Thursday, August 23, 2012

Silver Wheaton has demonstrated once again that it will only be possible to buy the stock on weakness -- as opposed to those times when it is rocketing higher -- if we are following the action minute-by-minute on the very lesser charts.  Yesterday's escape from the doldrums came so suddenly that even the nimblest camouflage trader would have had difficulty catching the  entry trigger of the pattern shown. What's more, the clunky, multiple-bar point 'C' would have necessitated breaking a single-bar rule that we hold dear. Still, you should peruse this chart to see where the opportunities came from, the better to recognize them if they should resurface.

The nervousness of yesterday's opening inflated the puts somewhat, moving them beyond the reach of the lowball bids I'd suggested.  We shouldn't be leisurely in trying to buy them, however, since Tuesday's bull trap in Apple and many other stocks has created a supply overhang that will not be easily surmounted.  Assuming yesterday's buoyancy will linger nonetheless for yet another day or two, I'll recommend bidding 0.68 for eight November 62 puts on the opening, but lowering the bid to 0.62 if the first try goes unfilled. You should also check back after the first hour, since I'll have a better feel for pricing the options after the mood of the day has been established.  _______ UPDATE ( 10:24 a.m. EDT):  We missed buying the puts again when the Cubes opened on a gap lower. Stay with this one.  But understand that we will never, ever chase puts or calls because directional plays are too hard to beat even when we are not giving up a nickel's worth of edge here and a dime there.

The broad averages are hovering in a high-risk zone, as noted in today's E-Mini S&P tout. There was 'news' that the Fed 'might' have quantitative easing on their agenda at the September meeting, but as of Wednesday night this wasn't having a discernible impact on index futures.  It would seem that the central bank is going to leak this story one drop at a time, allowing the usual bunch of thieves and imbeciles to make of it what they will. ______ UPDATE (4:35 a.m. EDT):  It is now early Tuesday morning, and Comex Gold appears to be having a delayed, explosive reaction to the latest, desperate  QE3 murmurings.  The December contract is up $25 at the moment, although the E-Mini S&P, trading a measly 1.25 points higher, seems, understandably, and perhaps finally, to be scrupling over the insane political idea that QE3 will somehow prevent the U.S. economy's slide into Depression and save the world. If the broad averages do not soon join in Gold's revelry, it will be possible to infer that traders at last understand that the Fed used up its last bullet -- which is to say, its credibility -- when QE2 expired.

The futures are in a high-risk zone, having broken out above March 27's watershed high, but we can be cool with it as long as we play by the rules. This means first of all that we should require a pullback to at least 1401.00 (daily chart, k=1387.50 on 7/30; A=1349.25, B=1424.75)  before inferring that the futures are ready to take another leap, giant or otherwise. More immediately, camouflageurs should seek entry opportunities on the 15-minute chart. The nearest and subtlest of them would come on a print slightly exceeding a small 'external' peak at 1415.25 recorded on August 21.