Friday, August 27, 2010

SLW – Silver Wheaton (Last:25.27)

– Posted in: Current Touts Free Rick's Picks

We hold a long-term position of 800 shares with an adjusted cost basis of 12.95 that yields a paper profit of more than $7000 at current prices.  Whenever this stock turns feisty, it reminds me what a juicy takeover candidate it would make. It's hard to say whether it is rumors or reality driving SLW now, but I'm not so keen to do covered writes as I was before. My upside target is currently 25.54 (midpoint, now support = 21.27), and at this point I'm inclined to simply buy a few puts if and when the target is reached. _______ UPDATE (10:31 a.m. EDT):  The stock has hit 25.09 so far today on a powerful opening-bar gap, creating a pattern that projects to 25.35. Let's put on a hedge when it gets near that price, shorting eight October 26 calls against our position.  Offer them for 0.96 -- or whatever they will fetch with the stock trading within a nickel of the target.  (Note: As of 1:21 p.m., it looks as though the options will be trading for around 1.00.)  _______FURTHER UPDATE (2:14 P.M. EDT):  We shorted eight calls for 1.00 off a so-far intraday high of 1.01. Do nothing further for now, but please note that the stock could go as high as 25.54 on a targeted basis. The intraday high as of the moment is 25.32.

DXY – NYBOT Dollar Index (Last:82.88)

– Posted in: Current Touts Free Rick's Picks

The Dollar Index has been struggling to put a midpoint resistance at 83.10 behind it, but five days of oscillating around it have not done the trick. If and when bulls muster the requisite thrust, look for DXY to reach a minimum 84.29, the 'D' sibling of the midpoint. We'll want to monitor the action closely at that point, since an easy push past the resistance would be an obvious negative for bullion.

AAPL – Apple Computer (Last:240.29)

– Posted in: Current Touts Free Rick's Picks

AAPL didn't get much of a bounce from the important midpoint support at 246.28 shown in the chart, so we should infer that the stock is bound for the 226.58 target shown in the chart. The midpoint is now resistance and was narrowly missed by the head-fake that began the day yesterday.  How can we take advantage of this developing weakness by getting short?  Not easily, since a feint to the nearest midpoint resistance today, 243.95 (15m, A=238.42 on 8/25), would have us shorting into a bullish impulse leg. Instead, I'll suggest looking for camouflage on the very lesser charts once 243.95 is closely approached.  This one is obviously for seasoned Pivoteers only. ______ UPDATE (12:44 p.m. EDT): We can scrap the bottom-fishing idea, since AAPL has shown little weakness lately whenever the broad averages have declined.

GCZ10 – December Gold (Last:1238.4)

– Posted in: Current Touts Free Rick's Picks

On Thursday, gold futures reached our longstanding 1244.2 "D" target and then reversed course just below the "D" target of an alternate version of the same pattern.  In yesterday's tout we were looking for levels at which the gold market might begin a new downtrend, but alas, we did not mention this possibility, which is depicted in the attached graphic.  It is too early to say that 1246.0 is an important high, but it will look increasingly important if and when the price falls below the 1230.7, 1223.5, and 1211.7 levels.  1223.5 is a stick-down low along Tuesday's "wall", visible on the 15-minute chart.  Reasons for waiting to buy at lower levels or for (gasp) shorting gold are numerous: (1) the rally from 1159.3 has completed an elegant ABCD pattern; (2) current expectations of future quantitative easing might be "in the market" already and traders might sell the news of a low GDP number this morning; (3) the GDP number might be better than expected, triggering "risk-on" trades which do not include buying gold; (4) open interest in gold futures has reached a high level, which often foretells a price decline; (5) bullish seasonal forces might not quite be ready to kick in; (6) the stock market might crash soon, triggering margin calls and cash-raising measures such as selling gold; (7) the recent silver rally might have been driven by the big COMEX shorts, who have lightened up and are ready to do some new shorting now.  We could go on, but the fact is that the active Hidden Pivot patterns are almost exclusively bullish, so the best approach is to buy gold if the emerging short-term patterns look compelling enough.  We should clear our minds and let the charts tell us what's going on, and what to do.  Yesterday

ESU10 – September E-Mini S&P (Last:1043.50)

– Posted in: Current Touts Free Rick's Picks

I continue to expect stocks to do absolutely nothing between now and Labor Day, although we may see some gratuitous feints, dives and thrusts between now and then.  There is little to suggest for Friday, since this week's lows achieved a downside target that had been in effect since August 19.  Any slippage beneath it, however, would set the futures on course, probably, for a gropefest down to as low as 1002.75, where an important and presumably supportive low was recorded on July 5.

The Fallacy of ‘Bailing Out’ U.S. Cities and States

– Posted in: Commentary for the Week of March 8 Free

Amazing how far a really stupid idea can travel. Warren Buffett helped spread and legitimize one a couple of months ago, and now the Wall Street Journal has pitched in on the same topic with an op-ed piece written by one Eden Martin, a lawyer and Chicago muckety-muck.  Here is what Mr. Martin wrote:  “The next big issue on the national political horizon may be whether the federal government should bail out the many budget-strapped states and municipalities across the country, especially their overly generous and badly underfunded pension plans.”  And here’s Mr. Buffett on the same topic, testifying before Congress in June on the role the credit rating agencies played in nearly bringing the banking system down: “I mean, if the federal government will step in to help [states and major municipalities], they’re Triple-A. If the federal government won’t step in to help them, who knows what they are.” Buffett himself should know the answer to the question he has implicitly raised, since, no matter who is doing the bailing out, or what is used to pay for it, we – and not some entity called “the Government” -- will all pay heavily for it in one way or another. We’ll explain in a moment. But first, let us be clear that we are not holding our breath waiting for the Journal’s editors to provide responsible counterpoint to all of this bailout claptrap. Unfortunately, the business community's newspaper of record has always played an aggressive role in telling its readers not what is, but what they presumably want to hear. How else to explain why the Journal would continue to devote hundreds of column inches lately to the possibility that the economy just might be facing a double-dip recession? In plain fact, and as any of the paper’s two million