Yesterday’s 206-point drop in the Dow was the worst decline in a month, according to a headline that caught our eye. But look at the chart below, which shows the Mini-Dow futures. From ledge to pavement, the dive produced barely a splat, failing to take out even a single prior low of significance. We’ve labeled a few such lows just so you know what it would have taken to merely hint of trouble ahead.  In fact, the Dow could have fallen nearly 200 more points without tripping any alarms.  We mean alarms tied to stock charts, by the way, not the alarms that have been shrieking at full-blast since last autumn, when the stage-managed collapse of the global banking system began to play out one illusory rescue package at  time.

Despite yesterday’s setback, we remain moderately bullish on stocks, even if we think the U.S. economy is already well into a recession that will make the 1973-74 cataclysm seem like a relative picnic. Our bullishness is based solely on some unachieved Hidden Pivot rally targets in the indexes and in some stocks that we view as bellwethers. Those targets are available to Rick’s Picks subscribers for whatever louche purposes they might afford.

A Funky Frontspread

Speaking of louche purposes, in the touts section of the newsletter, and via intraday alerts, we’ve been building a funky frontspread in Apple, mostly by selling naked calls against naked puts. Your broker will tell you this is a risky way to play the options game, and it surely can be. But when put and call prices for soon-to-expire options get as fat n’ juicy as they’ve been in Apple, it can be riskier to buy options than to naked-short them.

With that in mind, we added a smidgen of very tolerable risk (aka “taking gammas”) to our position yesterday, naked-shorting a May 175 put option just as panic selling of the underlying stock was nearing exhaustion. We shorted the put for 2.15 before it plummeted to 1.75, on its way to settling at 1.84. (In the newsletter marketing business, that's known as an "annualized gain of more than 5,000 percent !!!!!!!!!").  But we’re not counting our chickens, at least not yet. The rest of the position, built over the last two weeks, includes a round lot of stock acquired for $170.50, a May 185 straddle shorted for $10.40, and two May 170 calls shorted for 6.90 apiece. That might sound pretty complicated, if not to say treacherous, but if you work out the prices at expiration you’ll find that, come May 16, the position would be profitable with Apple selling anywhere between 167 and 191. With the stock currently trading around 183, we’ll take the odds.

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Free Hidden Pivot Demo on Friday

Can a novice learn in mere months how to interpret stock and commodity charts more accurately than many experts who do it for a living? Rick’s Picks  invites you to find out for yourself. Click here, then on the “Upcoming” tab, to sign up for a free Hidden Pivot demonstration this Friday morning from 9 to 10 (Mountain). The session is open to anyone seriously interested in attending the Hidden Pivot Seminar slated for May 21-22 (two consecutive evenings). During Thursday’s session we will attempt in real time to identify trading opportunities in such popular trading vehicles as Comex Gold and Silver, the Diamonds, QQQs and E-Mini S&Ps.

If you are skeptical that chartist “voodoo” can correctly call the trend in any time frame, or that it can consistently identify price reversals to within hundredths of a point, then I would urge you to attend this session.  You will come away convinced not only that it is possible, but that you can do it yourself with just a few hours of training. You’ll learn to look at stock and commodity charts in a completely different way, using your eye to discriminate winning trading patterns from losers as you would good art from bad.

Seats are limited, so please register soon if you want to be assured of getting a spot. No telephone is required, only a headset/microphone that plugs into a USB port or speaker jack on your computer.

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Get Your Chat-Room Pass

The Rick’s Picks chat room is the place to be if you’re looking for tradable ideas in real time.  Gold and silver traders in particular can benefit, since the room attracts experienced traders from all over the world at all hours of the day, particularly during U.S. market hours. If you would like a free one-day pass to check it out, click here, and then on the green banner.

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