The number 901 looks like nothing special in the chart below, but we’ve kept it prominently in mind as the trigger point for a potentially explosive move to at least 972. Both numbers are what we call Hidden Pivots, and we have come to regard a breach of these resistance points as a very reliable sign of more strength to come. In this case, to avoid a false signal, we’ll stipulate that February Gold close above 901.00 for two consecutive days before we infer the big surge is under way. Of course, if and when the futures get to 972.20 (the exact target), they undoubtedly will feel the magnetic pull of $1,000, which was last tested in mid-July. It seems obvious in retrospect that there were just too many cocky bulls at the time, since, the day after the futures poked above $1,000 for a couple of hours, they began a devastating two-month plunge the took them all the way down to $688. There was one decent rally along the way as autumn began, but the 26 percent gain achieved during those four weeks evaporated in mere days. This time, however, the suspicion grows that the opposite could happen -- i.e., would-be buyers who hesitate on the approach to $1,000 will find themselves choking on dust when bullion starts the New Year with spectacular and largely anticipated lurch. The tipoff is that precious metal shares have been outperforming bullion for the first time in a long while. Something has changed, for sure, and we think it portends a rollicking 2009 for gold bugs. (If you’d like to have Rick’s commentary delivered free to your e-mail box each day, click here.) *** Happy New Year! This will be the last regular issue of Rick’s Picks in 2008. Service will resume over
Wednesday, December 31, 2008
February Crude (38.19)
– Posted in: Current Touts Free Rick's PicksNight owls who followed my advice yesterday could have caught a ride worth as much as $2,000 per contract, on initial risk of as little as $130. For those who made money on the trade, here's another night owl special that comes from the two-minute chart: Bid 38.92, stop 38.87. I typically recommend a stop-loss of at least 20-22 cents when trading against swings in this vehicle, but the pattern from which I've derived the target is so delicate that we should look for a very precise bounce here, assuming one occurs. _______ UPDATE: The midpoint support gave way easily, telegraphing the considerable weakness that followed. The obligatory short-squeeze came eventually off a low at 36.94, but it unfolded in too many stages to suggest there is any real buying power here. It would take a print at 57.25 to hint that anything worthy of our attention is happening. My gut feeling is that we will see oil trade below $20/barrel, and perhaps below $15.
NEM Newmont Mining (40.04)
– Posted in: Current Touts Free Rick's PicksNewmont seems unlikely to indulge our lazy bid below the market, so I'll suggest getting long today on an impulsive break above the two peaks labeled in the accompanying chart. You should only attempt this one if you understand why the rally must have no b-c corrections in the space between the two peaks. If you use stock to get long, a 40.41 buy-stop limit is suggested on 200 shares. _______ UPDATE: We hold 200 shares for 40.41, off a buy-stop triggered when Newmont popped (so far today) to 40.59. This morning's reversal has beeen quite sharp, so expect some consolidation before the stock attempts to take on some resistance highs near 45 from late October.
DIA Diamonds Trust (89.28)
– Posted in: Current Touts Free Rick's PicksAssuming the Diamonds blow past the 86.92 midpoint pivot that arrested yesterday's spree, they will likely be bound for a minimum 88.30 thereafter. I'll leave it to chat-room Pivoteers to improvise a boarding strategy for the ride north, but if and when the rally reaches its projected terminus at 88.30, we'll want to attempt shorting there by buying a January 88 put (DAVMJ); or alternatively, naked-shorting a January 90 call (DAVAL). I will update with more-detailed guidance if the trade gets in range before the final hour, so keep your bulletin launcher open if you'd like to be alerted in real time. _______ UPDATE: A short from 88.30 would have worked nicely, since the Diamonds plunged 1.47 points (!) after making a top that day at 88.37. They have since recovered (and then some) on the first trading day of the New Year, but if you managed the risk properly, you would have come away with an easy profit.
