I had expected 2009 to begin with gold sharply on the rise and stocks in retreat, but so far both seem to be taking direction from a headless chicken. Stocks lurched higher last Friday on a short squeeze but have since gone erratically flat. As for commodity gold, it has been pretty wild these last few days but is still trading somewhat below its New Year’s peak, even after yesterday’s trampoline recovery. That may be about to change, however, since there were bullish signs in the price action of precious-metals bellwether Newmont Mining. Specifically, the broad-tossers who make their living rigging the stock were able to turn an 86-cent profit in the early minutes of the session by deftly working the “buy” side. This they accomplished by fading sellers on moderate weakness, then running up the stock by about 2%, All of this occurred, probably, before many of those sellers realized they’d been had -- filled at what turned out to be some of the worst prices of the day. Incidentally, if the high achieved in the opening minutes had held for the remainder of the session, we’d have been bearish coming in Wednesday morning. However, although Newmont subsequently dipped slightly beneath the opening lows, relentless buying drove the stock steadily higher for the next several hours. As a result, fully half of the day’s action took place above the opening peak. This seems quite bullish to us, and it would be affirmed by a gap-up opening today. That’s what we might expect if there is too much demand to allow DaBoyz to pick off sellers on the opening, as they did yesterday. Which is to imply, if the pros can’t steal the stock, they will often employ the opposite strategy, ripping off buyers at as high a price as
Wednesday, January 7, 2009
NEM Newmont Mining (39.27)
– Posted in: Current Touts Free Rick's PicksWe've legged into a covered write: long 200 shares from 40.41, short two January 40 calls for 1.20. Do nothing further for now. We could have done better on the calls, as you will already have surmised. It is usually risky for me to recommend a price at which options should be bought or sold on the opening, since that is when professional predators are at their most brazen. However, in some situations I would rather try to second-guess the opening than suggest that you return to the website during trading hours for further instructions. In this case, second-guessing caught a whipsaw. _______ UPDATE: Newmont's mini-crash this morning portends further slippage to 36.36, a Hidden Pivot support. If and when the stock reaches 36.41, cover the short calls. _______ FURTHER UPDATE: Newmont appears to have bottomed for the time being at 36.32, four cents beneath the target. This would have allowed one to cover the short Jan 40 calls for around 0.48. We'll apply the 0.72 profit to the stock, giving us an adjusted cost basis per round lot of 39.69. No further action is suggested right now.
IBM (88.66)
– Posted in: Current Touts Free Rick's PicksBecause IBM could waft as high as 94.44 in the days ahead, let's try to leverage this possibility as cheaply and risklessly as possible, bidding 1.80 for the Feb 95-Jan 95 call spread (IBMBS/IBMAS), good-till-canceled. If an intraday opportunity to leg into the spread at our price or better should materialize, I'll put out guidance in real time. You can be alerted via a screen pop-up simply by clicking on "Launch Bulletins" in the column at left. FYI, legging into the spread would imply doing the "buy" side (i.e., buying the Feb 95 call) when the stock is at a minor rally target. _______ UPDATE: The spread opened for 1.40 but was easily do-able thereafter for 1.50, so we'll use the higher price to establish a cost basis for our calendar spread. I am not sure why TradeStation reflected a 1.80 offer for the spread at Tuesday's close, but it may be because, after the close when prices are no longer updating, the application's OptionStation Analysis can be buggier than a whorehouse mattress.
February Gold (838.70)
– Posted in: Current Touts Free Rick's PicksIf a low at 856.70 recorded Tuesday evening endures, the next bullish thrust should carry to at least 870.60. If the futures get past that resistance, a midpoint Hidden Pivot, then they could keep going to as high as 884.40. In the meantime, there were no enticing hidden supports at which I might suggest that you attempt bottom-fishing overnight. _______ UPDATE: The bullish look of the daily chart remains intact following today's sharp selloff, but the hourly chart is another matter and points toward a minimum 824.70. Bottom-fishing there is suggested with a tight stop-loss.
Dollar Index (82.00)
– Posted in: Current Touts Free Rick's PicksThe Dollar Index has exceeded the 83.56 target show in the accompanying chart by a decisive 46 cents. This suggests there may be enought power to push DXY into the uppers 80s, where a test of 2008's recovery highs awaits. A two-day close above 83.98 would likely clinch it, since that is the midpoint resistance of an even larger pattern begun from 75.89 last September. _______ UPDATE: This morning's nasty plunge has brought into sharp relief a bearish pattern on the daily chart that yields a 79.01 midpoint support. We'll use it as a minimum downside target for now. It looks like the way down could be quite choppy.
