Monday, October 27, 2014

‘Bear Rally’ within Striking Distance of Old Highs

– Posted in: Free Rick's Picks

Bears will have noticed by now that the wicked short squeeze off mid-October's bottom is within striking distance of new record highs. As such, traders should position from the long side, using such Hidden Pivot targets as we can identify to limit risk. One such target has been flagged in today's tout for the E-Mini S&Ps. It will work for bulls and bears alike, so check it our if you want to be prepared for whatever Mr Market throws at us this week.

Has Burger’s Popularity Doomed McDonald’s?

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

McDonald’s, where a family of four can eat breakfast, lunch or dinner for less than it costs to prepare a meal at home, is blaming weak consumer spending for an unprecedented stretch of punk earnings . Someone should level with them: “It’s the hamburgers, stupid!”  Q3 profits were down by 30%, generating a lot of hissing and clucking on Wall Street. Portfolio managers must be scratching their heads trying to figure out how the fortunes of an American icon could have fallen so swiftly. Doubtless, Mickey D’s oh-so-clever ad-men are hard at work on a rescue effort, crafting a powerful new “message” for the Super Bowl audience. What they really need to craft is a hamburger that tastes more like one. Face it, we’ve been eating mystery-meat patties under the Golden Arches by the tens of billions for three generations, and what little savor they provide has come solely from the ketchup, pickles, mustard and onion on top. Ironically, it is the soaring popularity of the hamburger itself that may have contributed most to McDonald’s weakening sales. America is very obviously in the midst of a hamburger renaissance, as witness the rapid growth of such real-burger chains as Smashburger, Freddie’s, In-N-Out and Five Guys. You can enjoy the actual taste of beef at all of these places – or fill up for cheap at McDonald’s. And if you want the deluxe experience, there are more great bar-burgers out there for $8 to $20 than America’s food critics, magazine polls and foodies can celebrate. Here in Boulder, just to mention a few, are Tom’s Tavern (which has continued to offer the original bar burger even though the place was transformed into the upscale Salt restaurant); Drakes Haus, which features merlot-infused beef; Larkburger’s black-angus-on-a-bun  (“This isn’t a burger you hold. It’s a

ESZ14 – Dec E-Mini S&P (Last:1959.75)

– Posted in: Current Touts Free Rick's Picks

Even on the weekly chart the vicious short-squeeze off the October 16 low looks impressive (see inset).  Will the move achieve new record highs? As a practical matter this should be of no serious concern to us, since we'll continue to trade price movement in whatever way best suits our goal of profiting with relatively little exposure.  Paradoxically, the least risky way to get long over the next few days would be to do so with the futures flirting with September's all-time high. Panic, fear, greed, uncertainty and, or course, stupidity will all be at an extreme then, but to us the chaos will just be "impulse legs" that are easily tradable using signals from the lesser charts.  Most immediately, the futures appeared bound for a Hidden Pivot target at 1966.00 when trading ended on Friday.  This implies a possible bullish opportunity for night owls on Sunday, but as always, if the resistance is easily exceeded, that would be a yellow flag for bears keen on intercepting the rally. Do it if you like, but mpt aggressively unless you've been long for the ride up. _______ UPDATE (11:40 a.m.): This post in the chat can speak for itself: "Great call on ES at 1966. It actually topped and 1965.75 and fell to 1944.5. That has made my week, and its only Monday morning." I haven't established a tracking position because no other subscribers reported doing the trade, either northbound or shorting the top.

MCD – McDonald’s Corp. (Last:92.72)

– Posted in: Current Touts Free Rick's Picks

This week's commentary implies that McDonald's shares are an attractive long-term short. Most immediately, the stock looks primed to fall to the 85.53 Hidden Pivot target shown. The fact that the stock market's powerful short-squeeze has lifted the stock somewhat makes the bet even more enticing. Accordingly, I'll suggest shorting two round lots anywhere above the 91.42 midpoint pivot (i.e., the red line). Use a stop-loss equal to one-third of whatever you stand to gain if the stock were to fall to the target from the price where shorted.  This is the "mechanical entry" tactic I have often alluded to in the chat room and which I teach as part of the Hidden Pivot Course.  If you prefer to use options, buy the Jan 17/Oct 31 85 put calendar spread 16 times for 0.70 or better. Our goal will be to reduce risk to zero or less by rolling the spread forward, shorting the nearest weekly calendar spread each Friday. _______ UPDATE (11:28 a.m.): With the stock up somewhat this morning -- don't these guys read? -- lower the bid to 0.68, and decrease it by 0.01 for each 5-cent gain in the stock above 91.86. _______ UPDATE (7:43 p.m.):  The spread closed at 0.70, but there's not much more we can milk from it, since the October calls we're trying to short closed at 0.03. Traders who have yet to act should wait to buy eight Jan 17 85 puts 'naked' with the stock trading near the 92.59 target shown. Those who are long the spread should first try to cover the short puts with a 0.01 bid, day order. If the order is filled, sit tight for the time being. _______ UPDATE October 28, 10:45 a.m.): The stock gapped up 61 cents on the opening to a spike