Dow

With the Dow down almost 200 points yesterday, we were kicking ourselves for having scratched a bearish “strangle” position in the QQQs the day before. We’d been long the June 65 calls and June 62 puts in a slightly bearish ratio, having paid a relatively whopping $444 for this high-leverage bet on volatility. We say “a whopping $444” because it is only on very occasions that Rick’s Picks has recommended taking positions with puts and/or calls that risked more than theoretical nickels and dimes. Usually, we try to leg into vertical spreads or butterflies so that risk has been reduced in theory to zero (or less, if possible, since one can sometimes leg into vertical bull or bear spreads so that they are carried, effectively, for a net credit). Just this once however, we’d justified entering the trade on the prospect of an avalanche in stocks to kick off what is looking increasingly like a nascent bear market. But straddle bets are expensive, akin to betting on longshots at the race track. And with June expiration stealing up on option-premium buyers  -- essentially, retail suckers -- there was risk that the remaining time premium would implode if the broad averages noodled around for more than another day or two.  Friday would come, and it would dawn on the rubes that expiration lay just three weeks down the road – on the 15th of the month, the earliest expiration date possible, since June 1 falls on a Friday. We Remain Skeptical And so, bearish as we were – still are – we decided to cut and run.  The decision looked like perfectly bad timing yesterday around mid-morning, when stocks were getting schmeissed. Fortunately, however, the decision to exit the strangle with neither a gain nor a loss proved to have been

Gold is getting mildly pounded early Wednesday morning while the E-Mini S&Ps are down the equivalent of about 50 Dow points. Selling appears to have dried up in the latter, implying DaBoyz are setting it up for a goosing at the bell. however, this will occur only if sunrise does not bring a new wave of selling driven by news.

Europe’s bankers will need to think really big the next time they try to construct a proper “mother of all firewalls.” A nearly trillion-euro package that was on the table a few weeks ago would combine €440 billion of uncommitted funds from an existing credit “facility” with  €500 billion pledged toward a new one. Those may sound like big numbers, but they evidently were not big enough to prevent market forces from roiling Europe’s stage-managed bond markets last week. The result was a surge in yields on Spanish debt  that spooked U.S. stocks, among others,  into their worst weekly decline of 2012. Although the world’s bourses had celebrated in the weeks leading up to and immediately after the February bailout of Greece by central banking’s wizards and alchemists, stocks have been falling steadily since the beginning of April. Clearly, the specious extravagance of a trillion-eurofund doesn’t buy much peace of mind in financial circles these days. That's notwithstanding the obvious fact that the countries charged with funding the "facility" would have to pony up only a small fraction of the marquee sum. As much should be clear to all the players, since even the ostensibly solvent likes of Germany, Holland and Finland don’t have that much good money to throw after bad, nor the will to import austerity by-the-empty-truckload in support of a doomed euro and a bunch of sovereign deadbeats. Private Lenders Flee Spain For their part, U.S. stocks looked dismal last week, with the Dow off 1.6% and the S&Ps down 2%.   However, such relatively mild selling may prove to be just a warning tremor if Europe’s debt crisis is about to return to the headlines.  On Friday, investors’ fears ratcheted into the red zone when it became apparent that a tidal surge of borrowing from the European

Like a breath of spring, wasn’t it?  Just when we were expecting yet another short-squeeze toward Dow 14000 and beyond, the Indoos plummet a refreshing 203 points, bowing to economic realities and rationality at last. Or was it just March madness? Who cares. When some uncharacteristically glum Wall Street wrap-ups hit the tape late Tuesday afternoon to acknowledge the stock market’s steepest decline of the  year, it were as though we’d died and gone to heaven. It was even better than that, actually, since the selloff did not exactly take us by surprise. A trading “tout” that we first aired in mid-January called for a 600-point Dow rally to 13085, but here’s the timely update that went out to subscribers shortly after midnight Tuesday:  “The Dow [has gotten] as high as 13056 — close enough to the target to turn us very cautious.  This means, for one, that we are not taking the likelihood of yet one more short-squeeze rally as a given.  In fact, a downdraft that exceeds 12883 would create the strongest bearish impulse leg on the daily chart that we’ve seen in a while.” In the actual event, the Dow blew past 12883 on its way to an intraday low at 12734. So how bearish are we?  Not as bearish as you might think, actually -- just very cautious, as noted above. We leave bullish and bearish “feelings” to gurus who possess, um, crystal balls. We don’t purport to see the future – only to trade day-to-day realities that can change so fast that if you stop to pat yourself on the back after making a good trade or prediction, you risk getting flattened by Mr Market’s equivalent of an 18-wheeler. But as long as you don’t take your eye off the truck, there is nothing to

Stocks are creeping into the red zone, according to our proprietary technical indicators. A possible end to the Mother of All Bear Rallies begun three years ago? Perhaps. But rather than guess about such things, we’ll let the charts tell us what we need to know.  We don’t have a crystal ball, after all, but we’ve learned that the stock market cannot change directions in any significant way without telegraphing the turn on the lesser, intraday charts. This they did back in January, when a pullback to a key ‘hidden” support signaled the big rally that was to follow. Specifically, using Hidden Pivot Analysis, we were able to tell subscribers to expect a Dow rally of at least 600 points, to a minimum 13085. At the time, we were bearish as all hell on the real world.  However, and as all traders come to understand, the stock market is unconnected to the events of the real world. Under the circumstances, trying to predict its ups and downs on the basis of the  headlines is futile.  Nonetheless, bearish as all hell, fearful of war in the Middle East and ever mindful of the economy’s fitful descent into Depression, we wrote the following in a Rick’s Picks “trading tout” disseminated to subscribers on January 18: “Take any dozen good reasons for being bearish right now and they still don’t equal the bullishness of the chart shown [see above]. The undeniably compelling rally objective is 13085, a 4.8% move from current levels, and one can only surmise that the dusting the 12158 midpoint received on the last pullback (12/28) all but clinched a finishing stroke to the higher number. Moreover, it implies that bears shouldn’t get their hopes too high even if, in the next few days, the Dow plummets 324 points to

[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

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.

Several of today's touts are tradable, and the very bullish target for the E-Mini S&Ps corroborates a 13085 Dow target first broached a while back.

We got short at the top on Friday, but how long will Mr. Market let us enjoy the ride? Our vehicle, QQQ put options, nearly ran off the road on Tuesday when the Dow began the day with a 125-point rally. A pullback in the early going shaved that gain by two-thirds, but by early afternoon bulls were beating on the highs, threatening to send bears into a new round of short-covering. The pessimists got a reprieve, however, when something spooked the market late in the session, sending the Industrial Average into a 225-point dive that left it 66 points lower on the day.  It was not a session for the faint-hearted. Still, the outcome boosted the value of our put position, leaving Rick’s Picks subscribers in good shape to try to lock in a profit no matter what the stock market does as 2011 draws to an unpredictable close. On Friday, we’d actually been bullish for most of the day in anticipation of a powerful rally in the E-Mini S&Ps to exactly 1259.25, a Hidden Pivot target. With ten minutes to go before the bell, the futures got as high as 1258.50, and so we sent a bulletin to subscribers telling them to get short by buying January 54 puts for 0.96 in QQQ. This equity-based vehicle corresponds to the S&P futures and was making its high at 57.17. Although we rarely advise opening a position on a Friday afternoon, the circumstances strongly warranted it. This time, taking a gamble paid off when the new week began. Monday’s gap-down opening caused our Jan 54 puts to spike to as high as 1.25, and so we told subscribers to take a profit on half the position. Now that the selling has resumed, our goal will be to spread off our