Rick Ackerman

I am tracking two positions -- one bullish, the other bearish:  1) long two May 18 248 calls for 0.85; and 2) short 100 shares from 244.37.  The short position, initiated on 200 shares in the opening minutes of the session, is showing a theoretical gain of $284. It includes a $121 profit on 100 shares covered at 243.16, the worst price reported by a subscriber who did the trade. For Tuesday, bid 240.30 to cover the remaining 100 shares. If DIA gets within 0.70 of that number, implement a 'dynamic' trailing stop to preserve a risk:reward ratio of 1:3.  That means that if DIA falls to 240.96, your trailing stop would shrink to 22 cents, or a third of what you stand to gain if you are able to cover the remaining round-lot short at 240.30.  If DIA opens higher and keeps going, use a stop-loss at 242.45.  For those who are long the 248 calls, do nothing further for now. Our goal is to leg into a vertical ratio spread by shorting a 245 call if and when DIA turns strong.

Quiet buying Sunday night has pushed index futures to a decisive level where just a little more progress would tip the short-term outlook sharply in bulls' favor. They had more inspiration from AMZN's crazed rally last week than they could handle, but merely playing catch-up in the days ahead is likely to lend buoyancy to the broad averages. For precise benchmarks, check out my latest update for the June E-Mini S&P contract.  If you don't subscribe but would like a free peek, click here for a no-risk trial subscription. It will give you access to Rick's Picks, including the chat room, touts and impromptu 'requests' sessions for two weeks.

Buyers spent the last two days head-butting the 2678.25 midpoint resistance shown, presumably gathering energy for an extended move to the pattern's 2745.25 target. A rally reaching that number would be significant -- and bullish -- since it would surpass a fairly important 'external' peak at 2744.00 recorded on March 21 just before the June contract took a steep fall. Although that would leave the futures well shy of the record high print at 2883.25 on January 29, it would almost surely renew and embolden  attempts to get there. _______ UPDATE (April 30, 8:53 p.m.): Today's moderate selloff was not technically significant, but I'll mention a downside target at 2526.50 in case the decline starts to snowball.  Here's the chart.

We dodged a bullet on Tuesday, pulling a 47.50 bid just before the bottom-dropped out -- first in AMZN, then in this stock.  CRSP's intraday low could have been bought with a tight stop-loss, since it occurred close to the 46.54 midpoint support. I wasn't at my desk when this happened, though, and I doubt that I would have advised a stop-loss wide enough to have survived the 19-cent overshoot.  It was not sufficient for us to infer the stock is bound for 41.36,  but a two-day close beneath p=46.54 would shorten the odds of a further fall to that number. In any event, we'll move to the sidelines for the moment. If the stock gets near 41.36, that would be a back-up-the-truck opportunity to buy it as far as I'm concerned. _______ UPDATE (April 25, 8:24 p.m. EDT): A rally to the green line would set up the stock for a 'mechanical' short, but we'll let it pass as we continue to look for a low-risk buying opportunity. ________ UPDATE (April 29, 5:08 p.m.): The stock has not merely rallied to the green line, it has attacked it.  We'll back away for now, but if CRSP pushes above c=51.72, we may have to give up on trying to buy it on-the-cheap._______ UPDATE (April 30, 1:42 .m.): Bid 44.07 for 200 shares, stop 43.57, good through Tuesday.  Here's the pattern we're trying to leverage. (Note: The chart indicates a 44.03 bid, but you should use 44.07.) _______ UPDATE (May 1, 6:22 p.m.): Leave the bid in through Thursday. Today's recovery lacked vigor, suggesting there's still a chance we could buy stock with a stink bid (albeit a targeted one). _______ UPDATE (May 7, 5:28 p.m.): Cancel the bid for now.  I'm pussyfooting because I expect many subscribers to do this

