Thursday, December 4, 2014

Punishment for All Who Bet on Volatility

– Posted in: Free Rick's Picks

Traders who paid through the nose to bet on volatility have been taking it in the shorts lately. How else to explain the stock market's soporific price action other than as a costly rebuke to the multitudes who evidently are long straddles? Stocks have been acting as we might expect them to in the doldrums between Christmas and New Year's. The wasting of options premium has been mildly alleviated by whatever hysteria DaBoyz are able to stir up on Fridays, but otherwise we shouldn't expect much excitement as 2014 draws to a close.

SIH15 – March Silver (Last:16.435)

– Posted in: Current Touts Rick's Picks

There is everything to like about the bullish pattern shown, and so it remains only for the futures to push above the 16.723 midpoint pivot in order to energize bulls for a further push to at least 17.375.  An easy move through either of those pivots would portend still higher prices -- potentially as high as 18.725 before the rally cycle begun on November 30 from 14.155 has burned itself out.  Alternatively, a downdraft that touches 15.500 would generate a bearish impulse leg on the hourly chart. Although that would be cause for discouragement, it would not necessarily be reason to despair.

CLG15 – February Crude (Last:67.75)

– Posted in: Current Touts Free Rick's Picks

If crude is going to bounce, or perhaps even turn around, the most logical place for this to occur would be at the 58.45 midpoint Hidden Pivot shown. I first broached this number when the futures were trading above $80. This chart is a composite that blends many contract months, so the ABC coordinates are not going to be precisely correct. However, they are close enough to give us a potentially tradable bottom that has nailed the low within perhaps 15 to 20 cents. More immediately, however, the prospect of a $9 fall to the target is reason to favor the short side on any short-term bets. We 'know' that the 58.45 midpoint pivot is an important number because it is all but inconceivable that its 'sibling' at $2.06 will ever be reached.  That is not to say that the futures cannot go lower after bouncing from 58.45. But we'll be better able to judge the chances of this once we've seen how the initial rally from 58.45 (or possibly from above that number, which would be more bullish) plays out.

ESZ14 – December E-Mini S&P (Last:2072.75)

– Posted in: Current Touts Free Rick's Picks

The long-term chart shown is intended as a reminder that this vehicle still has some running room before it encounters an impediment with the potential to stop the rampaging bull, even if only briefly. The 2115.50 Hidden Pivot target can be shorted aggressively using the 'camouflage' technqiue or very a tight stop-loss, but for the time being it should serve as a lodestone for bullish bets.  The expected rally would be equivalent to about 350 Dow points,  implying the Indoos are about to crack 18,000. The popular imagination will surely shift toward Dow 20,000 in a big way at that point, which is all the more reason why we shouldn't regard such an outcome as a done deal.