Free

Let me wish you all the blessing of having many things to be thankful for. Have a warm and happy holiday, surrounded by family, friends and those you hold dear. See you next on Monday.

The New York Composite Index lies within a hair of a trendline that has acted as either support or resistance numerous times since 2017. In this case it is potential resistance and a compelling one at that, just 12 (or so) points from the high achieved Tuesday afternoon. Peter Eliades was the first to call our attention to the trendline, and it has filled us with anticipation since. Drawing a trendline that works predictively is as much art as science, and if it attracts too much attention, that can tend to reduce its effectiveness. There’s no reason why NYA cannot blow past the trendline, but were that to occur we would have to infer that there’s a motherlode of unspent buying power yet to be tapped. There is additional resistance in the form of early 2018’s record high at 13,635. If it too gets shredded by a short-covering stampede, that would put a 15,414 target in play and 14,242 as a minimum objective. One more trading note: If NYA plummets from these levels to 11,896, as scary as that would seem, that’s where we would suggest loading up the truck.

The wilding spree continues! It has exceeded some key technical levels, although one I'd deemed crucially important months ago and which has kept us on the right side of the trend remains to be achieved.  It's a 283.97 target in AAPL, and it looked like it was being put on hold last week when stocks stumbled out of the gate.  However, Apple shares got second wind on Monday, to put it mildly, and the target now looks like it will be achieved without a significant detour.  Subscribers hold calendar spreads at the 280 strike that have allowed them to leverage a move to the target with little at risk. If you're interested in the details but don't subscribe, click the 'Free Trial' button above and to the right on this page.

The futures were  slipping below the water line Monday evening, threatening to negate the support of a 1454.40 midpoint Hidden Pivot support. It is tied to a 1429.50 target given here earlier, although it's possible the downtrend will go no further than p2=1441.90. The bad news is that that is my minimum downside objective for the near term. Clearly, gold cannot swim upstream, not even a little bit, as the stock market continues its by-now historical wilding spree.  Here's a step-by-step forecast for the next couple of weeks that I posted in the chat room. Let's see how I do: "First, a decisive breach of p=1454.40; then, instead of continuing down to D=1429.50, GCZ reverses sharply to trigger a not-unappetizing mechanical short at x=1466.80. But instead of doing what it is supposed to do -- i.e., delivering a quick profit by plunging to p=1454.40 -- it continues higher, breaking above C=1479.20 to turn everyone bullish. The rally will come within 1.20 of some minor ABCD target; then the uptrend, on an overnight spike as usual, sputters out and dies, reversing punitively." (Note: 1436.10 for the February contract is equivalent to the one at 1429.50.) _______ UPDATE (Dec 2, 9:16 p.m.):  Click here for a play-play scenario that I posted last week; and here for a chart that shows how it would play out for the February contract.  So far, price action has gone more or less according to plan. If you're interested only in the bottom line, Feb Gold could fall to 1436.10, but don't be surprised if the little sonofabitch head-fakes first.  It'd take a print at 1496.40 to rouse my enthusiasm once again.

We hold eight Dec 13 280 calls with a cost basis of 0.28. We bought them anticipating a rally to a 283.97 Hidden Pivot target that has been solidly in play since March, when the stock was trading $90 lower. The target has served not only to guide us in trading AAPL, but to keep us properly bullish as the broad averages seemingly defied both common sense and gravity.  When we bought the calls our goal was to cover their cost 100% by rolling the 280 calendar spread on three successive Fridays. With the stock strongly on the rise, I'll suggest an alternative strategy to simplify things: Offer four Dec 6 280 calls short for 0.55, good through Wednesday. If the order fills we'll own the Dec 13 280 calls effectively for nothing. It would also give us a backspread position that would make us longer as AAPL rises. ______ UPDATE (Nov 26, 7:55 p.m.): I just noticed that AAPL triggered an rABC short last week. We're a little late to the party, but I'd hate to let an opportunity go to waste. Accordingly, I'll recommend bidding 0.31, day order,  for two Dec 6 250 puts. This is a speculative bet and will not affect our call strategy. _______ UPDATE (Nov 30):  We hold two Dec 6 250 puts for 0.31 and eight Dec 13 280 calls for 0.28. For now, offer four of the calls to close for 0.48, good through Tuesday. Check for updates before and after Monday's opening in case AAPL moves significantly. _______ UPDATE (Dec 2, 9:34 p.m.): Our strangle position is inadvertent, but even so, I'd be surprised if this stock fails to put either end of it in play. For now, do nothing. _______ UPDATE (Dec 3, 8:52 a.m.): Offer the puts to close

A target at 280.88 allowed us to get short four cents off what could prove to be an important top. An initial position of eight Nov 22 280 puts has yielded a partial profit that effectively reduced the cost basis for the two puts that remained to a $200 CREDIT. Because the options expired on Friday, I suggested rolling the position forward by buying two Nov 29 280 calls while letting the two puts we were long turn into short stock. This effectively gave us two synthetic put options that will provide further gains if DIA continues to fall while limiting our losses if the Dow recovers next week. The $140 we paid for the calls is more than offset by the $400 in theoretical profits booked on the sale of six puts from the original position.

