We are short two contracts with an effective cost basis of 1418.00 after I advised covering near 1380.00 half of a position initiated at 1399.25. This is a tracking position created for the further guidance of traders in the chat room who reported having taken action. For now, plan on covering one contract at 1366.00, just above the 1364.50 downside target I’d advertised as a lead-pipe cinch when the futures were trading around 1392.

You should make that order o-c-o with a stop-loss to close out both contracts if there’s a bullishly impulsive thrust on the 15-minute chart. What this implies is that the stock must take an uncorrected leap surpassing at least one internal and one external peak. I’ve labeled two ‘externals’ in the accompanying chart, but an ‘internal’ peak could be created near the very bottom of this formation if the futures fall back just a few ticks  beneath their current 1375.75.  The effect of that would be to lower the stop-loss from just above peak #2 (1388.75) to just above peak #1 (1379.50).

_______ UPDATE (9:50 a.m. EST):  The futures bottomed at 1363.50 this morning, an hour before the regular session began, and have rallied 11 points since. We are now short one contract on paper, but what the hell do we care about being short, since our cost basis when we impute the theoretical gain of 52 points for the contract covered at 1366.00 is…1470.00. To manage the risk of this single-contract short position, I’ll suggest an impulse-leg stop-loss on the 60-minute chart. At the moment, that would require the current rally to remain uncorrected between the ‘external’ peaks at 1381.75 and 1397.50.  If such a powerful rally occurs, with us on the wrong side of it all the way, it will still leave us with a theoretical gain of $3600 on exit. Click here for a trial subscription that will allow you to follow this trade and to sample all of Rick’s services, features and 24/7 chat room risk-free.