My wife does most of the grocery shopping, but on my last few visits to Whole Foods and Safeway, I was dismayed to find that some of the things she had sent me to buy were unavailable. The shelves where I might have expected to find these items, including fruit juices, canned soup and crock mustard, were bare. I assumed that there had been a run on them, perhaps because they had been heavily discounted. However, now comes word on the evening news that some major purveyors, including Kraft and Sarah Lee, are cutting back on selection by focusing on the brands that sell best. Signs of scarcity are not confined to branded products, either, since both stores have noticeably thinned their usually burgeoning produce bins so that they are less cornucopian. The grocer told my wife that this greatly reduces waste, and that every penny counts because profit margins in the produce aisle are so thin. As the economy grinds lower, we see evidence nearly everywhere that the retail landscape is undergoing a sea-change. It is difficult for us to imagine which stores will survive, let alone flourish, since even Wal-Mart is struggling to keep up its numbers. Department stores must be at the top of the endangered stores list, since it seems increasingly obvious that there will not be enough business over the next year or two to keep all of the higher-end operators afloat. Neiman, Saks, Nordstrom’s, Macy’s: Which one will be the first to bite the dust? It took the local mall five years to find a tenant to replace the defunct Lord & Taylor, but if a second department store were to close, it would probably turn a corner of the mall gangrenous. Diners’ Last Fling? It disconcerts whenever a luxury-goods store shuts down and an
Wednesday, February 18, 2009
Dollar Index (87.68)
– Posted in: Current Touts Free Rick's PicksContemplating a gold chart here recently, I noted that unpaused rallies seldom take out three or four prior peaks, only to fizzle out without a C-D follow-through leg. As much could be said of the Dollar Index, which yesterday pushed past four prior peaks on the daily chart, one of them a daunting "external". The implied target is 90.26, representing a rally of 3% from these levels.
April Gold (972.60)
– Posted in: Current Touts Free Rick's PicksTen hours of trying failed to knock gold down more than a couple of bucks after Tuesday's sharp surge. As of midnight EST, the futures were working on a minor rally target at 981.60, but it held little value for trading purposes. Another Hidden Pivot at 995.10 promised one last show of resistance before $1,000, but it too is not a place where bears should contemplate taking an aggressive stand. The futures need only achieve 991.50 to refresh the bullish impulse on the daily chart and set up JP Morgan & Friends for the haymaker.
Best Buy (28.10)
– Posted in: Current Touts Free Rick's PicksWe're long the Feb 30-Feb 27.5 put spread twice (or a multiple thereof) for a net credit of 1.30 per. This guarantees us a profit of at least $260 come Friday, when the puts expire, but we could make as much as $760 if BBY settles 27.50 or lower. One way to lock in a profit, and to eliminate any stock position that might arise from the exercise/assignnment of our options, is to buy the Feb 27.5-Feb 30 call spread twice. Let's try to leg it on, bidding first for the Feb 27.5 calls @ 0.30, good through Thursday.
GDX Gold Miners ETF (37.10)
– Posted in: Current Touts Free Rick's PicksWe stand to make as much as $1286 on our two covered writes if GDX settles $35 or higher on Friday. To lock in the profit, let's spend $20 (or $10 for each covered write held), bidding 0.10 for two February 35 puts (GBJNI). This will turn our position into a riskless "conversion," and if you work the numbers you'll see why it would lock in our considerable paper gains. Make the bid good through Thursday, contingent on the stock trading 38 or lower. Note: The covered write was legged on, effectively, at 31.12 for 200 shares of stock and 2.55 for each of the two short calls.
