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Rick’s Picks Weekend Edition

by Rick Ackerman on September 26, 2009 12:01 am GMT

Two Exploration Stocks to Consider

[We often feature the work of our friend and colleague Chuck Cohen, a NYC-based investment consultant who specializes in mining companies. Below, he explains why it is time for those who have been straddling the fence to buy junior gold shares.  He concludes with two specific recommendations that trade over-the-counter for less than $1.]

Rick has asked me to write about gold with a focus on the junior mining companies, so here we go, along with a couple of specific recommendations. I tried to point out the pros and cons of buying the juniors last month, but let me now make a quick refresher. I also suggest that you go back to Rick’s August archives to review my articles on gold and the junior sector.

Advantages of juniors…

– They have been beaten down in price due to the credit squeeze last year….

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Tepid Media Make Gold an Enticing Buy

[Rick has been under the weather with a possible case of food poisoning. Filling in for him today is Chuck Cohen, a financial consultant whose work will be familiar to many of you. The following appeared at LeMetropole.com over the weekend. Chuck thinks that as long as the news media continue to stumble around in the dark in their coverage of the gold world, we should remain confident about accumulating more bullion and precious metal shares for the long haul. RA]

It took a mix of $1000 gold, the media’s reaction to it, and a very fallow day to compose this piece. As serious as the news is these days, it is still difficult not to see the absurdity in what is unfolding. Now that gold has finally pierced $1000, I had expected to find repentance and mea culpas by a news media that has persistently resisted and even mocked the gold bugs for nearly a decade. But if the news over the weekend is an indication, gold might…

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Of Green Shoots and Broken Windows

Our memory stumbles whenever we try to recall any recent sightings of “green shoots” that would support the officially promoted illusion of a U.S. economy in recovery.  Actually, this vision is more of a hallucination than an illusion, since one’s mind needs to venture beyond the pale of rationality, light years beyond the fringe of statistical evidence, to conjure up supposed signs of sustainable growth. Does “recovery” square with the reality that you, personally, see all around you?  Indeed, whatever picture the government and the news media want us to see will be unconvincing at best, since a…

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Will Gold Be the Turd in G-20’s Punchbowl?

With a glower of contempt toward the bankers, gold remains easily aloft above $1000, developing thrust for the next big move. We wrote here a while back that blast-off from $1000 would follow the realization that G-20 can do nothing to restore stability to the world’s tottering financial system. Now, the question is whether anything at all will be “realized” in the wake of the Pittsburgh meeting. We hesitate to call it a summit because the event seems to have slipped off the news media’s radar.  Unable to recall the actual…

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Panicky Gold Sellers Find Safety Aboard Titanic

It’s a crazy world that views dollars and Treasury paper, of all things, as a safe haven whenever the financial news turns unsettling.  Yesterday’s upsetting story had sales of existing homes falling by 2.7% last month, darkening the mirage of recovery in the housing sector. Home sales had risen over the four previous months, but the distress buying that was driving this statistic appears to be drying up. Skittish traders lost no time connecting the dots, dumping gold and piling into dollar assets.  They evidently had…

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TODAY'S ACTION for Monday

Holiday Schedule

by Rick Ackerman on September 28, 2009 12:01 am GMT

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Rick's Picks for Monday
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DXY – NYBOT Dollar Index (Last:76.68)

by Rick Ackerman on September 28, 2009 12:01 am GMT

The Dollar Index on Friday ended the day with a bounce from the exact midpoint support of the pattern shown in the chart. It would need to rally today to at least 76.94 to suggest bulls are back in charge. At that point they would be presumed capable of propelling DXY to as high as 77.47. Key resistance on the  way up would come at 76.98.

GCZ09 – Comex December Gold (Last:992.40)

by Rick Ackerman on September 28, 2009 12:01 am GMT

Gold’s two setbacks this year have averaged about 12%, which would imply a pullback to around $940. Would that be so bad? In any event, my worst-case correction target for the near term is 970.80, predicated on a breach of that Hidden Pivot support’s midpoint sibling at 985.60. Friday’s low exceeded the midpoint by just one tick, so we should view it as still intact. As always, interaction with these pivots will be the key to gauging the strength of the downtrend.  Alternatively, we should set the bar at 1001.70 to alert us to a decisive, bullish turn on the hourly chart.

