Gold and Silver futures are in uptrends Tuesday night that could generate opportune ‘buy’ signals. To assist you in getting aboard with as little risk as possible, I’ve sketched out detailed scenarios that show how these trends might be traded.
COMMENTARY for Wednesday
TODAY'S ACTION for Wednesday
Rick's Picks for Wednesday
Should I mention that yesterday’s 337-point rally was not impulsive on the larger intraday charts? Check out the 240-minute bars if you don’t believe me. Another measly 31 points would have done the job, but it looks like the panic-stricken shorts who powered yesterday’s wilding spree just didn’t have it in them. My hunch is that the rally will prove to have been a one-and-a-half-day wonder after bears have done their puking Wednesday morning. Still, because the daily chart actually is impulsively bullish, we’ll have to treat the expected pullback with the same deference today’s commentary has accorded Kim Jong Il. Allowing for the most bullish scenario I could possible see over the next eight trading days, my maximum rally target would be 12760, subject to midpoint interference at 12248.
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Based on a 155.30 rally target disseminated here on May 6, we bought four June 152 puts yesterday for 1.00 with DIA topping at 155.14. Since I advised closing out two of them for 1.14 intraday, we are left with a profit-adjusted position of two puts whose cost basis has been reduced to 0.86. Now, offer an additional put on the opening and hold the remaining put as a lottery ticket.
The climax of yesterday’s bullish stampede exceeded an in-our-wildest-dreams target by 56 cents (see inset), but when the dust had settled, short positions initiated by subscribers near an 89.43 Hidden Pivot were well in-the-black. For tracking purposes I’ll use 24 May 87.50 weekly puts that ‘Dave’ reported buying for 0.11 in the chat room. They had tripled by the close, and so half should have been exited at some point along the way. However, I’ll assume none were sold and recommend that you close out half at-the-market on the opening. Of the 12 that would remain, offer six for 0.50 and hold the rest for a potential home run on Friday, when the puts are due to expire. The 0.50 offer should be entered before Thursday’s opening, since traders could conceivably close out a total of 18 at that price or higher on a gap-down at the bell.
Yesterday’s trade in this vehicle had not been offered as a tout, but a timely question in the chat room helped us identify an opportunity to pick up some cheap call options intraday. Here is what I wrote in the chat room: “The Auggie 160 market is 0.22/0/26, so 0.24 is the right price with GLD at 132.88. So, if GLD falls to our 131.83 target, the Auggie 160s should sell for about a nickel less (they have a delta value of about 0.04). So let’s bid 0.21 (an extra penny for good measure) for 28 of them., stop 0.18. We’ll worry about what to spread against them later.” Although the intraday low at 130.95 exceeded our target, the result was that subscribers were able to buy August 160 calls for 0.21, a penny off the intraday low.
This position is highly speculative, since there are two very bearish targets outstanding, but it has the potential to pay off at about 60-to-1. With a three-cent stop-loss on the calls, we’ve limited our theoretical risk to about $84. However, I’m now going to suggest giving the position a little more room by lowering the stop to 0.16. At the same time, and on a one-order-cancels-the-other (OCO) basis, I’ll suggest offering 28 August 163 calls short for 0.30 against those we hold. If the order fills we’ll own a virtually riskless position that can make us as much as $8400 if Gold rallies strongly between now and late August.
Wall Street did not exactly take Apple out to the woodshed following yesterday’s revelation that the firm has paid little or no taxes on foreign income of $75 billion. The stock flinched, down $2.73 on the day, but investors seem to recognize that revising 275,000 pages of tax code to force Apple to pay its fair share will require many years of wrangling on Capitol Hill. And who’s to say that the effort would not leave other loopholes just as easily exploited by the Sunnyvale behemoth’s clever lawyers and accountants?
Technically speaking, however, the news seems to have sapped some of Apple’s vital juices, since the stock failed for the second consecutive day to decisively exceed a small but nevertheless significant ‘external’ peak at 445.36 (see inset). That feat, trivial though it may seem, will remain crucial to the short-term picture. If and when it is achieved, expect the stock to rise to a minimum 449.9o, a Hidden Pivot target. If the pivot is easily surpassed, look for the bullish momentum to continue till week’s end, at least. Camo traders should position from the long side, using the 15-minute chart for leverage.
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Yesterday’s rebound in this vehicle was strong, although not quite as compelling as the one in Comex Gold futures. Moreover, the intraday low exceeded the midpoint support of the pattern shown by a decisive 52 cents, shortening the odds that its ‘D’ sibling at 22.25 will eventually be reached. We’ll give bulls the benefit of the doubt nonetheless, since mining shares are unlikely to languish if they catch their first whiff of strength in bullion in many months. From a Hidden Pivot perspective, this vehicle needs to keep running without taking a breath until 29.83 (a 5/14 peak) has been exceeded. Camouflageurs should look for entry opportunities on the 15-minute chart, since there are some choice ‘externals’ to be found therein.
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Tesla got short-squeezed to within 28 cents of the 86.72 target I’d proffered early Monday morning, but a second-wind rally to 88.00 suggests it’s got eyes for 104.44, the ‘D’ target associated with the first number. It can serve as a minimum upside objective for now, implying that all trades between here and there be positioned from the long side. We’ll plan on buying weekly puts if and when the target is reached, provided it happens before Wednesday of the given week. Please note as well that a lesser Hidden Pivot at 94.19 (see inset) has the potential to stop the rally cold and can therefore be used for spec camouflage shorts.
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Prospect of World Peace Sends Stocks Soaring
by Rick Ackerman on December 21, 2011 3:52 am GMT · 14 comments
U.S. stocks showed unbridled enthusiasm yesterday for the changing of the guard in North Korea, tacking 337 points onto the Dow Industrial Average. Could heir apparent Kim Jong Eun be the Man of Peace the world has been waiting for? It sure looked that way on Wall Street, where a wave of optimism about something fabulous swamped sellers from the opening bell. Even if the young Kim – reportedly a huge basketball fan like his dad — merely slows North Korea’s mischievous transfer of nuclear weapons technology to Iran’s mullahs, jihadists and terrorists around the world, it would be the best Christmas present our crisis-fatigued planet could receive. Small wonder, then, that North Koreans were sobbing in the streets as they grieved the loss of their Dear Leader. And very dear he must have been, to judge from the tens of thousands of mourners who lined up for hours to pay their respects as Kim Jong Il lay in state, ensconced in a glass-covered coffin. Was he smiling when he died? We couldn’t tell looking at the picture below, although we won’t be surprised if a future biographer reveals that Kim, who’s name means “regal hill,” was a world-class kibitzer in private. » Read the full article