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From the monthly archives:
April 2011
We hold 300 shares with a cost basis of 42.01. After creating a nasty bearish impulse leg on the hourly chart on Monday, SLW has been playing toe-sies with a support line near 42.00 that goes back to late March. Since I don’t fancy doing nothing while the stock glowers menacingly at us, I’m going to suggest taking the offensive with a 2.35 bid for three June 40 puts, day order. My goal is to leg into a bearish “free” butterfly keyed to the 36 strike. This strategy is suitable only for those who are long stock, but I will continue to look for a great entry spot for newbies. It is not here, though, at these levels, since the question of up or down looks to me like a coin toss.
Silver has clawed back some ground following Monday’s thrashing, recouping as of this moment about half of a $2.27 loss. The futures are trading Wednesday night near their recovery highs, but it will take a further push to at least 41.315 to shift the rally to a higher gear. That would create a bullish impulse leg of hourly-chart degree, surpassing a small peak at 41.310 made on the way down earlier this week. _______ UPDATE (9:05a.m. EDT): This gets so-o-o tiresome. The futures took a whoopee cushion leap to 41.400, only to recede nearly as precipitously. Sometimes it seems as though we should trade this vehicle using a clock, not charts. In any event, the bad guys will have to deal with the fact that the thrust, fleeting as it was, created a bullish impulse leg on the hourly chart. If and when the follow-through leg occurs, it has the potential to reach 41.495. The midpoint resistance associated with that target is 41.020, so that’s the number to beat in the hour ahead. _______ FURTHER UPDATE (1:40 p.m. EDT): The bad guys are sucking wind today, SIK having blown through every minor pivot that dared get in its way. The action has put a 43.61 rally target nicely in play, subject to possible midpoint kanoodling at 41.660. That last number has already been exceeded, increasing the odds that the bad guys will reap further abuse and punishment in the days ahead. The pattern yielding the 43.31 target can be found on the hourly chart using the following coordinates: A=38.07 (4/5), B=41.975, C=39.705.
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Just a smidgen more and the futures will have recouped half of the $33 selloff from Sunday night’s $1478 high. My hunch is if they can close above the 50% retracement level, which lies at exactly 1461.50, bulls will have the bad guys on the run come Thursday. In the meantime, you can plan on bottom-fishing at the correction’s ‘p’ midpoint if it comes to resemble the one shown in the chart. _______ UPDATE (3:23 p.m. EDT): Anyone who used the chart as instructed could have caught the exact low of the day, a ‘p’ midpoint at 1452.00, based on the following coordinates: A=1468.40, B=1445.00 and C=1463.70. If you bought multiple contracts at the low, take profits on half the position now. Set a fixed stop at 1454.80 for the rest, switching to a $6 trailing stop once 1464.90 is reached.
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