Monday, September 8, 2014

TLT – Lehman Bond ETF (Last:115.73)

– Posted in: Current Touts Free Rick's Picks

We'll give our calendar-spread strategy a rest for now, since TLT looks like it could fall to 114.25 before it catches fire again.  There's no great urgency about starting a new position, since the cost of the out-of-the-money spreads we're using isn't going to increase much if TLT rallies a point or two.  For now, however, please report your current position in the chat room so that I can get a sense of how many subscribers are participating and how you're using my advice.  Those who have yet to take a position should view the recording of last week's impromptu session to get a feel for the details. The relevant material begins about 11 minutes into the recording.  You should also check my previous TLT in the archive for a detailed history of the trade, especially the way in which we've rolled the spread each week to all but eliminate risk.

GCZ14 – December Gold (Last:1256.10)

– Posted in: Current Touts Free Rick's Picks

Several subscribers have reported using my 1257.80 correction target to get long near the low, so I've established a tracking position for your further guidance. Assuming half of the position was covered at 1270.00, we hold two contracts with a profit-adjusted cost basis of 1246.10 from an original position of four contracts. To manage risk dynamically, I'll now suggest using an impulse leg stop-loss based on the hourly chart. This implies that the futures would have to breach the two lows shown, and to do so without a visually significant correction once low #1 is breached, to stop us out.  If the stop is hit, brace for more downside to at least 1249.20. You can bottom-fish there with the usual microtight stop-loss, but don't expect to hit a home run on the bounce. ______ UPDATE (2:01 p.m. EDT): Gold has relapsed to a so-far low of 1252.10 -- not exactly a healthy sign. We exited on the stop at 1257.90 for a theoretical gain of $1,180 per contract.  The 1249.20 pivot can still be bottom-fished nonetheless.

ESU14 – Sep E-Mini S&P (Last:1994.00)

– Posted in: Current Touts Free Rick's Picks

My trading partner, John Boutiette, took a short position in this vehicle on Thursday that was nicely profitable by day's end. However, even though he covered some contracts on the pullback, I had to avert my eyes when bears got squeezed for the hundredth time on Friday. My gut feeling now is that buyers were acting much too feisty on Friday to ease their grip on shorts' cahones. Sunday night's ostentatious calm, together with the feebleness of the pullback so far, only increases the likelihood that we'll see new record highs in the week ahead.  Night owls with designs on getting long should use either of the pivots shown for tightly-stopped bottom-fishing. _______ UPDATE (1:56 p.m. EDT): Good news for the short position, since the futures are falling today after taking a fleeting bounce from the 2002.25 pivot shown in the chart.  They are currently trading around 1994.00, down 12 points, so I'll let the short run for now, tied to an impulse leg-based stop on the 5-minute chart.

Feverish Bulls Snub a Day of Rest

– Posted in: Commentary for the Week of March 8 Free

Even rigged markets are entitled to a little rest now and then, wouldn’t you say?  If so, they passed up the opportunity to do so on Friday ahead of a three-day holiday weekend. Instead, while nearly everyone in America was fixing to usher out summer in whatever way might retain its savor best , stocks were ratcheting higher with a cheerless determination that was about as laid back as a buzz saw. You can see this in the chart below. The Dow Industrials bottomed a little more than an hour into the session;  then they forged ceaselessly higher until the closing bell imposed a mandatory time-out.  If buyers are acting this aggressively in the lazy, hazy, waning days of summer, just imagine what they are capable of between now and Thanksgiving, when the country traditionally gets back to work with a vengeance. Whatever happens, and no matter how convinced we are that the stock market is forming a broad top, we’ve grown weary of trying to short it. Some would say we’re crazy to even try to get in the way of a bull that has been rampaging for 65 months. The Dow is on its way to 20,000, permabulls insist, so why try to swim against the tide?  Maybe they’re right. Although we can think of a dozen great reasons why the Dow shouldn't keep rising in the months ahead, the arguments would be the same ones we’ve made all along. The simplest and most compelling of them is that the stock market’s stellar performance has gotten way ahead of an economy that can’t seem to get off the launching pad. But that’s been true for years, and it’s difficult to imagine what might change this dynamic, no matter how perverse it may seem. As for the spurt in