The December contract is trading exactly where it was a month ago, a situation hardly conducive to interesting or profitable forecasts, let alone dramatic ones. We ended last week with a cautiously bullish target at 25.02, but because gold futures looks slightly bearish at the moment, I'll sync up my Silver forecast with a 22.82 target that is cautiously bearish. That's the midpoint Hidden Pivot support of a pattern begun in mid-September that projects to as low as 19.94. Alternatively, a pop exceeding the 24.73 'external' peak recorded on the way down last Wednesday would shift the outlook to short-term bullish, and a print at 25.23, especially early in the week, would put 26.40 in play for a finishing stroke. ______ UPDATE (Oct 19, 9:14 p.m. ET): I've had enough gratuitous nuttiness for the time being. I'm going to sit back and watch for a few days. _______ UPDATE (Oct 21, 11:59 p.m.): Like the updated chart in gold, I offer this one without much enthusiasm, although it looks a little better than gold's. A pullback to the green line (24.33) would trip a 'mechanical' buy, stop 23.64, but I'd suggest an alternative entry set-up, since the initial risk would be nearly $3500 per contract.
I sometimes put Hidden Pivots aside and trade from the gut. Right now, my gut is telling me that the bull market in this stock is a Wall Street hoax that cries out to be shorted. I'd suggested doing so a while back, but I'm ready to get serious now and will be looking for a good entry spot. For the time being, however, and to tide over traders who may be chomping on the bit, I'll recommend putting on put butterfly spreads well below the market. Specifically, I'm recommending that you buy the January 18-20-22 put spread 100 times for a slight (i.e., 2-3 cents, to pay for commissions) credit. For each spread done, this would entail shorting two January 20 puts, buying one January 18 put and one January 22 put for a net credit of a 2-3 cents. This is tough to do at the moment, and if the influx of orders resulting from this recommendation rattles the market makers too much, we can try to end-run them by legging into the spread at possibly even better prices. The inset shows the relevant bids and offer for the options we seek. If we're successful, maximum profit on the position would be $20,000, with no loss possible (even after commissions). So why am I down on Yahoo? I mentioned here earlier that I do not share the Street's reverence for the company's CEO, Marissa Mayer. She may have been a hotshot at Google, but that kind of talent -- any talent short of genius, in my opinion -- is not fungible in the dot-com business. If she were the Steve Jobs of web-based marketing/advertising, I'd say Yahoo! has a chance to rule its world. Instead, far from innovating, Mayer went out and paid $1 billion for Tumblr, a
Notice how Soybeans' most recent thrust failed by two cents to surpass the very subtle external peak circled in yellow. This chicken-hearted action is a green light to position trades from the short side, including selling call premium, from now until the cows come home. Whether put premium will prove equally safe to sell depends on whether the minor downtrend exceeds its 'p' support (or more bearishly, its 'D' target.) If not, we could see this vehicle shuffle sideways for an eternity -- or until a 1930s-style dust bowl makes beans scarce.
Silver got sucker-punched at the highs yesterday, but it's no cause for concern, since the September contract had already done the heavy lifting by impulsing above two prior peaks on the daily chart. (They lie, respectively, at 18.280 and 18.535.) In fact, the futures need to pull back a bit more -- to at least 18.110 -- to be considered fully re-charged for the next upthrust. Thereafter, a 34.5-cent "booster rally" from some low in the range 17.850-18.110 would imply the larger move to as high as 19.485 is under way.
I'd be tempted to recommend shorting a Hidden Pivot at _____ aggressively were it not for its close proximity to a visually obvious high at 31.63 made two weeks ago. Let's try it anyway, very gingerly, by naked-shorting a single September 32 call (SYJIF), stop ____, if and when SKF gets within a six cents of the target. By rough estimate the calls should be offered for around ____ at the time, but you should try to do no worse than a price midway between bid and offer.