AKAM – Akamai Technologies (Last:22.45)

by Rick Ackerman on September 28, 2009 12:01 am GMT

We hold 200 shares with an adjusted cost basis of 16.73. Shorting some option premium against them on the last run-up might have been warranted, but having missed the opportunity, we can take encouragement from the fact that Friday’s high slightly exceeded the look-to-the-left peak at 19.46 recorded on the way down a day earlier. _______ UDPATE (October 29, 10:12 a.m. EDT):  The stock has opened on a huge gap today.  Sell half the position (i.e., 100 shares) now, for around 22.45.  A sale at that price would give us an adjusted cost basis of 11.01 for the remaining round lot.

ESZ09 – E-Mini S&P (Last:1055.75)

by Rick Ackerman on September 28, 2009 12:01 am GMT

There are too many enticing downside targets at the moment to pick just one, but they’d all become moot if the futures were to reverse from the least important of them, 1038.25,  producing a bullish impulse leg on the lesser charts.  A tiny peak at 1049.75 will serve just fine to tell us when this may have occurred. ______ UPDATE (10:51 a.m.):  The futures picked an alternative pivot from which to bounce, and bounce they did. They’ve easily pushed past the l-t-l peak at 1049.75, threatening not only to ruin bears’ day, but their whole week.

SIZ09 – Comex December Silver (Last:16.370)

by Rick Ackerman on September 28, 2009 12:01 am GMT

The December contract will have a chance to turn from a minor midpoint support at 16.025, but if it doesn’t, look for the slide to continue to at least 15.795, a Hidden Pivot you can bottom-fish with a stop-loss as tight as three ticks.  Both of those numbers are tied to minor patterns, but a larger one hints of selling all the way down to 15.445 (subject to a possible bounce along the way from 15.930). _______ UPDATE: The futures bottomed at 15.760, three-and-a-half cents below our target and low enough to trigger the tight stop-loss advised.

$AAPL – Apple Computer (Last:100.57)

by Rick Ackerman on August 21, 2014 3:16 am GMT

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$+TLT – Lehman Bond ETF (Last:116.20)

by Rick Ackerman on August 20, 2014 4:59 am GMT

Subscribers are working two bullish calendar spreads (x16), but I would suggest increasing the size of the position if TLT corrects down to the 115.18 target  shown.   For now , we are long September 20 118 calls against short August 19 118 calls that we will roll into August 29 calls this Thursday and Friday.  We’ve already done the roll twice, reducing the cost basis of the spread to 0.04. This week’s roll will entail covering (buying back) the short calls and shorting a like number of August 29 calls, effectively selling the August 22 118/August 29 118 calendar spread.

It was marked on Tuesday at 0.17, off a 0.26 offer, but any price higher than 0.04 will effectively turn the position we’ll have  – long the Sept 20 118/August 29 118 calendar — into a credit spread.  This means we can’t lose – will make a profit no matter what TLT does.  Ideally, come September 20 , TLT will be sitting at 118, our spread will be trading for around 0.50, and we’ll be carrying it for a credit of perhaps 0.50.  The imputed profit would be  $1600 — not bad, considering our risk is already close to zero.

My long-term outlook for T-Bonds is very bullish, a view that goes sharply against a consensus which clings to the belief that interest rates – and the stock market — can only go up.  That is a bet we should be eager to fade. We may have a chance to do so at still better odds if T-Bonds continue to  sell off  on the manufactured idea that the Jackson Hole conference will open the floodgates for more stimulus and inflation. _______ UPDATE (10:38 a.m.):  The Sep 20/Aug xx calendar spread is recommended at this point only for those who did the original spread, since there’s not enough time left on it to roll its cost basis down to zero or less (i.e., a credit). If you are new to the spread, try buying the Nov 20/August 29 calendar for 0.90 with TLT trading around 115.80.  The spread has a delta value of 0.20, implying that being long one spread is equivalent to being long 20 shares of stock.  This means that, using a spread price of 0.90 as a benchmark, you should adjust the price you pay for it by one penny, up or down, for each 5 cents that TLT moves away from 115.80.

$SIU14 – September Silver (Last:19.615)

by Rick Ackerman on August 19, 2014 2:02 am GMT

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$DIA – Dow Industrials ETF (Last:168.82)

by Rick Ackerman on August 19, 2014 1:50 am GMT

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$SLW – Silver Wheaton (Last:26.58)

by Rick Ackerman on August 7, 2014 4:58 am GMT

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SIDE BETS for Monday

GS – Goldman Sachs (179.40)

by Rick Ackerman on September 28, 2009 12:01 am GMT

Goldman has taken a nasty dive from a peak that fell more than $4 shy of a potentially important rally target we were focused on. No one ever said it would be easy to short the little sonofabitch, but we’ll keep trying. Just so you know what the incentive is, if you’d bought some October 170 puts for 1.40 when the stock was topping last week, you could have cashed them out for as much as 3.55 on Friday, two days later.


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