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With $1000 Looming, Gold Fever Is Back

by Rick Ackerman on September 4, 2009 2:15 am GMT · 5 comments

We’re no fans of head-and-shoulder formations, since they are everywhere the amateur chartist might want to find them. But there is something to be said for the bullish reverse head-and-shoulders pattern that gold futures have been tracing out for the last year-and-a-half. The pattern is shown in the chart below, and it is predicting that December Gold, which settled yesterday at 997.70, its highest close since February, is about to run up to $1060. Trouble is, just about everyone we know thinks gold is about to pop to 1060, give or » Read the full article


TODAY'S ACTION for Friday

Too Sexy to Pass Up

by Rick Ackerman on September 4, 2009 3:06 am GMT

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Rick's Picks for Friday
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All Picks By Issue:

SLW – Silver Wheaton (Last:13.04)

by Rick Ackerman on September 4, 2009 2:30 am GMT

All our ducks are in line now that we’ve successfully legged into the December 12.50-15.00 call spread eight times for a net CREDIT of 0.15 per.  The short sale of some December 15 calls for 0.45 yesterday morning clinched it, allowing us to capture premium in this series when the options were fat and juicy. Let’s put in a stink bid of 0.20 to cover the December 15s, good through Wednesday. It would be worth our while to get ’em in at that price if we can do so within the next few days. Our goal would then be to re-short them on  rally. _______ UPDATEWe weren’t able to cover the short December 15 calls, since they never traded below 0.35.  However, with the stock pushing toward $13 our position is looking better than ever.  We have a chance to make as much as $2120 with SLW trading $15 or higher at expiration, but even if SLW plummets we’ll still make at least $120.

DIA – Diamonds (Last:94.46)

by Rick Ackerman on September 4, 2009 2:49 am GMT

I usually ignore hot tips, but a pen-pal of mine, Phil C., sent me a breathless note predicting that the Dow would rally 100-150 points this morning, forming a top from which it will collapse when traders return after Labor Day.  Putting aside the details, this sounds so absolutely right to me that I’m inclined to speculate modestly.  Mr Market loves to spring dirty, nasty surprises whenever possible, and what could be nastier — or more surprising — than a tsunami to greet us as we return from summer’s final fling?  To get short, we can use the midpoint resistance at 95.07 shown in the chart, buying two September 93 puts (DAVUO) if and when the Diamonds get there. _______ UPDATE (11:52 a.m.): Stocks are only modestly higher today after an other-then-depressing unemployment report, so a short-squeeze to the levels where we’d wanted to get short seems unlikely. We’ll do nothing officially, but personally I’m going to take a couple of puts home with me over the weekend. My hunch is that the best prices of the day will obtain near the close. (Note: I bought some September 93 puts — DAVUO — for 0.86.)

SIZ09 – Comex December Silver (Last:16.130)

by Rick Ackerman on September 4, 2009 3:13 am GMT

The futures pushed slightly above a 16.265 pivot that had served as a short-term, minimum upside objective. The overshoot hints of further upside progress, presumably to the next Hidden Pivot resistance worth noting, 16.640.

$ESZ14 – Dec E-Mini S&P (Last:)

by Rick Ackerman on October 22, 2014 7:47 am GMT

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$DIA – Dow Industrials ETF (Last:165.81)

by Rick Ackerman on October 22, 2014 7:18 am GMT

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$JNK – High-Yield Bond ETF (Last:40.52)

by Rick Ackerman on October 21, 2014 9:42 am GMT

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$GCZ14 – December Gold (Last:1248.80)

by Rick Ackerman on October 20, 2014 12:47 am GMT

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$CLX14 – November Crude (Last:83.00)

by Rick Ackerman on October 17, 2014 1:15 am GMT

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$TLT – Lehman Bond ETF (Last:122.01)

by Rick Ackerman on October 17, 2014 12:01 am GMT

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$HGZ14 – December Copper (Last:3.0100)

by Rick Ackerman on October 6, 2014 9:30 am GMT

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$SNIPF – Snipp Interactive (Last:0.3400)

by Rick Ackerman on September 5, 2014 3:05 am GMT

I first touted Snipp Interactive back in January, when it was trading around 0.15. Although the stock subsequently fell to a dime, it has since rallied sharply, settling at 0.2562 yesterday. This is one of my favorite stocks, and I came away from a conference call with its CEO, Atul Sabharwal, eager to sing their praises. During that call, I hit Atul with my best idea, a sweepstakes-type promotion, but he was already three steps ahead of me, able to cite, for one, New York State’s rules and costs for exactly the type of marketing scheme I’d suggested.

