June 2014

Our first 'Friday Jackpot Bet' was a qualified success, since subscribers were able to buy expiring calls at the 565 strike for 0.30 or less, then to sell half of them a short while later for 0.60. This made it possible to hold the remaining calls effectively for 'free' for five hours as we awaited the small rally that would have pushed them into-the-money. A mere $4 thrust would have caused our calls to quintuple in value. Alas, the rally never came (at least not until the last seconds of the day -- see inset) -- an unusually quiet day for Google shares, particularly on an expiration Friday. But our results underscored the possibility of doing no worse than breaking even on a day when things haven't gone our way. Make no mistake, this play is a longshot bet, and whenever we attempt it we should be reconciled to the prospect of losing it all.  Over time, however, if we hit just one out of every seven or eight attempts, the results should speak for themselves.  If you want to join us in real time next Friday, click here for a  free trial subscription -- no credit card necessary. This will give you access, for two weeks, to all member services, including timely trading touts and a 24/7 chat room that draws experienced traders from around the world.

Access to the Friday 'Jackpot Bet' will be the same as for any impromptu session that I conduct online: I'll post an access code in the chat room that will allow all Rick's Picks subscribers to attend.  Look for the code shortly after 9 a.m. EDT. I plan to go over some ground rules before the opening bell, add a dollop of disclaimer, and then we'll cross our fingers and wait for a promising rally or decline to fade.

DaBoyz were taking as much air out of Comex futures as possible Thursday night, the better to steal paper gold from widows and pensioners who may have come away from yesterday's monster rally eager to unload an asset that has underperformed for all too long. Could they be wrong?  From a technical standpoint, the August contract tripped a buy signal for a shot at 1445.00, a Hidden Pivot target. We can all afford to be a little skeptical about this, but even for skeptics there will be good reason to loosen up and go with the flow above 1342.60, an important 'hidden' resistance whose breach would reaffirm the very bullish price action we saw yesterday.  That's just $20 above the intraday high, and if it's exceeded as early as today, that would attest not only to the power of the rally, but to its potential staying power.

We took a flyer yesterday on some Priceline calls -- a trial run ahead of a new Rick's Picks offering, the 'Friday Jackpot' bet.  This is a highly leveraged speculation using put or call options that are about to expire not in days or weeks, but in mere hours. The underlying stocks that we use include such lunatic-powered high-flyers as Priceline, Apple, Google and Netflix. We've seen those stocks trace out price swings of $30 or more intraday. When that happens, options that can be purchased for under $1.00 can soar to $6, $8, $10 or even more. Yesterday's trade was a bust, as most such trades will be. Subscribers reported buying imminently expiring PCLN 1235 calls that were $30 out-of-the-money for as little as 0.95.  Alas, the calls went no higher than 1.48, then crashed too quickly for an easy exit.  Our standard practice, whenever possible, is to sell half the calls at twice the price paid for them, effectively reducing our risk for the remainder of the day to zero.  At that point traders are holding a free ticket on a 20-to-1 nag.  Not bad odds, since stocks appear to be at least somewhat more predictable than horses. Moreover, we still hold the calls bought yesterday, and even though they died in the stretch, they could conceivably come back to life if the whack-jobs who trade Priceline are feeling antsy on an expiration Friday, as they so often are. I'll be calling the trades in a virtual room tomorrow starting at 9 a.m. EDT. Only paid subscribers will have access to the room, but if you'd like a front row seat and don't subscribe, click here for a free two-week trial, no credit card necessary.

For once, it is bullion that is in a wicked short squeeze! The July contract will need an uncorrected rally exceeding 25.055 to break the back of the 38-month bear market, but today's rally is a nice start. A Hidden Pivot at 20.640 was as high as projections based on the intraday could have taken us, so the decisive move through it portends more strength to come. _______ UPDATE (June 20, 1:42 a.m.): DaBoyz seem to be having trouble shaking this vehicle down tonight. If 20.530 pullback low recorded Thursday afternoon holds, any rally past 20.985, a Hidden Pivot midpoint resistance, would indicate more upside to 21.435. Here are the coordinates from the 15-minute chart: A= 19.930 on 6/19 at 8:15 a.m. ET; B=20.835 at 1:00 p.m. _______ UPDATE (June 22, 10:55 p.m. ET): The futures topped our 20.985 threshold by a single tick -- not much, but sufficient to generate a bullish impulse leg, and along with it the presumption that any retracement from here is just that, and a buy.

If gold continues to rally, it could soon trip a buy signal corresponding to a rally target as high as 1445.00. Geopolitical tensions in the Middle East have powered the buying so far, but it remains to be seen whether those tensions will need to escalate to put further, upward pressure on bullion. For a technical road map, including the precise location of the buy signal and of a formidable 'hidden' impediment above it, see today's tout and the chart that accompanies it.

Geopolitical tension, of all things, has reversed a downtrend that threatened to bring August Gold down to 1221. Now, you can see a larger, bullish pattern that I once favored, being bent back into serviceability by the rally that has unfolded over the last two weeks. It would trip a 'buy' signal of major degree at 1291.40, but I wouldn't break out the bubbly until such time as the 1342.60 'midpoint Hidden Pivot' has been exceeded by at least a few dollars.  That would put a 1445.00 target well in play -- the most optimistic number I've been able to broach here in a long while.

Check Out the June 18, 15:14 post in the chat room for the precise location of the next, potentially very important, Hidden Pivot rally target.  It lies somewhat higher than the analogous target for the E-Mini S&Ps, but rather than try to rationalize the discrepancy, I'm going to suggest simply shorting either vehicle on its own terms. In the case of the Diamonds, you should use July 11 weekly puts, buying four of them at whatever strike price is selling for 0.80 or less when the target is reached or very closely approached. I will be in the chat room to provide further assistance, since this trade is intended even for relative option novices.  In addition, there is a rally target of lesser degree at 169.64 where you can try shorting (or 169.92 if any higher, owing to the lower point 'A' that is possible). This will be a do-it-yourself-er for more-experienced traders, but I would risk no more than 25% of the value of any sub-1.00 puts purchased when DIA hits either mark.

I'm tracking two short contracts with a profit adjusted cost basis of 1954.00 and a stop-loss at 1951.25 that will require monitoring overnight. We will continue to short every promising Hidden Pivot rally target that comes our way, since, as you will have surmised by now, it is no great trick to hit swing highs very precisely using the technical tools at our disposal. That is not to say that it is easy to stay short, since head-fakes and short squeezes are all but ordained to continue until there's but a last bear or two standing. As I've noted in the chat room, there's yet another promising, high-value rally target in the offing with the potential to reward the diligent permabear. I am going to refrain from publicizing it, however, since I don't want to jinx it. You can find out the 'whisper' number by going in the chat room and asking around (or click here for a free trial subscription - no credit card necessary).  Someone will email it to you.  And for those who would rather trade stocks and options than futures, there's an easily accessible target for DIA posted in the chat room that you can use as either a lodestone for a long position, or a place to get short -- or both.