Friday, December 17, 2010

Shortly after 1 a.m. Eastern, a potential camouflage opportunity was developing in March Silver. This play would be from the long side, and I have sketched out some hypothetical details in the accompanying chart. If you get on board and the trade survives the stop, thrusting above the 29.495 peak made Wednesday on the way down, hold onto at least a contract or two for a potential home run. ______ UPDATE (10:34 a.m.ET):  No home run this time.  The rally failed to even reach the c-d midpoint of thre pattern, subjecting traders to a 29.035 stop and a theoretical loss of $650.  Why?  The post-mortem suggests that the point 'A'  I used did not exist, strictly speaking, since the pullback that created it was much less than 0.618 of the large k-A segment immediately below it.  The real 'A' here was therefore 28.625, implying that the true entry trigger came at 28.870 this morning, yielding a 29.055 midpint (already exceeded) and a 29.425 target. 

Sellers cracked the 1378.70 midpoint support so hard yesterday that it appears likely the downtrend will continue to at least 1348.50, the '"D target with which it is associated. That implies that a key low at 1352.00 recorded on November 26 will fail as support, although not by much. Since we never want to chisel a bearish forecast for Gold in stone, and because Silver, ever feisty, could decide it doesn't want to knuckle under, we'll allow for the possibility of a bullish reversal. It would be decisively signaled today by a print above 1396.20.

Although we wish Federal prosecutors well in their efforts to root out insider trading, we won’t be too terribly surprised if the five alleged insiders charged Thursday in a high-profile case beat the rap. It’s like trying to root out corruption in places like Kazakhstan or Louisiana, where graft is a way of life. A jury of one’s peers in Baton Rouge probably thinks it’s got better things to do than convict someone for anything less than a capital crime. The five men charged yesterday are all connected to a Mountain View, CA, firm called Primary Global Research. The company advertises itself as an “expert network” firm, which is another way of saying they’ve got some well-placed eyes and ears in the corporate world. For a fee – often, apparently, a large one – the firm would patch clients into a teleconference or bring them face-to-face with someone who would not merely be guessing when he quoted current sales figures for, say, AAPL or Dell.  We lived in Mountain View ourselves for four years and never even heard of the company.  Ahh, if only we’d known! We’ve always wondered how the regulators choose their targets. There is so much “good information” out there, and so many ways to come by it, that ten-thousand prosecutors working for a thousand years would not exhaust the supply of potential felons. In the meantime, the real insiders have at times seemed to have gotten away with murder by operating in the open. Bear Stearns, for instance.  The late, great investment firm served for a while as investment banker to Resorts International, the first company to open a casino in Atlantic City.  At the time, we were working in the options pits of the Pacific Stock Exchange, making markets in put and call options on,