The 23,225 downside target we've been using for the Dow Industrials remains valid.  Its DIA equivalent is 232.03, and we can use it to 'mechanically' short DIA if this presumably corrective rally hits x=244.37 (the green line).  My strategy is to sell two May 18 245-248 call spreads for $3 or more, legging into the long 248 calls first. Bid 0.90 for two of them, day order, contingent on DIA trading 242.50 or higher. If DIA falls below 242.50, lower the bid for the calls by 0.05 for each 0.20 decrease in DIA. This means you would be 0.85 bid for the calls with DIA trading around 242.30. These bids are stingy and could turn out to be out-of-range. However, I'd rather have the order go unfilled than pay up even a nickel to get it done. We can adjust on-the-fly if necessary, but I'll have a better idea of 'fair value' for the spread as Monday's session progresses.  (Note: If your account is enabled for such trades, you can simply 'mechanically' short 200 shares of stock at 244.37, stop 248.49.  Please let me know in the chat room if you get onboard this way.) ________ UPDATE (April 30, 10:08 a.m.):  No option trades were reported, since DIA's gap-up opening put the 248 calls well out of reach. However, a subscriber shorted the stock at 244.37 as had also been suggested, so I am establishing a tracking position of 200 short shares, stop 248.49. Make the stop o-c-o with an order to cover half the position (100 shares) at 240.26. ________ UPDATE (April 30, 12:39 p.m. EDT): Since the DIA short was just 200 shares, I'll recommend covering half here, at round 243.19 (or lower). Please report any fills.  Set a stop-loss at 244.37 for the remaining 100 shares.  The

It would have suited my dour economic outlook perfectly if AMZN had laid an egg when earnings were announced after Thursday's close. The stock had already fallen more than 150 points in the days preceding the news, and there seemed to be little chance that it would reverse and surpass two peaks recorded in March. I'd said that such a move above would revive the flagging bull market, but my heart wasn't in it.  Better that the stock should continue to fall, reinforcing my gut feeling that the bull market begun in 2009 is over. Kaput. Finito. Instead, when the earnings hit the tape, AMZN erupted like Vesuvius, rocketing 249 points, or 16%, from the previous day's low in mere hours. What are we to make of this?  I've heavily promoted the idea that Amazon is the best proxy we have for the so-called smart money -- a window into the thieving, rapaciously greedy minds of Wall Street's best and brightest. I have also long regarded the stock as the perfect bellwether for the U.S. economy -- even moreso than GM during its heyday more than a generation ago. So where to next?  My gut feeling is that AMZN's rally into record territory is Mr Market's way of setting the hook so that neither bulls nor bears will escape when the bear market, which may already have begun, comes a-roaring. It is practically unimaginable that the broad averages could keep pace with AMZN and some of the other lunatic stocks for long.  Something's got to give, and my guess is that the stock market will drag the wack-o stocks down rather than be pulled higher by them. In any event, you should use the 1699.04 target shown as a maximum price objective for the near term.  There is no way

Several days ago, I wrote here that AMZN's reaction to earnings released after Thursday's close would determine whether the bull market, now in its 111th month, would live or die. The key test was whether the stock could get past two important peaks on the daily chart. It did so with ease when the news came out, exceeding not only those peaks, the higher of which lay at 1576, but the old record high at 1617. My latest analysis says that AMZN, which has traded as high as 1641 this afternoon, could go on to hit 1699.04 (or alternatively 1704.49). If so, we should be prepared for the possibility that this will be a bull trap, the deceptive last gasp of a bull market that long ago exceeded the bounds of economic reality.  The market in any event is incapable of keeping up with a stock driven by madness. Moreover, AMZN itself has been trading at around 250 times earnings -- a tad rich for DaBoyz to be fattening it up even more with manic short-squeeze rallies like today's.

AMZN is wafting into the ozone following the release of Q1 earnings moments ago. Its institutional sponsors had methodically exhausted sellers two days earlier, letting the stock fall by a hundred points in just a few days.  That set up the spectacular short squeeze underway now. From a low of 1405 on Wednesday, the stock has climbed 226 points, or 16%, in mere hours.  The rally exceeded the two prior peaks that I'd said here earlier would determine whether or not the aging bull market lives or dies. AMZN not only surpassed those peaks, it has also pushed past the old record high at 1619 recorded on March 13.  I expect the mania to top at exactly 1699.04, the target shown in the chart.  The bull market in stocks will continue until this occurs, but I will put out a screaming-yellow flag at that time, since this could be the last gasp of a bull market now in its 111th month and well overdrawn -- a bull trap for the ages.

A slew of economic reports are due out on Thursday -- a string of small firecrackers that is unlikely to have much effect on the markets.  First up will be durable goods orders, followed by jobless claims, retail inventories and money supply. At one time or another, Wall Street has obsessed over each; these days, none seems capable of producing even a hiccup in the broad averages.  Overshadowing them all will be the release after the close of Q1 earnings for Amazon.  The mere anticipation of this is driving the stock higher in after-hours trading. What a racket!  It would seem that the same guys who pounded the stock all week are having second thoughts. Did the 153-point plunge they caused overdo it? Probably not, but that hasn't mitigated the flurry of short-covering responsible for tonight's so-far 27-point climb.