Thursday, October 8, 2009

Index futures were going bonkers this evening -- news that Whirled Peas has finally been achieved? -- suggesting the bullish target given for the Mini-S&P is in-the-bag.  Night owls should try to make use of it, since DaBoyz may not leave much for those who trade the opening.

A Hidden Pivot resistance at 452.83 is the next potential resistance above, as well as our minimum rally target for the near term. If it is brushed aside, however, that would portend more upside over the near term to as high as 466.00.

We hold eight bull spreads that have the potential to pay one's subscription costs for the next six years. We own the spread -- long December 12.50 calls, short December 15 calls -- effectively for a CREDIT of 0.15 per, since we legged into it at very good prices. This means we stand to make as much as  $2120 if the stock goes out 15 or higher at expiration. However, we may have a chance to realize most of that gain well before Christmas, since SLW seems bound at the moment for a minimum 15.31.  The higher it goes, the deeper in-the-money both calls will be, and the less time premium we'll therefore have to pay to close out the December 15s.  In practice, the amount of time premium in the December 15 call over and above time premium in the December 12.50 call should roughly equal the value of the December 15 put.  This is logical because buying the December 15 put would be one way of locking in whatever profit we have in the call spread with SLW trading above 15.

The fact that the dollar has friends in high places, not to mention rumor-mongers to help out whenever the going gets tough, doesn't seem to be providing the kind of lift the casual observer might expect. Minor rallies have gone nowhere, and they are being met with minor impulse legs going in the opposite direction.  The intraday charts don't provide much clarity, but the daily bars suggest DXY is struggling to avoid the 75.47 target we flagged here a short while ago.  Keep in mind that if that Hidden Pivot gives way easily, the next scientifically determined stop on the way down would be 72.93, another number we have in play.

A less-than-compelling pattern points to 1076.75, but it'll do for our pecuniary purposes. The target's midpoint sibling lies at 1059.75, and I can't help noticing that that's the precise high so far Wednesday evening.  If it's not just coincidence,  this would portend a rather precise pullback from the higher number. In any case, 1076.75 will become the minimum upside projection if and when the futures punch out the lights of the midpoint. Short 'D' at your complete discretion -- or even on a whim, if you dare.

Catching a ride north with the strategy I advised here yesterday would have required a nimble and alert response in the wee hours; however, the potential short from 192.91, the Hidden Pivot target flagged in the same tout, still beckons.  As of early Wednesday evening, the little sonofabitch had wafted as high as 191.50, so there's not much further to go. To initiate the short, I'd suggest buying two November 180 puts (GPYWP).  I'm guessing they'll be trading for around 4.60, but I'll suggest monitoring the bid/asked for the Nov 180 puts as Goldman closely approaches the target.  You should stop yourself out of the position if the stock trades above 193.10.  More-experienced pivoteers can attempt shorting with camouflage after the stock hits or nears the target. This would entail initiating the trade on the first a-b-c pullback from near 192.91.

(From our correspondent Chuck Cohen, a NYC-based fianancial consultant who specializes in gold investments, here's an assessment of two mining companies that he thinks merit the attention of Rick's Picks readers.) Let’s look at two exploration companies which are linked by their being undervalued and by their locations in Quebec, one of the most mining-friendly places in the world. Becanse these companies operate in Quebec, the market will assign a premium to their respective share prices. Plus, in both cases the infrastructure is also very positive, a detail not to be ignored. Please remember that for any stocks I recommend, I suggest that you go to their web sites to familiarize yourself with the companies. Don't be lazy, but be a student of gold. Their respective URLs are Maudore.com and Niogold.com What I mean by "leverage" is the potential of a company reckoned by comparing the amount of gold it might eventually possess to its current market capitalization. Leverage is really a “what if” consideration.  For instance, what if gold goes to $2,000, and what if a company’s resources grow dramatically during this time? Then, the value of the company will rise sharply because of both factors. Most of my junior recommendations fall into this category, because my central assumption is for an enormous increase in the price of gold and silver. The larger companies will do well, but the smaller exploration companies will benefit most. If you can, please review the other articles that I wrote for Rick and see why I prefer the juniors. Or write me  and I’ll e-mail them to you. A key principle for these small companies is to buy them are when they are quiet and apparently ignored.  If the price of gold suddenly takes off, or if a junior comes up with unusually good drilling results in this point