September 2009

Silver Wheaton is screaming higher in after-hours trading, so we may get a chance to short eight December 15 calls for 0.45 against the eight Dec 12.50 calls that we own for, effectively, 0.15 apiece.  Our original cost basis was 0.45, but we were able to reduce that by 0.30 by selling half of the original 16-call position near the top of yesterday's steep rally.  The trade was featured as a Pick of the Day, so I am hopeful that many of you were able to take advantage of what looked, from the get-go, like an easy opportunity. From a Hidden Pivot perspective, the highest blowoff target I can identify for today lies at _____, a Hidden Pivot that comes from the lesser charts.

We hold 400 shares acquired on Tuesday for 17.07.  (The stock bottomed the next day at 16.76, somewhat lower than the 16.97 stop-loss I'd given, but we canceled it and let the trade ride.)  For now, use a stop-loss at 16.62 while offering 200 shares at _____. That's a penny below a Hidden Pivot target on the 10-minute chart, and we should infer that it will be reached if AKAM can get above its sibling midpoint resistance, _____.

We occasionally recommend option trades designed so that even the village idiot could hope to make money on them. These minutely detailed "Pick of the Day" selections are intended to make back one's annual subscription cost at the very least, but also to help traders get over whatever trauma they may have suffered trying to profit with puts and calls. This is quite a feat, even for us -- and we've been at it for more than 35 years. Truth to tell, it takes every trick we've learned over that time to string together a few easy winners. Our approach is not hit-or-miss, and we shun the common practice of putting out many recommendations in hopes that perhaps one or two will hit.  We'd rather that every trade make money, even if we've fallen short of that goal in practice. Our approach emphasizes quality over quantity, and this means "Pick of the Day" trades are offered only when an opportunity looks unbeatable. (If you don't subscribe but would like to verify for yourself how well these trades have fared, we would encourage you to take a risk-free seven-day trial to Rick's Picks by clicking here. That will give you access to a chat room where you can query the subscribers themselves.) An current example is a trade we've got on in Silver Wheaton, a favorite in the Rick's Picks chat room because the stock offers a direct play on silver.  The trade is being done in three stages because we have found that it is very nearly impossible to make money using simple, directional trades in which one buys, say, a call option in anticipation of a rally in the underlying stock. We have never met a trader who has made money over time using this tactic. Here's the way we

A crystal-clear Hidden Pivot target at 9.89 survived for all of a half-hour, hinting that this lump of brick dust will eventually go much lower before it finds a real bottom.  Anyone tempted to bottom-fish should keep the 4.41 target that I disseminiated in the chat room in mind. More immediately, a pop today that exceeds 9.64 would signal the beginning of a potentially significant dead-cat bounce.

Gold was screaming, the E-Minis were on the move, and although "camouflage" opportunities in each had come and gone, we examined their respective intraday charts closely to see whether there might have been an easy way in. We found that bullion's takeoff had been too abrupt to board, and in the E-Mini, although there had been several ways to get long, the larger patterns promised little follow-through. We ended the session on an interesting note, however, buying a 9.89 downside target in UNG that had been drum-rolled and many days in coming.

My analysis for gold, financial shares and the dollar go against the grain today, so I could wind up looking like either a hero or a fool an hour into the session.  My gut feeling is that the bank stocks will continue higher as long as they are able to operate effectively without rules or constraints.

The rally looked altogether unimpressive until late in the session, when a fleeting spike surpassed a look-to-the-left peak at 78.91 that I'd flagged in the chat room. That gives the rally nominal appeal on the lesser charts, although we should require _____ today to validate it. The location of the obscure but important peak-let this would surpass is shown in the accompanying chart.

Silver effected a promising spike yesterday afternoon, but the futures were struggling to hold onto the gain early in the evening.  If they go no lower than ____ overnight, however, any rally exceeding the relevant midpoint resistance at _____ would suggest additional upside potential over the near term to as high as _____.

Below 999.75, there were no more Hidden Pivot targets to project yesterday using the hourly chart. That is still the case, although we can use the breach of a look-to-the-left peak at 1009.50 to signal us when ES is turning around.