May 2009

(Although our long-term outlook for precious metals remains bullish, we doubt that gold is ready to leap beyond the $1000 barrier the next time it touches it -- especially if this occurs within the next few weeks.  However, with today’s commentary by our friend Chuck Cohen, we skip ahead to the not-so-distant future, when junior mining shares are likely to make dot-com mania seem relatively subdued in comparison. Below is Chuck's rousing forecast for gold and gold stocks. RA) Advice from Shaq, Canseco Can you remember back in what seems now like ancient history--1998-2000, when making money in stocks seemed absurdly easy. Stocks only went up, some of them to ridiculous levels. Testimonies of instant millionaires were everywhere. CNBC was on in every barbershop. Even Shaq and Jose Canseco were dishing out advice.  But then it was over, with almost everyone being taken to the cleaners. Even though we associate this period with pain and loss, we tend to forget that this fantastic move went on for almost eight years. There were actually some who foresaw the move, and for those who got aboard in the early 1990s, fortunes were made.  What if you had a shot at buying an equivalent opportunity, perhaps even far greater than that  of the dot-com era? A Big Move Is Developing Thrust At this moment, a once-in-history rise is revving up. It is coming in gold, specifically in the gold mining shares. The fundamentals are in place for the rise--unlimited creation of paper currencies out of every central bank in the world, the exploding claims upon the U.S. dollar, declining mining gold production, a dearth of large discoveries in recent years, a virtual cessation of central bank selling and a world-wide manipulation of the metal, particularly over the past eight years, that has produced an

Gold was trading moderately higher this morning after having pushed past a key peak at 935.80. Despite this, there were subtle hints that the time is not right for an historical push above $1000. I took pains to explain why, using Hidden Pivot analysis. We also employed "camouflaged" impulse legs to create a bottom-fishing opportunity in Goldman that did not pan out. Even so, we could have come away with a small gain despite the inopportune timing. That is the beauty of "camouflage," and the reason why I continue to emphasize it in the seminar and weekly tutorial sessions: You can trade all day long, picking bad entry points, and still come away with a profit. To end the session on a tradable note, we looked at very short-term trends in the Industrial Average, July Coffee, and the E-Mini S&P.

Tuesday night's action was tired but bullish, since minor correction targets were not getting hit. There's one such target in the E-Mini S&Ps that could help night owls chase boredom, but we'll have wait for the opening bell to find out whether Monday's short squeeze is about to get second wind.

A Motley Fool e-mail promotion that I received yesterday piqued my interest in this former "cloud" computing hottie, which they rate as the best investment opportunity since Microsoft's first stock-split. Coincidentally, AKAM's recent high at 23.58 created a "camouflaged" impulse leg that looks

We'll breathe easier when the futures finally push above 935.80, but the significance of the move won't be as bullish as before, since the rally has been interrupted by a so far three-day correction from the recent high at 934.80. I hesitate to read too much into it, but

The futures were struggling to go lower shortly after 11 p.m. Tuesday -- much as they did Sunday night, telegraphing Monday's rally. The nearest Hidden Pivot support is _____ , a midpoint whose 'd' sibling lies at 893.75, but both numbers were getting shunned -- a development that hinted of

As California goes, so goes the nation?  Let's hope not, since voters looked all but certain on Tuesday to force the deepest spending cuts since statehood was achieved in 1850. We have no qualms endorsing spending cuts over tax increases, but in this case the cuts will be so severe that it's possible only basic services will survive. A certain casualty will be the state's once-vaunted higher education system, which looks set to take a $2.3 billion hit on top $3 billion in reductions already baked in the cake. At the grade-school level, 27,000 teachers have already been laid off, but another 25,000 would face joblessness if tax-and-spend measures on the ballot are voted down. That would represent 15% of the state's public-school teachers and a possible boost in class size from 35 to 50 students from 20 to 35.  The almost certain failure of Tuesday's ballot initiatives will also push the state's borrowing needs into the stratosphere, placing a commensurate burden on taxpayers for years to come. California legislators had been planning to borrow about $13 billion in the coming fiscal year, but that figure will likely have risen to about $20 billion by Wednesday morning.  Under the circumstances, what incentive would anyone have to live in California, assuming one is not trapped in a home worth less than its mortgage?  Ordinarily, we might expect a huge exodus to Nevada, where property values have crashed to levels that down-and-out Californians could afford. Trouble is, the casino jobs that might otherwise lure Californians to Las Vegas and Reno have  largely vanished, and the gambling industry remains in its worst funk since Bugsy Siegel took Horace Greeley's advice to Go West, young man. Almost as scary as California's fiscal future is that of New York. Suffice it to say, the state's financial

The E-Mini S&Ps are barely higher in night trading, suggesting that DaBoyz have things very tightly under control.  Night owls should buy any dip that comes along, preferably off a Hidden Pivot pattern, but the time might be more enjoyably spent betting on whether DaBoyz will be able to summon the chutzpah required to pull the futures briefly into negative territory during the long night.

Okay, let's see FAZ try to hurt us, now that we've acquired four October 10 calls (FAYJB) for 1.20. These pups will require little tending in the weeks ahead, but I may call on you at some point to acquire some call options in another vehicle, the better to effect a strangle-type hedge.  Thereafter, with a few bucks down on the pass line, we'll be better able to summon the proper enthusiasm when rallies happen, as they always will.   This was a strategy I employed on the options floor in the late 1980s, when I was absolutely certain the bank stocks were about to collapse.  They didn't -- far from it, actually -- and I lost a small fortune on the thousands of put options I held. But I made it all back and much more by being very long drug stocks, including Schering Plough in its heyday.  Remember: We want to come out ahead no matter what happens, and we want to have fun while we're doing it.