Silver Wheaton

We hold eight December 40-45 call spreads risklessly, having legged into them for a cost of...zero.  The stock has since traced out a gratuitous 'vee' on the hourly chart, but the important thing to note, technically speaking, is that the spiky peak that trapped bulls yesterday morning also generated a healthy bullish impulse leg when it exceeded the 40.28 peak recorded on September 21.  Now, a pullback to at least 38.71 (see inset) would presumably set the stage for a fresh push into the low 40s.

With SLW falling hard, we remain long -- but risklessly so, since the eight December 40-45 call spreads we hold were legged on at no cost.  From a technical standpoint the stock seems likely to fall to 36.99 if it takes out D's sibling midpoint at 37.99.  Both Hidden Pivots are shown on the chart, within a pattern looks sufficiently compelling that I'll advise adding to our long position with a 37.03 bid for 400 shares, stop 36.89, day order. _______ UPDATE (September 28, 1:10 a.m. EDT):  The stock fell to 36.33 before trampolining higher, stopping us out for a loss of about $60 plus commissions. We still hold the call spreads and can simply sit tight for the time being. Because the downtrend exceeded a clear 'D' target, bulls will need to push above the recent peak at 40.34 to get out of jeopardy.

We're offering eight December 45 calls short for 0.78, the price we paid earlier for a like number of December 40 calls.  If we get our price it will leave us with eight vertical bull spreads that could produce a $500 profit each with no possibility of a loss. The stock appeared bound for 35.93 yesterday when it stalled in heavy chop.  That's the midpoint resistance of the pattern shown, but if it's exceeded bulls would be telegraphing more upside to at least 36.55, its 'D' sibling.  I estimate that it will take a bit more than that -- 36.90, based on a theoretical model -- to get us filled on the short Dec 45s. _______ UPDATE (10:26 a.m. EDT):  This morning's zesty pop brought SLW to within four cents of our 36.55 target, so a consolidation would be appropriate. Options volatility took a beating as a result of the rally, and it would now appear that the stock will need to hit 37.60 to get us short Dec 45 calls @ 0.78.  Promisingly, the first major resistance lies at 37.86 in the form of a trendline on the weekly chart that picks up two price points: last September's  42.50 high, and a subsequent peak in March at 40.36.  _______UPDATE (September 13, 1:14 p.m. EDT):  The SLW Dec 45 calls traded moments ago for 0.78 as QE3 news spiked the stock to a so-far high of 37.67. Subscribers who followed my advice should now hold a $5 vertical bull spread eight times that will yield a profit of $4000 if SLW rises to $45 or higher come December. There is no possibility of a loss on this position, even if the stock were to fall to zero.

Let's try to leg into some calendar spreads, first by bidding the December 40 calls conservatively:  0.86 for eight of them, day order. This strategy is cheaper and less risky way to leverage options directionally than simply buying call options outright (an all-but-guranteed loser). Obviously, SLW shares will have to soften today to get us filled, but if it doesn't work we can try getting long by buying the calls on pullbacks intraday. Succeeding at this would require a great deal of attention, but we'll try it the easy way first. _______ UPDATE (August 28, 12:45 a.m. EDT):  Since the calls traded down to a low yesterday of 0.86, I'll track eight of them for that price. For now, use a stop-loss at 0.66. _______ UPDATE (August 28): Chat-roomers have told me their 0.86 bids went unfilled, so I am canceling the tracking position. The calls have rallied to 1.00 since, but it is my firm policy never to chase options, even if it means we might miss an opportunity. For now, bid 0.78 for the eight December 40 calls, good-till-canceled. _______ UPDATE (August 31, 12:47 a.m. EDT):  Some chat-roomers have reported fills, so I will begin tracking eight December 40 calls with a 0.78 basis.  Do nothing further for now as we await a bounce from the 32.48 pivot shown (in a chart that has been refreshed). A weak bounce, or perhaps no bounce at all, would presage further weakness next week. _______ UPDATE (September 5, 6:46 a.m.) SLW has continued to move higher. Let me recommend offering eight December 45 calls short for 0.78 against the December 40s that we are long, good-till-canceled.  If successful, we'll have legged on a vertical bull spread that could produce a gain of as much as $4000 with no loss possible.

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.

I have no idea how this stock will open on Monday morning, but if Comex Silver is up $0.75 or less, DaBoyz may try to steal some out-of-the-money calls.  One we might try to acquire, the December 38, was artificially boosted on Friday's close with a 0.79 bid that was four cents above the last sale.  Let's play their little game, perhaps getting in some faces, with a 0.71 bid for eight of them (equivalent to owning 200 shares at current levels) on the opening. Thereafter, the bid should be lowered to 0.67 if the stock is trading below 31.75. _______ UPDATE (10:26 a.m. EDT): Maintain bids today as suggested above. These call are more popular than I'd imagined with the crime syndicate that rigs their price. _______ UPDATE (August 21, 3:25 a.m. EDT): We've got only SLW's dust to choke on at the moment. The stock may indeed be headed to the moon, but because the move is so frightfully extended, the journey will have to be without us.  Nevertheless, if I'm able to find a low-risk entry spot intraday, I'll put out a timely bulletin to those signed up for 'E-Mail Notifications' on their My Account page

We took note of Silver Wheaton's unaccustomed exuberance during the tutorial session earlier this week. The stock looks like it's just starting to develop thrust. Could this be an early indication that mining shares will lead bullion prices higher this time around?  If so, that would represent nearly as dramatic a shift as we are seeing in the bonds, whose decades-long bull market may be in its death throes. The logical implication is that inflation is about to return in a big way.  Hard as it is for me, a hard-core deflationist, to believe this, I'm prepared to let the charts do my thinking for me.  Regarding getting long in Silver Wheaton, I should have been paying closer attention when it bottomed near $23 in May.  Still, it's never too late, especially since the stock could be at $100 if silver prices are headed to new highs.

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.

During Wednesday's tutorial session, we discovered a possible buying opportunity in this stock without having looked for it.  I'd suggested using the 25.04 midpoint support shown to get long with a tight stop-loss. However, because the low of yesterday's nasty plunge only came down to 25.15 before the stock rallied out of the hole, it never triggered the screen alert I'd set. Under the circumstances, I'll recommend picking a 'camo' entry spot on the 3-minute chart. The best potential opportunity I can discern would follow a b-c pullback from between two peaks that lie, respectively, at 25.54 (12:15 p.m. EDT) and 25.57 (11:30 a.m.). _______  UPDATE (11:37 a.m. EDT):  Today's surreal rally was over on the first bar, an untradable gap-up opening to 26.84. We did nothing. You can learn how to do this stuff yourself, and it’s not that hard!   Click here if you’re ready to look at charts — and managing the risk of a trade — in a radical new way.