-- Posted Tuesday, 11 November 2008 | Digg This Article
| Source: GoldSeek.com
Rick’s Picks
Tuesday, November 11, 2008
“Phenomenally accurate forecasts”
If you view each and every rally as a short-squeeze, the stock-market begins to make sense. We should assume there are no bulls out there, only bears trying to avoid getting impaled by the next thousand-point thrust-from-nowhere. No such threat was evident Sunday night and in the wee hours Monday morning. That’s typically when some of the canniest predators in the game stress-test traders who went home Friday either too long or too short. This past weekend, however, unless you bet on the Eagles, there was little news to cause remorse – certainly not the kind of news that the Sunday night sleazeballs use to stampede short sellers. And so, by the time stocks opened Monday morning, the 200-point rally had detumesced by about a third.
For our part, we had recommended shorting some November QQQ calls against Decembers already owned. However, call premiums in the Cubes were so heavy at the bell that we decided to bail out of the initial position rather than dig ourselves in deeper. As we noted at the time via an early-morning bulletin, “the option markets were not ‘buying’ the feeble, phony short-squeeze that [had begun] the day. With the Dow up nearly 200 points, out-of-the-money calls barely budged.” Anyone who has traded options will know that puts and calls are usually pretty smart when it comes to reading the market’s mood. Thus, if call options that you are trying to sell fail to get excited when the week begins with a 200-point rally, as occurred on Monday, you should take it as a sign that whatever excitement seems to exist in the broad averages has been ginned up by a bunch of dirtballs keen on unloading their unwanted inventory on widows and pensioners.
The Price of Tuition
For the record, our loss on exiting the QQQ calls, which we’d acquired last week for $75 apiece, was $31. It was a small price to pay to keep us out of harm’s way yesterday. We nibbled at the E-Mini S&P on the way down, but the way it was bulldozing minor supports left us less than enthused about taking a bold stand. The day ended with a mild short-squeeze that recouped about 25% of earlier losses, but the rally looked as phony as the one that had begun the day. Stocks look like hell, actually, and even though they are not “supposed” to fall apart ahead of something so ostensibly promising as this weekend’s economic summit in Washington, we wouldn’t be surprised if they try to get the jump on whatever fraudulent rescue measures are reported out of the meeting.
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December Hidden Pivot Seminar
Because the November 5-6 Hidden Pivot Seminar was full, we will be offering the class again on December 3-4 for $1150. The fee includes entry to weekly tutorial sessions for an entire year. For more information, click here.
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Information and commentary contained herein comes from sources believed to be reliable, but this cannot be guaranteed. Past performance should not be construed as an indicator of future results, so let the buyer beware. Rick's Picks does not provide investment advice to individuals, nor act as an investment advisor, nor individually advocate the purchase or sale of any security or investment. From time to time, its editor may hold positions in issues referred to in this service, and he may alter or augment them at any time. Investments recommended herein should be made only after consulting with your investment advisor, and only after reviewing the prospectus or financial statements of the company. Rick's Picks reserves the right to use e-mail endorsements and/or profit claims from its subscribers for marketing purposes. All names will be kept anonymous and only subscribers’ initials will be used unless express written permission has been granted to the contrary. All Contents © 2008, Rick Ackerman. All Rights Reserved. www.rickackerman.com
-- Posted Tuesday, 11 November 2008 | Digg This Article | Source: GoldSeek.com