Wall Street firms often "talk their book" in order to front-run their own customers. You can bet that if a big-time investment house is out on the tape with a bullish forecast for a loser like, say, Uber, they mean to unload the stock, not buy it. An upbeat report from an influential analyst will typically cause shares to rise, at least for a short while, giving the firm an opportunity to dump its position into a flurry of buying by the usual lamb chops. There are other ways to rig the game that can be even more lucrative for the perps. One of them involves planting "news" in order to extract riskless profits from the option markets. In one example, 'conversions' and 'reversals' can be used to generate very substantial interest income with someone else's money. Employing reversals, a firm would short, say, 100,000 shares of AMZN for $1,750 apiece while simultaneously shorting a thousand puts at the 1750 strike and buying a thousand 1750 calls. No matter how much the stock moves, the relationship between the three sides of this position will remain fixed. The point of doing it in the first place is that the seller can park the $175 million in proceeds from the short sale in Treasury paper. How the Sting Works There is a temptation for unscrupulous firms to rig the price of these already-riskless trades even more heavily in their favor by deftly manipulating the news. For instance, a well-timed headline accompanied by a photo of a Tesla in flames could reliably be expected to push the price of TSLA stock and call options significantly lower for a short period. This would give the hedge fund an opportunity to leg into a truckload of reverse conversions at an unbeatable price by following these

Just for fun, I often try to guess why stocks supposedly have gone up or down on a given day before checking to see how the "experts" have explained it. Half of them appear to be card-carrying imbeciles; the other half, pathetic dolts whose job requires them to explain the stock market's wacky gyrations in pack journalism's agreed-on terms that all of us supposedly can understand. Let me suggest that you save your breath, guys, because you will never, ever get it right, unless by accident. For in demonstrable fact, stocks fluctuate for reasons that none of us will ever fully comprehend. Technical analysis accepts this and moves on, and good technical analysts calls the turns correctly without claiming to know why or how. Suffice it to say, mysterious cosmic forces cause stocks to fluctuate.  Seen from the perspective of my own forecasting system, stocks fell for the last two days and are threatening to keep falling simply because the broad averages had reached potentially important Hidden Pivot rally targets. They were billboarded here as early as six weeks ago, and so far they've caught tops in the S&P 500 and the Dow Industrials within hundredths of a percentage point. Hope Is Fading! So what are the aforesaid imbeciles and dolts saying about this decline?  You guessed it! It reflects "fading hopes" that the U.S. and China will successfully conclude a trade deal. Of course, even the imbeciles cannot believe such claptrap any longer, and both they and the dolts must realize by now that the talks are being stage-managed to drag on till the end of time. To fully appreciate how stupid trade-deal spin has become, we need only consider that the stock market is trading higher than it was before the tariff war began. Shares mostly rose while

I'm establishing tracking guidance for a short position initiated near Tuesday's 280.84 peak, since the 280.88 target I'd begun drum-rolling two weeks earlier is just too good to waste. Usually I require that at least two subscribers report having done a touted trade before I track it, but I am making an exception this time because it would seem that most of you have all but ceased using these targets, even to buy cheap puts or calls that effectively leverage the targets with entry risk held almost to nothing. Accordingly, I'll assume eight Nov 22 280 puts acquired for 0.77, where they opened (before trading down to 0.73). Half would have been covered for 1.54, leaving four with an effective cost basis of zero. We'll plan on holding them until Friday, when we can roll into the Dec 6 or 13 expiration. Incidentally and for your further guidance, the puts appear bound most immediately for 1.97, a 'D' Hidden Pivot target that is likely to be reached if p=1.53 is decisively exceeded. _______ UPDATE (Nov 20, 2:10 p.m. EST): I have closed out another 25% (i.e., two put contracts) of the position, since the puts have shot up above a 1.97 target mentioned in the Trading Room earlier today. We'll continue to hold two puts for, effectively, a CREDIT of $200 apiece. This guarantees a profit of at least $400, no matter what happens, for each eight contracts purchased initially. We'll still plan on rolling to a further-out expiration date on Friday, swinging for the fences with the contracts that remain.