Friday, December 5, 2014

Junior mining companies tracked by this ETF look a little shakier at the moment than gold itself, but we can still try bottom-fishing if conditions are right. The pattern shown suggests we would enjoy appealing odds with a bid down around 23.54, a Hidden Pivot support that roughly coincides with the 23.65 target of a smaller pattern. Accordingly, I'll recommend buying eight Dec 26 25-strike calls if GDXJ gets within 0.03 of the target by Tuesday. We can fine-tune the price in the chat room, but the calls would be well priced at around 0.95 if the 23.54 target were to be reached today.  That's very unlikely, but I am providing a benchmark so that we can adjust downward next week. Be prepared in any case to stop yourself our of the calls if they trade for 0.20 less than you've paid for them. _______ UPDATE (December 8, 8:56 p.m.) GDXJ took a big bounce from 23.49 yesterday, allowing subscribers to get long easily within pennies of the low. Assuming 16 calls bought for 0.84 (the low was 0.80), the risk could have been neutralized by shorting 16 Dec 25 calls at the 27 strike for 0.84 (they last traded for 1.00 yesterday). For now, do nothing further.  Although our risk is zero, the position could produce a profit of as much as $3200. _______ UPDATE (December 12, 2:10 a.m.): Slippage though a minor midpoint support at 24.92 yesterday portends more weakness to a minimum 23.04. You can bottom-fish there aggressively, but I'd suggest a stop-loss no lower than 22.89,

We pondered some bullish strategies during yesterday's impromptu session, but I may have to reconsider the idea of buying only on weakness, since we're not seeing much of that.  Our goal is to leg into 'free' vertical call spreads, of which I provided some examples during the webinar. But if the only pullbacks we can expect are brief ones in the opening hour, it will be far more difficult to leg into $5 verticals than $1 or $2 verticals. In any event, these trades will have to be improvised on-the-fly. Please don't hesitate to prompt me in the chat room if you see opportunity, since a team effort in real time will likely produce the best results.

The 2084.75 rally target shown was flagged during yesterday morning's 'impromptu'  webinar, but it came with a cautionary note about jumping aboard prematurely in expectation of a quick follow-through. This turned out to be good advice, since Mr Market spent the rest of the day screwing the pooch, presumably while awaiting better conditions to foment yet another short squeeze.  The target remains valid, and it looks like it could be shorted with a stop-loss as tight as 2-3 ticks.  However, I'd recommend doing so aggressively only if you've caught the ride higher, since any profits thereof could be used to widen the stop-loss when you reverse the position. Night owls will fare best if the rally resumes in the wee hours, but in any case, traders should look for a shallow pullback from just above peak #2 (2074.50) to initiate. I've sketched out a small ABC pattern to guide you. _______ UPDATE (8:43 a.m.):  The pattern I drew played out in actuality to yield a 2073.25 buy signal and a ride to D=2076.25. The futures subsequently 'went mental' on news that 321,000 new McJobs allegedly were created last month, but any subscribers who were long ahead of this would not likely have stayed aboard for the roller-coaster ride that ensued.