Bank of America

This impromptu session from Thursday morning runs a little more than an hour, touching on B of A, the E-mini S&Ps and Comex gold. But of greatest interest, perhaps, in the final 15 minutes, is a detailed (and bullish) look at the HUI Gold Bugs Index. My suggestion is to fast-forward to this segment (unless you’re interested in the real-time ‘camo’ portion related to other vehicles).

[I'm running this commentary for a second day because of the high-minded discussion it has elicited.  Please be aware that an announcement next week concerning the latest bailout for Greece would probably generate a short-squeeze rally on Wall Street, much as it has a dozen times before.  Be that as it may, a potentially important target at 1353.00 that I'd flagged here for the E-Mini S&Ps has held thus far, the futures having spiked in the opening hour yesterday to...1352.75.  In other trading notes, a rally target for Bank of America shares was bullishly exceeded, although two more important ones remain: 13085 for the Dow -- a longstanding objective of ours;  and 119.91 for Goldman Sachs. Taken together, the prospect of simultaneous tops in so many bellwethers suggests that an important trend change could be imminent.  Click here for a free trial subscription to Rick's Picks if you'd like to keep abreast of further developments in real time. RA] The financial world is on pins and needles as "investors" await Europe’s latest, quasi-momentous decision on the fate of Greece. The Greeks themselves, no fools, were a step ahead of the politicians and bankers, rioting in the streets.  Many of them have probably imbibed enough austerity to last a lifetime. Keep tightening one’s belt a notch at a time and eventually you’re left with two bloody torso halves. Not that the bankers would mind the mess as long as they get paid. So what, actually is at stake in this latest chapter of the eurobailoutpalooza? The rescue package under discussion amounts to a piddling €130 billion, and we can’t see how it’s going to make much of a difference. Even if it’s only intended to buy a little time, a sum as meager as that may not see the Eurocrisis through

We bought two March 9 puts for 1.10 yesterday when the stock popped to a high seven cents above our 8.08 Hidden Pivot target. The fact that BAC finished slightly above the target is not encouraging, but we'll stick with the 0.95 stop-loss on the puts nonetheless.  Our goal if B of A now drops as we'd expected is to spread off our premium risk by shorting puts of a lower strike. For now, though, do nothing further.  If the rally continues, the nearest minor Hidden Pivot with stopping power lies at 8.27. The puts might be trading for around 0.91 at that point, but there's no reason for us to double down by getting in the path of a runaway freight train. _______  UPDATE (11:12 a.m. EST):  DaBoyz opened the stock on a 19-cent gap, allowing their esteemed colleagues in the options pits to do likewise with puts.  Ours fetched 0.87, giving us a loss on two contracts of $46 plus commissions.  Their quasi-criminal work accomplished, DaBoyz have allowed BAC to detumesce, and the puts we'd held have move back up to 1.00.  We won't try to intercept the stock again -- other, perhaps, than by camouflage -- because its easy moves through distinct Hidden Pivots are warning that those who make their living manipulating this stock, and who presumably are distributing it heavily into this rally, have bigger plans.

The 8.08 rally target shown look sufficiently compelling to warrant the purchase of puts when the stock gets there.  Camouflageurs can short the shares naked, risking no more than 6 cents per round lot, but for those who prefer the ease and leverage of options, I'll recommend buying two March 9 puts (or multiple thereof) with the stock trading within 3 cents of the target. I'll further recommend that you stop yourself out if the puts trade 15 cents below their purchase price, since it's always possible B of A will fail to heed the Hidden Pivot resistance.  If we do the trade, our goal will be to eventually short puts of a lower strike for the same amount we've paid for the 9s. That would give us some vertical bear spreads with no possibility of a loss. _______ UPDATE (9:58 a.m. EST):  The  stock has gotten no higher this morning than 7.98, but if it hits the 8.08 target today, expect to pay about 1.12 for the puts. _______ FURTHER UPDATE (10:34 a.m. EST):  The stock popped to 8.09, pushing the puts as low as 1.06. Officially, I'll record a purchase of two for 1.10.  For now, if they trade down to 0.95, stop yourself out of the position.

The stock market hasn’t been much fun to trade in a while, but that could change today as the broad averages approach some potentially important rally targets of ours. Want to know exactly where these targets lie but don’t subscribe?  Click here for a free trial subscription that will give you access to our proprietary numbers. One of them foresaw a 600-point rally in the Dow that is nearly complete. The other is a bullish target for the E-Mini S&Ps that smacked us in the eye yesterday with its clarity.  There are also two bank stocks whose deft handlers appear to be setting up suckers for the kill. These financial biggies are household names, but because they are in the thick of Europe’s bailout hoax, they are destined to go down with the ship. Under the circumstances, the hysterical, short-squeeze rallies that have driven their shares steeply higher may be ready to seven-out. We’ve been itching for months to find a good place to short this market. As many of you who trade will already know, except for a delightful, breath-of-spring plunge in late October/early November, it’s been a tiresome, uphill slog for patient bears. Now, although we can’t guarantee that the Hidden Pivot targets about to be hit are going to stop the bull dead in its tracks, we’re optimistic that they will provide an exceptional opportunity to get short. There are umpteen ways to do this, but we’ll probably concentrate on index futures and put options on certain equity trading vehicles. If you’re not familiar with the “camouflage” technique we use to help alleviate the stress of initiating a trade, you may be surprised at how easy it is. 'Unmained' This won’t be the first time we’ve laid out shorts in a market that was steaming relentlessly higher.