Full disclosure: I hold 100,000 shares plus warrants to purchase another 50,000 shares.  But I hope that won’t discourage you from performing your own due diligence, since you are likely to be as impressed as I was when you find out what the company has been up to. For me, at least, Snipp (OTC: SNIPF) perfectly satisfies Peter Lynch’s rule that investors favor companies whose strengths and methods they can understand. Snipp does interactive marketing that allows clients to track results in real time. The results have been sufficiently impressive that the company has been attracting blue chip clients with little difficulty. Read more about SNIPP by clicking here.

From a technical standpoint, although the stock’s chart history is thin, it’s possible to project a near-term rally target of 0.2730. A tenet of Hidden Pivot analysis is that an easy move through such targeted resistance implies there is unspent buying power percolating beneath the surface. This is not a “hot tip;” indeed, Snipp’s story does not lend itself to the kind of hubris that will result in a $10 billion IPO. But it is an aggressive and imaginative pioneer in a rapidly developing niche, and its CEO has the kind of imagination, intelligence and energy that inspires confidence. _______ UPDATE (Sep 22, 8:30 p.m.): The stock has continued to rally, and the closest Hidden Pivot target is now 0.2668.  If that Hidden Pivot is exceeded on a closing basis for two days, however, a target at 0.3474 would be in play. _______ UPDATE (Sep 23):  Snipp has entered the Brazilian market via an exclusive marketing contract with Petrobas. Click here for the news release. ______ UPDATE (Sep 23, 1:57 p.m. EDT):  The stock has gone bonkers today, up six cents to within less than a penny of the 0.3474 target projected two days ago. _______ UPDATE (October 12, 9:20 p.m.): The stock has come down hard after peaking three weeks ago at 0.34, but I view the move as a corrective opportunity to accumulate more shares.


This Just In... for Friday

About My Option Strategies…

by Rick Ackerman on September 4, 2009 12:01 am GMT

The following questions about my option strategies came up in the forum, but I am republishing them here because they may be of interest to a wider audience:

What is the advantage of going long one call, and then locking in a given spread via shorting another call, versus “locking-in” the spread by going long on puts instead?

My answer below is more generalized, but to address your specific point, we should prefer to “lock in” a profit by shorting a wasting asset rather than buying one ourselves.  For most option traders most of the time, shorting calls is MUCH more profitable than buying puts.  Indeed, in the several decades I have been trading options,  I cannot recall a instance when put buyers were happy for more than three consecutive days.  Even those who owned puts ahead of the 1987 crash had just two days of sheer bliss to get rid of them.

Is it that in the latter scenario, one is long twice, and can thus get screwed twice by the pros? I always thought the latter scenario would be a good one in cases of low implied volatility, where the loss on one is mitigated, and the gain in the other is increased when implied volatility rises during larger underlying moves. (That may just be retail-customer theory, which the pros have long beaten. But what do I know? I’m still waiting for someone to start offering straight options on the VIX. Thanks!

&&&&&

The spreads I prefer are intended to provide a highly leveraged shot at big profits, but without the usual, horrendous time decay. This tactic is especially useful if we expect a stock to rise (or fall) over a period of several months. We also seek to take advantage of fleeting spikes that goose option volatilities to the moon. If, for instance, SLW opens on a gap this morning (it did), we may have a chance to short Dec 15 calls when they are hugely overvalued — sell them, perhaps, for even more than the 0.45 we’d intended. (They topped at 0.50 before receding with the tide.). And, of course, we do so with the expectation that Silver Wheaton will be strong in the coming months, but not so strong that the December 15 calls will go in-the-money. We may ultimately decide to exercise our December 12.50s, a step in building a long-term position. RA

The Real Unemployment Rate

by Rick Ackerman on September 4, 2009 4:38 am GMT

Were you aware that the Bureau of Labor calculates unemployment in various and sundry ways that are not shared with the press?  Neither were we — until we heard about ‘U-6,” which reckoned U.S. joblessness at 14.8 percent back in February.  We would assume it’s much higher now, but unfortunately February was the last month given.  Incidentally, if 1933’s rate of 24.7 percent had been calculated using today’s dubious metrics, it supposedly would have been lower by at least five to ten percentage points. Click here  for the link.


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