From Jonathan Auerbach of Auerbach & Grayson, here’s a timely treatise on the gold-to-suit ratio. Turns out an ounce of gold is buying more than a single, decent man’s suit these days. Click here for the analysis.
From the monthly archives:
May 2010
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Newmont looks bound for a minimum 60.72 over the near term, but any higher would indicate 62.48. That’s a smidgen shy of the watershed high recorded at 62.72 early in 2006, but a breach of the pivot would imply that the peak is likely to be exceeded. Above it we could use a 71.14 target from the weekly chart to guide us.
We hold 800 shares with an adjusted cost basis of 11.75 against eight May 18 calls shorted for 0.64. Let’s bid 1.84 today to try to get the calls back. Pivoteers please note that I am using an abc-pattern “inverse” variation to project a low on the calls.
A rally target at 19.825 remains our minimum upside objective for now, since yesterday’s rally fell nine cents shy. The target is a Hidden Pivot that I expect to show some stopping power, but if it’s breached by more than three or four ticks, look for more upside over the near term to at least 20.32. You should also keep in mind a major target at 21.53 that we’ve been using for a while. Shortly before 3 a.m. EDT, easy opportunities for night owls looked limited. ______ UPDATE (1:31 p.m. EDT): The futures popped overnight to 19.845, exceeding our minimum upside target by two cents. This has bullish implications going forward, but they have been sidetracked by a savage, 50-cent drop from the highs.
Buyers took out the 1243.10 rally target without much effort, implying they’ll soon be back for more. Potential over the near tern — in this case, meaning the next 3-5 days — is 1286.30, a Hidden Pivot resistance that comes from the daily chart. More immediately, the futures appeared to be struggling to reach a 1230.70 retracement target after having penetrated its midpoint sibling 1236.00. You can bottom-fish with a 1230.30 stop-loss if the opportunity should arise. ______ UPDATE (1:28 a.m. EDT): The futures have exceeded the minor support at 1230.70 and now look bound for a somewhat more important one at 1226.80 (5m chart, A=1249.10 on May 12). Since they are rallying from 1227.50, however, we may have seen the lows for this correction. A bullish turnaround would be corroborated by a print at 1235.40, which would create a bullish impulse leg on the five-minute chart.
The 1170.25 rally target that we’ve been using is obviously still on this vehicle’s reptilian brain, and now it has been surpassed by 1.00 point. That’s not quite enough to get it by the 1173.25 benchmark we set yesterday, but if it happens this morning it would create a bullish impulse leg on the hourly chart that we could not ignore. However, lest we be bamboozled by a head-fake, let’s ratchet the bar up slightly to 1175.25, which takes into account the 1175.00 peak-let show in the chart. A point ’B' high that forms between those two numbers would offer great camouflage and the possibility of a trade like the one I’ve sketched. On any kind of rally, my minimum upside target will be 1181.00. _______ UPDATE (1:17 p.m. EDT): Our look-to-the-left peak at 1175.00 did its job beautifully, since we were not fooled when this sneaky little sonofabitch tiptoed up to exactly 1174.75 before going into a 13-point selloff. The analysis remains valid, as does the crucial importance of 1175.00 to the short-term picture.
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The futures look primed for a further drop to 72.19, a Hidden Pivot midpoint lifted from the daily chart (A=87.15). If and when the time comes, you can bottom-fish there with a stop-loss as tight as 71.05. Alternatively, it would take a thrust exceeding 79.76 to turn the hourly chart bullish and a 77.88 print to achieve this on the “15″. Neither benchmark is subtle enough for trading purposes, so I’ll suggest zooming down to the 5-minute, where 76.16 or better would create a bullish impulse leg. If there’s a b-c pullback thereafter from 76.18 or lower on the 1-minute chart, I’ll suggest that you take the money and run by using a camouflage ‘X’ entry. If this opportunity materializes, the key to capitalizing on it will be to act very quickly on the buy-stop. _______ UPDATE: The futures popped for a weak rally, but not in way that closely resembled the scenario sketched in the chart, so we did nothing.
German Outrage Could Queer Deal
by Rick Ackerman on May 13, 2010 1:08 am GMT · 10 comments
The Dow Industrials tacked on another big gain yesterday, blithely ignoring a global thumbs-down on Euroland’s latest, trillion dollar bailout package. The blue chip average finished up 149 points on the day, even as rumors circulated that Germany was about to ditch the euro and resurrect the D-mark. Whether or not this is true – and we doubt that it is – it’s clear that the Germans are becoming increasingly angry about having to play rich uncle to their n’er-do-well neighbors. Outside of Germany there appears to be a growing consensus that any further attempts to rescue, just for starters, Greece will simply be throwing (relatively) good money after bad. This thought surfaced with unsurprising vehemence in the Rick’s Picks forum, where hard money rules, but it was surprising to see » Read the full article