” an options order.  As you will discover, the task does NOT require a sophisticated understanding of puts and calls -- only a focus on bids and offers for a couple of TLT calls tied to a calendar spread that deserved to be bought extremely aggressively.

The stock market, drawing on the collective wisdom of tens of millions of investors, is supposedly all-seeing and all-knowing. If so, only a mere handful of them seem to have known that business was improving at Twitter. The stock took a 36% leap after the close on Tuesday, trading as high as 52.48, after strong earnings were reported in a conference call.  I say that a handful saw it coming because volume in some out-of-the-money TWTR calls was suspiciously huge on Tuesday, even if the stock didn't move that much.  We'll leave that for the regulators to sort out, since they apear to have mastered the art of catching "insiders" by following paper trails that practically glow in the dark. As for TWTR, it's already trading $4 above the highest target I could have predicted for it over the short-term.  Since the rally is 99% short-squeeze and 1% bullish buying, there's no telling how high it might go. The earnings news was very good, although not spectacular, but what do I know?  I have yet to figured out how the company makes its money when, say, a million followers tune to Justin Bieber, down in his cups at 3 a.m.