As last week ended, one might have believed Wall Street investors had just about everything wrong.  Stocks were up sharply on bullish payroll news that flatly contradicted something every American knows – i.e., that the Great Recession is still very much with us; T-bonds were getting whacked on the flimsy assumption that the economy is picking up strength; and gold and silver were under attack because, well, because all was right with the world.  Even the hacks and scribblers who bring us the news did their bit to feed Friday’s feel-good binge.  For one, there was nary a discouraging word on the Web’s main news pages about Greece and its slow-motion bankruptcy – only a story about how Europeans were working diligently to protect the homeless from a cold snap.  And the left-tilting L.A. Times, thinking wishfully, weighed in with the most fatuous story of the day:  an analysis piece saying that the payroll numbers could prove to be a turning point in Obama’s reelection year -- the day when he shifted from slight underdog to favorite. All of which led us to post a link at Rick’s Picks to some sobering counterpoint in the form of an essay, Peak Money Arrives. Here’s an excerpt to ponder lest you grow giddy over Friday’s silly headlines: “The world is running out of money. If money is credit, and credit relies on confidence, there is not enough confidence in the financial system to supply the world with the money it needs. Since the initial credit crisis struck in 2008, credit and money have been withdrawn from the system in such staggering amounts that international trade can no longer grow. The world’s central banks are playing a rear guard action by acting as lender of last resort to banks that no longer trust

Since someone inquired about this stock in the chat room, I've flagged a 3.39 target that comes from the razor-sharp pattern shown in the 240-minute chart (see inset). Although B of A may well be on its way to the grave, I would still rate 3.39 as a back-up-the-truck number to initiate a speculative buy. Recalling that similar pre-crash projections I made for Lehman yielded a negative 'D' target, we might infer that, technically speaking, prospects could be worse for B of A. _____ UPDATE: We'll put this one aside for now, since B of a shares are moving in the wrong direction.

(Louis Piro is an investor from the old school, a guy who innately understood that there were no shortcuts to building wealth.  His approach may seem almost quaint in an era of instant IPO billionaires, but --  who knows? -- it may yet come back into vogue. Piro was my barber when I lived in Mountain View a decade ago, and his story originally appeared in the Sunday San Francisco Examiner during the dot-com boom of the late 1990s. I republish it here every couple of years because the advice it holds for investors remains timeless. RA] If there is a single word to sum up the success of investor Louis Piro, that word is "dull." Piro has never made a killing on a stock.  He doesn't play hunches and he runs from hot tips.  He says he passed up Pfizer not long ago because its shares were too pricey even before impotent men started flocking to their Viagra pill for a cure. Nor will Piro sell anything from his portfolio.  He just keeps buying -- and then only with money he knows he won't need any time soon.  He adds stock whenever the price drops substantially. Piro shuns companies that sell products or services he can't understand, and he has never even owned a share of a Silicon Valley upstart. His favorite word -- "dividend" -- could be the mantra of a successful hypnotist.  Zzzzzzzz.  Finally there is this pearl, the cliché that underlies nearly every investment decision that Louis Piro has made in the last 45 years:  "Buy shares in companies that will grow with America." ‘Build a Little Nest Egg’ That Piro, 63, could have amassed considerable riches by following such homely rules is probably not unusual.  What is striking, however, is the remarkable degree of his

Although we waxed skeptical here the other day about Warren Buffett’s just-announced $5 billion stake in Bank of America, we allowed for the possibility that the deal will provide a handsome payoff to him no matter what happens to the bank.  B of A could implode, after all, a victim of sinking collateral values for its mortgage loans, and of litigation over its securitized-lending business.  There is also the wild card of homeowners challenging lenders in court to show clear title to properties that are in line for foreclosure. In fact, this issue alone has the ability to capsize the global financial system, since “clear title” is exactly what ceased to exist when the feather merchants of the banking world leveraged out real estate to-the-max earlier in the decade to create an $800 trillion derivatives edifice – the Mother Lode of Digital Money, as it were. All of that sum must be viewed at the moment as deflationary overhang, by the way – not to mention, a key stumbling point for those who argue that The Great Economic Crisis must eventually precipitate out as hyperinflation. So, how do you produce even mild inflation, let alone hyperinflation, with the housing market in a full-blown Depression?  Most surely not by expanding the capacity of banks to make mortgage loans. That’s been tried to death – first moderately, then aggressively, and finally desperately -- with zero success. Despite trillions of dollars worth of mortgage stimulus and supports both implied and real, the residential market looks even grimmer than it did a few years ago.  Existing-home sales fell 3.5 percent in July despite the fact that prices were 4.4 percent lower than in July 2010. Now that’s deflation. There’s also the $6.6 trillion loss of home equity that has occurred since the onset of the