December 2012

I missed a trick when I pronounced this vehicle doomed after it slid through a 609.47 midpoint a few days ago. There was a perfectly serviceable alternative midpoint pivot at 606.05 that in fact predicted Priceline's powerful bounce within 40 cents. I've labeled the two respective B-Cs so that you can see for yourself.   Notice that the lower of them -- the one that actually worked -- yielded a hidden support at exactly 606.05 (the red line), foretelling the bounce we saw from 606.45.  The lesson here is that Priceline's ups and downs are as predictable and tradable as that other $600 supposed giant-killer, Google.  One final note:  camouflageurs should see in this chart an interesting buying opportunity at the moment arising out a very short k-A segment. Can you  find it? _______ UPDATE (December 24, 11:29 a.m. EST): Use the p and D targets of the pattern shown, respectively at 605.39 and 572.14, if you're fixing to get short or bottom-fish.  _______ UPDATE (January 3 at 2:44 a.m. EST): The stock appears bound for 668.10 after trampolining from a shakedown low at  601.50 on New Year's Eve day.  The p midpoint resistance associated with that target is 647.89, but don't expect it to show much stopping power. ______ UPDATE (January 15 at 11:38 p.m. EST): The stock overshot my target by 23 cents before DaScumballs pulled the plug and let this vehicle fall $14.  They then proceeded to goose the stock back up to 665.79, presumably with even more ambitious targets in mind.  The stock, as you can see, has been perfectly predictable and not the least bit scary, so camouflageurs should be licking their chops right now.  _______ UPDATE (January 22 at 4:32 p.m. EST):  The stock is bound for 719.93, the Hidden Pivot target, on the daily

We gauge the strength of rallies and declines not only by how easily they push past Hidden Pivot 'p' and 'D' targets, but by how long it takes them to do so.  In this case, it took the E-Mini S&Ps four days to blow past a 1437.75 target (basis the December contract) that we discovered -- and which some of you shorted -- during last Wednesday's tutorial session. The impulsive thrust will have bullish implications for the near term, but not powerfully so.  If the futures had pushed decisively above the 1437.75 pivot within hours of first encountering it, we might have inferred that the obligatory Christimas rally was going to be a real doozey. As things stand, however, because it took four days and a running start to achieve this modest feat, we should expect more of a wafting effect into year's end as portfolio managers take advantage of the absence of sellers, including bears now in retreat. Most immediately, the rally would appear to have a lock on the 1447.75 target shown. It's not far above, and I would strongly recommended shorting there, if only for a scalp-trade. 'Camouflageurs' should seek to initiate the trade on the 5-minute chart or less, using a stop-loss of no more than five ticks per contract. If you're not familiar with the technique, get short simply by offering at 1447.75, stop 1448.50. In either case, you'll be on your own if the order fills. Of course, it is suggested that you maintain the 1:3  risk:reward that I recommend for all trades from start to finish.  Please note that this one is likely to fill at night if the futures rally only moderately from the day-session settlement price. ______ UPDATE (2:27 p.m. EST):  In the soporific flux of an especially tedious day, the

It doesn’t take much buying power to get a Christmas rally going -- only the seasonal absence of sellers, along with a steady flow of short-covering by bears who have thrown in the towel on December. Both factors are in evidence now, although not powerfully so, and we should therefore expect portfolio managers to make hay while no one is watching or cares.  This could set up bears for a big score in January, since it is a given that any agreement on Capitol Hill that purports to get us past the so-called fiscal cliff will be political theater with no impact on the toxic growth of U.S. debt nor the economy's slide into recession.

So many institutional geniuses are so utterly dependent on the performance of this one stock that we should expect to see it trading at least 100 points higher by year's end.  However, yesterday's hysterical rally implied that we are not the only ones anticipating this.  In any case, the leverage we are about to seek lies in building a spread position near the 600 strike.  Vertical bull spreads will already have become a bit pricey due to the $18 whoopee-cushion bounce off yesterday's lows.  However, calendar spreads and butterflies should remain relative bargains for long enough that we can plan to buy a few even as the stock makes its way higher. For now, let's try to leg on the January (monthly) 590-600-610 call butterfly spread for 'even' or better.  This implies shorting two January 600 calls for as much as we have paid for a single January 590 call and a single January 610 call.  Since my intention is to make this trade accessible even to novices, we'll want to do the 'buy' side of the trade first, acquiring four January 590-600 call spreads on weakness.  Once we've done that, we'll be looking for a rally to get short four January 600-610 call spreads. Check out the table accompanying this tout if you want a picture of what we'll be doing.  Bottom line is that, when we're done, we'll be long four January 590 calls, four January 610 calls, and short eight January 600 calls. Trust me, I'm going to make this easier for you than it sounds. If you'd like to be alerted in real time to the opportunity, be sure you've checked 'E-Mail Notifications' on your My Account page.  If you don't subscribe to Rick's Picks but are eager to give this trade a shot, click here

