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From the monthly archives:
May 2009
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We hold two June 43 calls with a cost basis of 1.75. Since there are no longer any front-month expirations that we can short against our position, let’s try to spread off the time-decay risk by offering two June 45 calls for 1.20, good-till-canceled. Upside potential over the near term is to as high as 43.92 My apologies for letting this position slip through the cracks, since we could have further reduced our risk by shorting some May 43 calls. The addition over the weekend of an Open Positions/Actionable Advice listing for Rick’s Picks should help you and me both keep track of recommendations. _______ UPDATE (3:19 p.m.): The short sale was completed today at the suggested price, 1.20 – a nickel off the intraday high. We now own the June 43-45 call spread for a 55-cent debit. Since it has the potential to go to a $2.00 credit, our risk:reward ratio is now properly adjusted and quite attractive.
So far so, good, since the forecast seems not only to have caught the last gasp of the downtrend, but a potentially important low. The low overshot the 80.04 forecast by 0.23, but that’s not very significant when you consider the magnitude of the dollar’s swings this year as well as the immediate potential for a major bullish turn. We’ll be better able to judge the strength of this uptrend if and when it encounters a Hidden Pivot resistance at 80.48 That’s my minimum upside target for the moment.
We hold four September 10 calls with a cost basis of 0.69. Wheaton is in a minor downtrend that could hit 8.96, but the larger trends all point higher. Continue to offer four June 10 calls short against our position for 0.70. _______ UPDATE (3:44 p.m.): This one’s getting very close to a fill, so be sure to have your offer in when stocks open Friday (May 29) morning. If the order doesn’t fill in the first three minutes, lower the offer to 0.60.
If Gold is setting up for a big thrust, it shouldn’t have to correct any further before taking on the 970.00 peak recorded on March 20. That means no prints below 952.80 today, since that would insert a b-c correction into the impulse leg begun from 915.20 on May 18. The impulse leg as it exists so far is fairly strong and should be able to push the June contract to $1000, but it is what happens after that that is our main concern.
Selling Sunday night was conspicuously gutless, suggesting DaBoyz were accumulating contracts in anticipation of taking them higher on Tuesday. They’ve been playing this game for the last three sessions without much success, but the long weekend may have provided that extra dollop of nervousness they will need to get a short-squeeze going. Night owls can try bottom-fishing at 883.00, a minor midpoint support, but if it gives way, expect more weakness down to at least 880.50 This is little stuff, but that is where our focus should be if we want to try to get aboard near a bottom with relatively little risk. Alternatively, if the futures move higher without first dipping below 882.50, look for a rally to at least 893.25 a Hidden Pivot.
America paid tribute to its war veterans over the weekend with ceremonies, concerts and solemn gatherings across the nation. Washington D.C. was the scene of a particularly stirring tribute, the twentieth annual PBS National Memorial Day Concert held outside the Capitol rotunda. Many in the audience were moved to tears by the incredible story of one veteran, Jose Pequeño, a New Hampshire National Guardsman and former Marine » Read the full article
Gloomy Picture Perhaps Worse Than It Seems
Gloomy forecasts have generally held sway at the Committee for Monetary Research and Education’s annual spring dinner, but this is the only time we can recall when there were no optimists on the dais bold enough to challenge a consensus now gloomier, probably, than at any time since the 1930s. Jim Grant’s off-the-cuff talk was about as sunny as the evening’s presentations got, and even he was unwilling to allow much more than a ray of hope that everything would somehow turn out all right. Bob Hoye, on the other hand, was unequivocally bearish: “The chances of anyone fixing this mess,” he told the crowd, “are literally zero.” » Read the full article
Street Celebrates More Bad News
by Rick Ackerman on May 27, 2009 12:26 am GMT · 8 comments
The stock market further distanced itself from reality yesterday as the Dow Average tacked on another 200 points to its nearly 2,000-point gain since early March. It’s hard to say what caused this latest outburst of irrational exuberance. It may have been the news that North Korea had thumbed its nose at the world by testing A-bombs underground. That story dominated the headlines over the holiday weekend and was said to have been the cause of global “concerns.” Lately, though, such concerns have been the bread and butter of Wall Street pros who go bargain-hunting every time stocks sell off. For them, it’s not a case of » Read the full article