Rick Ackerman

With yesterday's selloff, bullish option plays for October are probably dead, although it remains to be seen whether Shutdown Blues will be with us for long enough to kill November calls as well. Although I expect the broad averages to go continue lower in the weeks ahead as the political stalemate persists, I'm wary of buying puts at the inflated premiums they currently command. Shorting into minor rallies will be an alternative to consider, but our timing would have to be very good to turn such plays into riskless vertical spreads.

Gold's timid, laborious climb has used the 1321.20 midpoint pivot again and again as a touchstone, implying that its 1340.3o 'D' sibling should be used as a minimum upside objective for the near term. While low-risk buying opportunities have not exactly been abundant, notice in the chart the tradable 'camo' set-up at the right-hand edge.  If you're reading this and it's around 12:30 a.m. EDT, you may be able to leverage the 1326.50 'buy' signal on a chart of lesser degree.  I've sketched the coordinates for your guidance, including an x entry point already triggered on the '30-minute' but potentially still available in lesser time frames.

I'll use a 0.65 fill [revised to 0.47 -- see update below] reported in the chat room yesterday as our cost basis for eight November 1000-1010 call spreads recommended for purchase a while back. Weak as the stock was, the spread could have been bought for as little as 0.30 intraday.  Because Google is not likely to make much headway with The Shutdown weighing on the stock market, I'll now recommend offering the November 1010-1020 call spread eight times for 0.65 or better. If we succeed, we will have legged into butterfly spreads that could produce a profit of as much as $1000 apiece without risk. It will require a rally of perhaps 16-18 points to get us filled, however, and if it fails to materialize, I may advise a stop-loss for the spread we already hold.  Price action near the 863.63 midpoint pivot of the pattern shown implies that Google could fall to 851.58 if the support fails.  The 858.41 target of a larger pattern could help break the fall, or perhaps even engender the rally we'd be looking to short via the Nov 1010-1020 spread.  _______ UPDATE (8:24 p.m. EDT):  The low of yesterday's 14-point swoon occurred at 851.63, a nickel from the 851.58 target flagged above. However, because there were no reports in the chat room of anyone getting aboard, I will not be tracking a trade.  Meanwhile, I am still waiting to hear from traders who got filled on the call spread, since the 0.65 price mentioned above was achieved by a trader who forgot he'd left the order in.  If I don't hear from anyone else, I'll assume nothing done and drop guidance. _______ UPDATE (October 9, 8:09 p.m. EDT):  Fills down to 0.38 have been reported, but I'll use a mid-range price at 0.47

The futures took a 13-point bounce yesterday precisely from the 1666.50 correction target I'd disseminated the night before, providing an easy opportunity for profit. Traders who caught the move and who are game to try again should plan to do their buying at the 1657.25 Hidden Pivot shown.  A two-tick stop-loss is all you should allow, with partial profit-taking on multilot positions if 1660.00 is reached on the bounce. As always, an easy and decisive breach of so clear a target should be regarded as a warning that still lower prices impend.

I have my doubts that the bull market begun in 2009 has breathed its last, but in any case, stocks are likely to head lower in the weeks ahead as the political stench from debt-ceiling negotiations worsens. It's one thing for Wall Street to pretend that our President's breathtaking incompetence and rabid zeal for socialism are nothing to worry about. Trouble is, he's pushing the nation toward economic Depression and political breakdown far more quickly than most of us might have imagined even a year ago.

The Dow blew past a major midpoint resistance at 15312 in mid-September with such force that we might have thought its 'D' sibling at 15684 was all but certain to be reached. Instead, the rally died 155 points shy of the target, then turned south with such a vengeance that the point 'A' low is now in danger of being breached. This price action is most unusual, given the ease with which bulls conquered the midpoint resistance in the first place.  Now, my hunch is that 'A' will in fact be breached but that the market will recover to hit a new all-time high. I base this scenario on the likelihood that the political wrangling on Capitol Hill will eventually quiet down, but not before things get worse as the debt-ceiling deadline approaches.

If most Americans hate Obamacare already, wait till they see their healthcare bills in January. Big insurers, who strongly supported the Affordable Care Act Frankenstein they helped create, have notified customers that the biggest rate hikes ever are coming at the beginning of 2014. A friend of ours was informed just last week that the cost of his family plan will increase by 92 percent.  He got off easy compared to your editor. My wife and kids are on a high-deductible plan offered by Humana whose cost will nearly triple at the beginning of the New Year if we don’t take steps to keep our existing plan. Turns out the Obamacare version they would substitute covers maternity care and a variety of other services that we neither need nor want. The changes will be hitting tens of millions of Americans in just three months, threatening to implode a tortured economic recovery that was already the weakest on record. Premium increases will come on top of staggering price hikes effected since Chief Justice Roberts personally sanctioned an Affordable Care Act that the Wall Street Journal once editorialized as “the worst bill ever.” It should be obvious to all by now why Obama is unwilling to modify it.  Clearly, it was never meant to improve the quality of health care in this country, but rather to redistribute income without imposing an explicit new tax on the middle class.  “The president's health-insurance plan forces those who hire, work and produce to pay full price for health care, while creating generous discounts for practically everyone else,” noted an op-ed piece by Casey Mulligan last week in The Wall Street Journal. Next Wave of Obama Redistribution “This second redistributionist wave of the Obama era will follow a first wave of tax hikes, additional unemployment benefits,

DaBoyz have put the E-Mini S&Ps in a holding pattern after gapping them down 12 points Sunday night. As you can see in the chart, the so-far lows lie just above a Hidden Pivot support at 1672.25.  The goal of this carnival-midway maneuver is to exhaust sellers, allowing those who ply the night markets to pick up stray contracts that can easily be unloaded at higher prices. However, if more contracts come in for sale overnight, making it difficult to waft this vehicle higher, look for it to ratchet down to at least 1666.50. Traders can try can try bottom-fishing there, but I wouldn't suggest leaning too heavily on the support, since the fetid political air on Capitol Hill has the potential to change the mood on Wall Street from surly to ugly in a trice. ________ UPDATE (10:47 a.m. EDT):  The futures trampolined 12.50 points off 1666.50 exactly. If you caught a ride using multiple contracts, you should have exited 50%=75% of the position by now.  For tracking guidance I'll asume a single contract remains from four, and a profit-adjusted cost basis of 1652.00.  An impulse leg-based stop on the 3-minute chart right now -- which is what I am suggesting you use -- would take us out at 1670.75.

Every now and then, a seemingly perfect ‘camouflage’ set-up will produce a losing trade. When this happens, as occurred in December Gold during this session, don’t despair or swear off Hidden Pivots. Instead, you should take the failure of the trade to pan out as a sign that your trading vehicle is about to head in the opposite direction. The best way to capitalize on this is to jump on the very first camouflage ‘trigger’ headed the other way. December Gold misbehaved in exactly this way. _______________________________________________________________ By Brian Catalucci on September 13, 2013 Using puts and calls to play directional hunches is akin to using numbers cribbed from Chinese fortune cookies to play the lottery. In either case, your chances of coming out ahead are slim to none. For a look at how badly the deck is stacked against you, check out the anatomy of an option trade in which our primary goal was to keep risk and reward in a 1:3 relationship.