The broad averages were in good position to turn ugly on Wednesday; instead, they turned sharply higher, probably to steal a march on shell-shocked bears ahead of a five-day holiday blowout. Because Independence Day falls on a Tuesday, trading volume is likely to ratchet lower beginning around mid-day Thursday. Expect it to continue falling until Monday’s closing bell. Prices are apt to trend higher over the entire period, given the ebullience of today’s short squeeze reversal. Will sobriety return after the Fourth? We’ll just have to wait and see.
Pre-Holiday HijinxPosted Wednesday, June 28 0 comments
ESU17 – Sep E-Mini S&P (Last:2443.75)Posted June 28, 2017, 8:59 pm
$DIA – Dow Industrials ETF (Last:214.24)Posted June 28, 2017, 7:50 pm
We began the day bidding for put options but backed away when DIA opened strong and forged higher. I now expect this vehicle to reach the 230.08 target shown. This is a major Hidden Pivot resistance, and although it’s possible to extrapolate even higher projections up to 269.40 from the monthly chart, the pattern I’ve selected looks more likely to produce the major top we’ve been looking for. At the very least, it should produce a tradeable top, and that’s why we must be prepared to get short there with a stop-loss as tight as 1.00 point. How long might it take? My guess is three to six weeks, judging from the dramatic way the bull market’s trajectory has steepened since this phase of it began in August 2015. If the target were to be reached in just three weeks, the implied 1600-point rally in the Dow would effect a blowoff worthy of the name. We should be ready for it regardless, but in the meantime any swing trades we initiate should be from the long side. You should stay tuned to the chat room in real time if you’re interested, since getting aboard with risk under tight control, presumably using ‘camouflage’ entry set-ups, will require very close attention to the lesser intraday charts.
AMZN – Amazon (Last:976.78)Posted June 27, 2017, 7:17 pm
Sellers on Tuesday daintily probed the 977.11 ‘midpoint’ Hidden Pivot support shown in the chart, validating the bearish pattern as well as its 938.17 target. We’ll wait for the support to give way, assuming it does, before we infer that the weakness is likely to continue down to at least 938.17. Were this to occur, it would assuredly be simultaneous with continuing weakness in the broad averages, most particularly the Nasdaq. Alternatively, if buyers recover their recent bravado, this erstwhile world-beater in rally mode would still face jeopardy in the form of a daunting Hidden Pivot resistance at 1024.83 (60-minute, A=930.30 on 5/5). I have higher targets outstanding, including one at 1083 that should be familiar to you, but for now we’ll take our projections one minor trend leg at a time, since we want to get this one exactly right if the downturn is about to turn ugly.
$+QQQ – Nasdaq ETF (Last:140.01)Posted June 27, 2017, 6:57 pm
$GCQ17 – August Gold (Last:1243.70)Posted June 25, 2017, 6:06 pm
$VXX – S&P VIX Short-Term (Last:12.68)Posted June 25, 2017, 6:03 pm
I’ve revised my bear market target for this vehicle to 11.72, somewhat higher than the one at 11.26 given here earlier. The new target comes from a point ‘C’ peak recorded in after-hours trading on May 18 rather from a lower peak made earlier that day during the regular session. I am more comfortable using the higher number, a Hidden Pivot support, for purposes of bottom-fishing, since I would hate to miss the trade merely because VXX had reversed from above the original target. Either number would be a record low for S&P volatility, but we should have little difficulty imagining such depths will indeed be achieved, given the airless tedium of Friday’s session. For my specific trading strategy — buying some perfectly priced call options — check out my 20:15 post from Friday, June 23, in the Rick’s Picks Banter Room. ______ UPDATE (Jun 27, 8:03 p.m.): The rally in this otherwise moribund vehicle could continue for a few more days if my bearish expectations for QQQ pan out. Regardless, we will NEVER buy call options when VXX is trending, only when it is hitting precisely targeted lows. Stay the course, and don’t look back if we miss a chance.
$+TLT – Lehman Bond ETF (Last:126.05)Posted June 18, 2017, 6:04 pm
We hold a long-term position of 200 shares with a 120.36 cost basis and implied profits of $1200 based on Friday’s close. We are also short two June 30 127 calls for 0.90 that we narrowly missed covering for 0.20 last week. Let this covered write ride for now, since it gives us downside protection with very little upside risk. Our maximum gain of $180 would come with TLT trading between 127.00 and 127.90 when the options expire. We will continue to work the position, increasing its yield over time by buying additional shares in timely fashion, and by doing more covered writes whenever the odds look juiciest. I would encourage relative newcomers to Rick’s Picks to monitor my TLT touts closely, since I consider this vehicle a source of easy profits, even for trading novices. Trades like this one are the best way I have of returning to you the money you paid to subscribe. This is a very long-term play, since I expect the T-Bond futures to go much higher in the years ahead.______ UPDATE (Jun 22, 11:12 p.m. EDT): TLT has been stronger than I’d anticipated, but we’ll leave the covered write alone, since the rally is approaching a 128.40 Hidden Pivot resistance (click here to see it) that seems likely to show some stopping power. _______ UPDATE (Jun 28, 1:07 a.m.): Bid 0.20 to cover the calls, day order. If it goes unfilled, re-enter the order on Thursday, but lower the bid to 0.15. _______ UPDATE (Jun 28, 10:08 a.m.): The calls have traded as low as 0.23 this morning, so I will consider them covered. Since we originally shorted them for 0.90, this will effectively lower the cost basis of our 200-share long-term position to 119.71. With TLT currently trading for 126.10, that implies a $1278 gain so far. Continue to hold the position. We’ll do more covered writes in the future as TLT embarks on a massive bull leg to 150 and higher.
TYX.X – 30-Year T-Bond Rate (Last:2.78%)Posted June 15, 2017, 1:45 am
I’ve called up a long-term chart for this interest-rate ETF today to show how yields on the 30-year T-Bond could fall to as low as 0.62% over the next several years. They’ve oscillated around 2.74% — the pattern’s midpoint Hidden Pivot — for nearly five years, but the thing to notice is that they breached that support twice decisively in the process. This is usually a sign that the trend will continue to the ‘D’ target with which the midpoint pivot is associated — in this case 6.24, or 0.624%. My hunch is that at some point the downtrend in yields will turn precipitous when all the bozos who have bought into the Fed’s economic recovery/inflation hoax have to unwind their huge mistake. The move could steepen initially when it becomes apparent that the Fed will have to ease when the housing and auto sector downturns currently in progress turn ugly and threaten to send the U.S. economy into deep recession later this year.
$SIL – Silver Miners ETF (Last:35.23)Posted June 5, 2017, 9:16 pm
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