SLW

Without intending it, Rick’s Picks may have become an oasis for gold and silver bulls who are at the point of despair over the mining sector's relentless, and presumably unjust, plunge. We have good news for you:  Using technical tools to tweak your timing and risk management, it’s possible to buy “crap” stocks all the way down without getting hurt if you’re early. We use the word “crap” ironically, of course, since it is only when stocks have been beaten down as badly as those in the mining sector that they become screaming bargains. And that pretty much sums up the situation as far as we’re concerned. Not that the blighters who have been doing the selling couldn’t bludgeon bullion shares even lower before they relent. In the meantime, wouldn’t it be lovely to take all that stock from their undeserving hands -- and to do so without penalty or punishment if we are premature? On the subject of mining-sector “crap,” a perfect example is the execrated and abhorred GDXJ, an Exchange Traded Fund (ETF) that tracks the shares of junior gold mining companies.  Although it has an ardent following among Rick’s Picks subscribers, GDXJ has unfortunately proven treacherous to the financial health of long-term investors. Some of them may have thought GDXJ looked like a great bargain a couple of months ago when it was trading for around $30 a share, down from a high of $43 in 2011. We told subscribers to hold off on buying, however, warning that the stock could eventually fall to $20 or even lower. That is still a possibility. Nonetheless, to avoid missing a possible long-term bottom, we started nibbling at 23.93, a “Hidden Pivot” target first advertised in the newsletter when GDXJ was still above $26.  The buy at 23.93 proved timely

Silver Wheaton may yield an opportune buy this morning, according to an analysis of the stock done in conjunction with last night's concluding session of the Hidden Pivot Seminar.  Accordingly, I'll recommend  bidding 29.33 for 400 shares, stop  29.18. Our bid lies two cents above the midpoint Hidden Pivot of the pattern shown. This play is obviously highly speculative, since it is usually wise, when trying to catch a falling piano, to let it first bounce three times. If the stop fails, try again at the 'D' target, 27.97, using a 27.99 bid, stop 27.89. My hunch is that there are more than a few Rick's Picks subscribers who have been itching to try again. We already hold a bull spread (two June 40-42 verticals) whose cost basis has effectively been reduced to zero by partial profit taking during a fleeting rally a while back.  Note: There is one more target at 28.15 where you could try buying, but this should be done only by those who understand why. Hint:  Start with A=34.20 on 4/2, hourly chart. _______ UPDATE: The target at 29.33 caught Silver Wheaton's intraday low to the penny, although so far the stock has gotten no bounce from it whatsoever. Maintain stops on our newly acquired position at 29.18, but make it one-cancels-the-other with a closing offer of 200 shares @ 29.97, day order.  The wind in precious metals will need to change direction Sunday evening to lift this stock out of trouble. If it falls anew, 27.97 would be the next spot where we can try to get long. _______ UPDATE (11:54 a.m. EDT):  Silver Wheaton has gotten pulverized this morning. The good news is that the low of the $1.38 plunge was 27.96, a single penny beneath where I'd suggested buying.  For your further guidance,

We hold two June 40-42 call spreads effectively for free, having legged into them in timely fashion and taken partial profits along the  way. The stock has been a disappointment even though it cost us nothing to bet that it would get its mojo back at some point between early March, when we initiated the position, and late June, when it expires. Be that as it may, the stock is approaching a downside Hidden Pivot target at 28.15 where it would once again be an attractive buy.  Accordingly, I'll recommend acquiring four  September 32 calls if SLW comes within 10 cents of the target. I'll also recommend buying 400 shares via camouflage, using the first uptrending 'X' trigger that occurs on a 5-minute chart or less once the stock has come down to at least 28.35.  The accompanying chart shows how fetching the pattern is that we'd be buying.

Rick’s Picks occasionally serves up “softball” trades geared to relative novices who have never fooled around with stock options, let alone made money with them. The goal each time is to help subscribers make enough to pay for a year’s subscription to the service ($350, or click here for a free trial). Last week, we bid fair to put them on a winning track with a trade in Silver Wheaton designed to risk no more than literal pocket change. We did so in two steps: 1) buying June 40 call options for 1.17 when the underlying stock fell to within pennies of a correction target at 34.53 we’d identified earlier; then, 2) two days later, with the stock in a powerful rally, short-selling June 42 calls against the ones we’d bought for the same price.  The net result was a vertical bull spread that cannot lose money no matter what the underlying stock does but which will produce a gain of as much as $200 per spread if Silver Wheaton is trading above $40 come mid-June. Not bad odds, right?  It’s like getting 15-to-1 on a horse to finish in-the-money, but also getting a money-back guarantee if the nag fails to place or show. Notice, however, that a profit on this trade is still contingent on a moderate rally between now and mid-June from a current price of around $36. If Silver Wheaton should fail to move above $40 over the next 90 days, however, the trade would ultimately produce neither a profit nor a loss – would in fact expire with a value of zero, or exactly what we “paid” for it. In the interim, unless SLW falls dramatically, we can always sell the vertical spread for more than zero. (It settled on Friday at 0.45 cents, yielding a

Having established a long position in Silver Wheaton two days earlier just 13 cents from a potentially important corrective low, we took a close look at the stock’s vital signs to determine what to do next. SLW had in fact rallied $1.80 from the bottom, or a little more than five percent, turning June 40 calls that we’d acquired into solid winners. With the goal of shorting June 42 calls against them, how far should we try to stretch this one? As you will see, there were good technical reasons to let our profits run.

