Wednesday, September 15, 2010

Dollar could bring stocks down

– Posted in: Rick's Picks

If the selling in the dollar gets really serious, it could trigger the avalanche in stocks that we've all been waiting for. The Dollar Index tout provides some major targets, but if you want to get ahead of the disaster, you'll need to clock the lesser uptrends and downtrends.  When the former start failing to reach their 'd' targets, that could be the sign.

ESZ09 – E-Mini S&P (Last:1119.00)

– Posted in: Current Touts Free Rick's Picks

As implied here earlier, I'll be a (temporarily) true believer in this hoax if DaBoyz can short-squeeze the futures above 1142.75 (a look-to-the-left peak from May 18) in a single session, with no pullbacks visible on the hourly chart.  Meanwhile, unless you're trying to scalp off the three-minute chart, or to play the breakout with camouflage, there is little point in trading this vehicle when it is so close to major resistance.

SIZ10 – December Silver (Last:)

– Posted in: Current Touts Free Rick's Picks

There are two rally targets shown in the chart, both moderately compelling as places for a tradable turn to occur today.  The lower lies at 20.71, exactly 16 cents above yesterday's high, the other at 21.00. If the futures head higher as expected, you can infer the second target will be reached if the first is exceeded by more than 1.5 cents. Scalpers can try shorting at either price with a three-tick stop-loss, but you'll be on your own if the order fills.

GCZ10 – December Gold (Last:1270.80)

– Posted in: Current Touts Free Rick's Picks

The pitch of yesterday's rally looks too steep to sustain all the way to 1290.90, our target at the moment, but bulls weren't giving much of it back Tuesday night.  There are two places where you might try bottom-fishing in anticipation of a shallow pullback: near 1264.40, the Hidden Pivot midpoint of the larger pattern; and just above it, at 1268.40, a lesser midpoint (see chart) that should contain the correction if the rally is to resume full-bore shortly.  Camouflage entry is suggested at the midpoint, but in neither case should you risk more than four ticks initially.  ______ UPDATE (1:46 a.m. EDT):  A long from 1268.40 would have worked, since the futures went no lower than 1268.10. With four ticks at risk initially, you should have taken profits on half the position (or implemented a trailing stop) at 1269.60, where your paper gain would have equaled three times the 0.40-cent stop-loss at the time of entry. The actual high so far has been 1271.90, and if you're still aboard you should work the position so that no loss is possible.  You'll be off and running if 1274.60 is touched before 1268.00. ______ UPDATE (10:46 a.m. EDT):  Gold went nowhere overnight, biding it's time as Japan futilely struggled to hold down the yen by supporting a doomed dollar. FYI, the lower target, 1264.40, came within a dime of nailing a subsequent intraday low at 1264.50.

DXY – NYBOT Dollar Index (Last:81.25)

– Posted in: Current Touts Free Rick's Picks

By exceeding all of our downside targets yesterday save one, the Dollar Index signaled more weakness in the coming weeks to as low as 79.08. Although the implied drop is unlikely to follow a straight line, it's hard to imagine just who would be stepping in to support the dollar on the way down.  The Chinese have become net sellers of U.S. Treasury paper, so it won't be them.  But neither will it be the dealers and hedge funds who have been sucking up Notes, Bills and Bonds, since they are already in dollars. As for Japan, its financiers are already up to their eyeballs trying to hold the yen down.  Under the circumstances, we may want to look beyond the Hidden Pivot target at 79.08 and use the trendline shown in the accompanying chart. It implies a further drop to around 76, which could turn China, Europe and the rest of the world even more hostile toward the buck.

SLW – Silver Wheaton (Last:24.80)

– Posted in: Current Touts Free Rick's Picks

Yesterday's forecast caught the intraday high of a powerful rally to the exact penny, allowing us to initiate a covered write at an excellent price. We shorted eight October 26 calls for 1.00 just ahead of an end-of-day selloff that shaved 70 cents from the share price in less than an hour. Let's try to partially cover the position today so that we can re-short some more calls later:  Bid 0.58 to close for four calls, day order, and 0.48 to cover four more.  We continue to hold 800 shares with an adjusted cost basis of 12.95, but our goal in putting on the covered write is to further reduce the cost of our stock.

Bullion Soars Despite Cramer’s Endorsement

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

We should know soon whether the animal spirits that pushed gold and silver sharply higher yesterday can withstand the endorsement of James Cramer.  Although we seldom watch his show – even with the TV off, you can practically hear him shouting within a ten-mile radius of CNBC’s Fort Lee studio -- someone mentioned in the Rick’s Picks chat room yesterday that he’s hot to acquire gold and precious-metal shares. Never too late, we suppose, but we somehow doubt he was so keen on the stuff ten years ago, when an ounce of bullion was selling for about a fifth its current price. Is it too late to jump on the bullish bandwagon even though Cramer’s doing it?  Not at all.  In fact, so certain are we that an ounce of gold will trade above $1400 by year’s end that we promise to don a grass skirt and dance the hula in Times Square in the middle of winter if we’re wrong. (Oh, right, we’re already doing that because Goldman shares failed to fall to a $29 target we were equally certain about. What could we have been thinking? So foolish to have bet against a company that, through interlocking directorates, owns a majority stake in the U.S. Government.) You don’t need to be a technical analyst these days to discern that precious-metal quotes want to go higher.  Silver in particular has gone marauding despite the best efforts of the bad guys to hold it down. We had alerted subscribers Monday night to the possibility of a price surge that would lift gold as well when we wrote as follows: “Silver has been showing more energy than Gold lately, a fact that has been reflected in [our] enthusiastic Silver touts over the last couple of weeks.  Late Monday night, the futures were