With DaBoyz short-squeezing rumors of a fiscal-cliff agreement for all they're worth -- and then some -- I've recommended raising the stop-loss on our January 128 DIA puts to 0.80.  Those of you who hedged the original put purchase by shorting puts of a lower strike against them for more than 1.00 should sit back and enjoy the show, since you effectively hold a free lottery ticket. My gut feeling is that with yesterday's short-squeeze rally, bulls have gained working control of the broad averages for the remainder of the year. Moreover, they are in good position to put a vise grip on the testicles of bears who have enjoyed being short in Apple. Doesn't that imply that we should placing some leveraged bets in Apple shares right now?  Indeed it does! Check out today's tout to see the plan.  I've spelled out in detail a bullish butterfly spread that will be geared toward beginners with option accounts.  If you have only lost money trading options and think puts and calls suck, please do give this one a try.  Don't subscribe? No problem: CLICK HERE.

We hold four January 128 puts purchased for 1.00.  DaBoyz are obviously capable of squeezing quite a bit of yardage from the 'story' that Democrats and Republicans are getting 'closer' to an 'agreement'.  So that we do not find ourselves having to give such claptrap even a passing thought, I'll suggest raising the stop-loss on the puts to 0.80.  This means that if they trade at that price (or perhaps below it on a gap), you should sell them at-the-market.  Some subscribers have already shorted Jan 127 puts against the 128s for more than they paid.  That is what I should have recommended to you myself, since any profit on a put position, especially in December, is as rare as gorilla eggs. Those of you who have hedged the position in this way should simply forget about it and enjoy the show, since you've got a lottery ticket that cost you nothing. Technically speaking, the Diamonds look bound for at least the 133.35 mipdoint resistance shown.  We're jumping the gun to be plotting an exit before that threshold is reached, but my gut feeling is that strong impulsiveness of this move is sufficient to torment bears for the remainder of the year.  We'll plan on re-shorting this brick when a better  opportunity presents itself, but for now let's cut our theoretical position risk to $80 plus commissions.  _______ UPDATE (11:15 a.m. EST): With the short squeeze on the Dow continuing, we exited the puts at 0.80, booking a theoretical trading loss of $80.  We'll want to try getting short again (and again, and again), but for now do nothing further.

With Europe's problems getting pushed off the front page lately by all manner of sensational news, it's not surprising to see that those running the show, most particularly the ECB, have used the lull in coverage to push the euro as high as possible.  Think of them as squirreling away nuts for the winter.  And you had better believe they're going to need every one of those nuts when the world's attention turns once again to the sordid details of deals buttressing the illusion of a stabilized Greece, Spain and Italy. Meanwhile, from a technical standpoint, we needn't even work the numbers to infer that the futures are on their way up to 134+ to test copious supply left there last spring.

Considering how coy and delicate the game of toe-sies has been at the precise, 1689.00 midpoint support of the bearish pattern shown (see inset), it seems entirely likely that a decisive breach will produce a fall to at least D=1662.40. How decisive a breach?  Let's use a two-day close beneath of 1689.00 as our criterion.  Alternatively, we shall require no less than an impulsive thrust past external peaks #1 and #2 to signal a likely resurgence of bulls. ______ UPDATE (December 18 at 1:39 p.m. EST):  Don't count on much of a bounce from 1662.40, since I can practically guarantee you that the futures will fall to at least 1631.80 when that support is spent. [NOTE: THIS buy-able TARGET IS $5 ABOVE THE ONE GIVEN ORIGINALLY. THE ERROR WAS DUE TO A RECURRING PROBLEM WITH THE TRADESTATION PLATFORM.]  The larger pattern, 60m, is A=1800.00 (10/4); B=1674.70 (11/5); and C=1751.60.  The 1689.00 midpoint support of this pattern has been obliterated this morning, leaving almost NO doubt about the 1626.40 minimum downside objective.

Index futures have gapped higher Sunday night, gold is down following a nasty head-fake, and all is wrong with the world.  The tide could always reverse by morning, but as of around 8 p.m. Eastern there was nothing in the news that would account for the buoyancy in shares.  Distribution seems to be an entrenched fact of life on Sunday nights in any case, and this night, with no horrific geopolitical headlines to impede the effort, has been no different thus far.  Check out the chart accompanying today's Feb Gold tout if you want to see exactly what would make a further fall of 4% in the gold price all-too-likely. And if you don't subscribe, click here for a free trial to Rick's Picks.