We hold two June 40-42 call spreads effectively for free after shorting two June 42 calls yesterday for 1.17 against June 40s bought earlier whose cost basis had been reduced by profit-taking to 1.17.  What this implies is that we cannot lose even a dime on this trade no matter what the stock does, but we stand to make as much $400 if Silver Wheaton is trading above 40 come June expiration.  For now, do nothing further. If SLW moves sharply higher over the next month or so, we would likely have an opportunity to trade out of the position for a nice gain before the options expire. As of yesterday's close, the stock had exhausted its upside potential for the day with a thrust to 36.39 that exceeded the Hidden Pivot target shown by three cents.  

We hold two June 40 calls with a 1.17 cost basis after imputing to them a partial profit taken on two more at 1.37.  Use a 1.17 stop-loss for the two that remain (or multiple thereof), but make the order one-cancels-the-other with an offer to short two June 42 calls for 1.47, good-till-canceled.  If successful, we'll hold two vertical spreads for a net credit of $30 each.  In theory, that means the worst we could do on the trade after commissions is make about $40; and the best, if SLW is trading above 40 come June expiration, is make $460. The stock's immediate fate is not predictable, at least by me, but it'll need to hit 36.41 for bulls to regain control. Otherwise, SLW will remain vulnerable to more slippage down to as low as 33.44. ______ UPDATE (2:29 p.m. EST):  Lower the short offer for two June 42 calls (or multiple thereof)  to 1.17 or better, good through Friday.  Would you like to learn how we use the ‘camouflage’ trading technique to significantly reduce entry risk? Click here for details.

Like a breath of spring, wasn’t it?  Just when we were expecting yet another short-squeeze toward Dow 14000 and beyond, the Indoos plummet a refreshing 203 points, bowing to economic realities and rationality at last. Or was it just March madness? Who cares. When some uncharacteristically glum Wall Street wrap-ups hit the tape late Tuesday afternoon to acknowledge the stock market’s steepest decline of the  year, it were as though we’d died and gone to heaven. It was even better than that, actually, since the selloff did not exactly take us by surprise. A trading “tout” that we first aired in mid-January called for a 600-point Dow rally to 13085, but here’s the timely update that went out to subscribers shortly after midnight Tuesday:  “The Dow [has gotten] as high as 13056 — close enough to the target to turn us very cautious.  This means, for one, that we are not taking the likelihood of yet one more short-squeeze rally as a given.  In fact, a downdraft that exceeds 12883 would create the strongest bearish impulse leg on the daily chart that we’ve seen in a while.” In the actual event, the Dow blew past 12883 on its way to an intraday low at 12734. So how bearish are we?  Not as bearish as you might think, actually -- just very cautious, as noted above. We leave bullish and bearish “feelings” to gurus who possess, um, crystal balls. We don’t purport to see the future – only to trade day-to-day realities that can change so fast that if you stop to pat yourself on the back after making a good trade or prediction, you risk getting flattened by Mr Market’s equivalent of an 18-wheeler. But as long as you don’t take your eye off the truck, there is nothing to

'Dueling impulse legs' cede an edge to bears at the moment, although the most recent impulse leg (see inset) suggests night owls will enjoy better odds if they trade from the long side. The pattern shown projects to 39.52, and it should be regarded as no worse than an even-odds bet because the p sibling at 38.94 with which it is associated has already been exceeded to the upside by a decisive 6 cents. Since action at the opening bell cannot be precisely predicted, I won't offer explicit instructions for buying the stock. However, the 38.59 'D' target of the small corrective pattern shown is where I'd look if SLW opens quietly Friday morning.  Note that the downtrend halted on Thursday at the precise Hidden Pivot midpoint of the pattern. _______ UPDATE (10:39 a.m. EST): The stock opened very unquietly on a gap slightly below 38.55, so we did nothing. SLW continued to head lower, breaching the 'p' midpoint of a pattern projecting as low as 36.42. This is bad news, but the outlook would improve if the stock can push past a small 'external' peak at 38.43 in the next day or two. _______ UPDATE (March 5, 11:35 a.m. EST): The stock has crashed the support, apparently bound for a worst-case Hidden Pivot target at 34.53.  The correction will be a 15 percenter at that point -- a good time to establish a long position.  Accordingly, I'll recommend bidding for four June 40 calls with the stock 34.60 or lower.  ______ A FURTHER UPDATE (March 6, 9:58 a.m. EST): We bought four June 40 calls for 1.27 just now when the stock plunged to within a penny of the 34.53 Hidden Pivot I'd flagged as a worst-case low. In fact, there is now a new worse-case possibility at 34.07,