We’re trying to spread off four September 10 calls we hold with a cost basis of 0.69, but so far no buyers have taken the bait. Perhaps if we raise the price it will change our luck: Offer four June 10 calls short for 0.70, good till canceled. We are not simply getting greedier, since SLW now looks capable of reaching a Hidden Pivot at 10.04 over the near term.
From the monthly archives:
May 2009
The futures have bounced from a low that fell 1.25 points shy of a 901.50 midpoint support, hinting that bulls will be in charge in the early going Wednesday. The support will remain viable as a minimum downside target provided 912.25 is not exceeded first. However, if the support is breached, that would signal more weakness to at least 891.0. The first hint of a rally strong enough to carry into week’s end would be signaled at 921.75.
Let me add some technical heft to the observation in today’s commentary that the Gold Bugs Index looks ready to break out. Specifically, HUI appears bound for a Hidden Pivot target at 361.53 that lies just above a key September peak. The implication is that we are about to see the creation of the third bullish impulse leg of weekly-chart magnitude in more than four years. Moreover, if the target is breached on a closing basis, another at 391.16 (!) would come into play. The provenance of both numbers is shown in the accompanying chart.
Member-only content. Please Login or get a free trial of Rick's Picks to view.
From just above a predicted low at 119^10, the futures have now rallied to within a whisker of our first important rally target, 121^28. Someone in the chat room reported booking a $400 profit on a long position taken near the lows, but it would have required daring, not to mention cunning, to have extracted much more than that. The 121^28 target is no longer significant from a trading standpont, but we’ll be focused on it nonetheless, since an easy breach would shorten the odds of another leg up.
Will homes maintain their value best in expensive neighborhoods, where homeowners presumably are not under the gun to sell or even to make mortgage payments? I’ve argued the opposite – that in percentage terms, high-end homes are likely to fall the hardest as the nation’s real estate crash runs its course over the next 4-5 years. While it is true that the wealthy, most of whom own their homes outright, do not face jeopardy from mortgage lenders, they could find themselves on the ropes for other reasons, including the failure of a business or devastating investment losses. That could easily force the sale — for starters — of a vacation home, which would put price pressure on all of the other homes in the neighborhood. Keep in mind that prices are set at the margin and that $2 million homes in a high-end development all become $1.4 million homes overnight if just one of the homeowners is forced to sell in a hurry. » Read the full article
The rally is coming off a low that exceeded an important midpoint support at 83.45, so our expectations are low. That said, I should note that my friend Bob Hoye is now bullish on the dollar and thinks that its strength in the weeks and months ahead will be a significant factor in the next, hellish phase of economic and financial decline. We’ll take this up in greater detail later, but suffice it to say, I am looking for a potentially important low at 80.05, with possible strength in the dollar that would unsettle many leveraged bets currently propping the financial system.
The September 84-May 84 spread that we hold four times is an easy exit right now for around 4.20, which would yield a theoretical gain of $160. That would hardly be worth the effort, so I’ll suggest waiting until you can come away with at least 4.40, for a profit of about $240. Closing out the position for that sum should be quite do-able if the Diamonds get within 15-20 cents of the 84 strike today.
Natural Gas futures have been on quite a tear lately, but the rally will face its first challenge in the form of a Hidden Pivot resistance at 4.485 (basis July). The pivot lies not far above current levels and should contain the move for at least an hour or two. If not and the futures blow right past it, take it is a sign that more strength is coming.
NYC Gold Expo Blissfully Subdued
by Rick Ackerman on May 13, 2009 12:01 am GMT · 12 comments
The scene at the Hard Assets Investment Conference in New York City looks pretty subdued this year — an encouraging sign, since it will be time to exit precious metals when this annual event reaches the frothy stage. For now, though, frothy it is not. I’m told that there are only half as many exhibitors this year as last, continuing a pattern of decline that began a couple of years ago (when, need I remind you, gold quotes were nearly 40 percent lower). Mining and energy companies with booths at the show were oh-so-eager to » Read the full article