Wednesday, August 15, 2012

Encouraging, to say the least.  Monday's modest spike on the opening bar may not look like much at first glance, but if you let your eyes travel west you'll see that it exceeded a key peak at 31.03 recorded back in May, creating a bullish impulse leg on the hourly chart.  The stock has fallen back some since, but the pullback low is still three cents shy of the 30.34 print needed to turn the bullish signal into a dueling muddle.  Even then, however, odds will still favor bulls, since they required barely any pullback for the running start that bettered the May peak.  A buy recommendation at the moment seems a bit premature, notwithstanding the fact that I haven't much looked SLW since May, when I tuned it out altogether. Last week's $2 gap-up, sneak-attack rally was my comeuppance, though -- just the way a stock is supposed to move when it wants to screw erstwhile or inattentive bulls out of entry opportunities.  I am attentive now, however, and ready to jump on the stock if a situation arises where entry risk is down near-zero.  You can learn how to do this stuff yourself — and more easily than you might imagine.  Click here for a free trial subscription.

GDXJ is selling off  without having quite reached a middling rally target at 20.81 (see inset).  This has mildly bearish implications for the near term, but we can nonetheless try bottom-fishing with tight stops, since the bigger picture still looks promising. Accordingly, I'll recommend bidding 19.64, stop 19.56, for 400 shares. As you can see, our bid lies four cents above the 19.60 D target of the minor corrective pattern shown. (There are alternative abc corrective patterns, but I'm trying to keep it simple.)

On paper, we're short two contracts -- effectively from 1413.00, since we covered two for a partial profit at 1405.00. For now, use a fixed stop at 1408.25 for one of them, and at 1411.50 for the other. On a one-cancels-other basis, you should also cover a third contract at 1391.00. Overall, this strategy for risk management lies somewhere between "swinging for the fences" and getting out with at least a small profit no matter what. One reason we are not going for broke on this one is that my big-picture forecast allows for a Dow rally above 14000.