Gold: A KEY Technical Turning Point...
On Tuesday the DOW was down -343 points intra-day, and
closed down -243 points... but, the HUI Gold Stock Index
closed up.
During the forced liquidations of October and November,
the HUI Gold Stocks have been tracking the DOW, but now...
that technical convergence is breaking into divergence,
with the HUI finally rallying into a weaker broad
market.
And THAT is exactly what gold bugs have been
waiting for.
The HUI Gold Stock Index is now basing for a potentially
explosive "W" double bottom with the right leg of this
rally in the HUI, pointing it's bat to the HUI 320 level.
I've talked about the necessity for gold to break through
$800 as a pre-requisite for gold stocks to break out of
this HUI 150-250ish trading range, and it has.
For the HUI to rally to 320ish, gold must now find support
around $750 and challenge the upper $800's again...
I've pounded the table for some time now, that the deflationist's
who missed the most profitable part of the final surge in
commodity prices, will also miss this trade, which in gold
stocks... will be "doubles and triples" off the October
and November bottoms.
People... the CPI is still over 3% and 2% has historically
been the "mandate" ceiling for inflation with Central Banks.
Inflation is NOT dead, neither is gold, and the Gangster
Bankster's have just flipped a $7 Trillion Dollar nitrous
switch.
This is the collapse of a hyper-leveraged credit bubble,
and we have both inflationary and deflationary
forces at work, and will continue to do so.
Inflation is NOT dead, but deflationary forces can NOT be ignored either.
Leave the academic debates to academics, because traders have
been given opportunities in which markets are making moves
in ranges over days, that formerly took weeks, and in weeks
that formerly took months, and in months that formerly took
years.
Traders look primarily for discrepancies between price and risk.
The inflationista's got too bullish back in March, and the
deflationista's got too bearish here in October, and November.
And that's what you should be trading...
"The Discrepancies Between Price and Risk."
Sure, you need to have a thesis on how this tug of war will
ultimately play out, but you don't have to be right on an
outcome that may ultimately take years to play out, you only
have to be right on the interim discrepancies between price
and risk in the ongoing battle.
And the war is ongoing...
Central Banks are injecting unprecedented levels of stimulus
into the global financial system.
The U.S. Fed is now printing money in buying long
dated Treasuries.
Never before in history has there been this globally coordinated
level of cooperation between central banks. They are all
cutting rates and flooding the system with money.
While banks are hoarding the cash on their balance sheets
and many argue that there can be no inflationary effect
from this until the banks actually begin to loan out
that money... gold, and commodities are anticipating
the when, and not if, eventuality of that reality, while
virtually all fiat currencies are engaged in dance of death.
And remember Rothbard's tome on inflation...
"He who get's the (newly printed) money first -- wins."
And shame on you, if you do not think that the Bankster-Gangsters
are not taking some of that money and leveraging it into
gold, and commodity stocks that they shorted all the way down.
The injection of "Trillions of Dollars" into the global
financial system can not be, and will not be ignored...
by either the bankster-gangsters, gold, or traders.
While gold, and more so -- gold stocks, are not immune to
event driven sell offs in the broad market, gold and gold
stocks have FINALLY broken free from the shackles of
forced selling from hedge fund & mutual fund liquidations.
While the potential of a deflationary collapse can not
be ruled out... the "trade" is NOW on the hyper-inflationary
potential of the unprecedented level of rate cuts which now
gives those seeking safety in short term Treasuries a negative
return. And those seeking safety in currencies a slow dance of
death, by trying to seek safety by trying to select the best
of the worst.
Gold if only by default, is now getting a stronger bid, and
that is an event that if anticipated, is now being richly
paid off.
This is an environment in which you should continue to take profits
into these gap up opens, but rotate the proceeds back into
laggards like SLW, AUY, and this morning... GSS.
Keep doing what's been working, but give Ole' Yeller some
leash to run.
Keep raising stops...
Keep adding some puts for insurance on all major rallies...
Keep selling puts into all major pullbacks...
And give Ole' Yeller some leash here... because she's running
hard & strong, and unless we get another broad market "event"
she's heading towards that HUI 320 level as indicated by
the "W" Double Bottom Chart.
And keep diggin' for those laggard trades...
Yesterday morning, AUY sold down to the $4.80's pre-open
with 10,000 share block trades clearing right and left,
and over 1 million shares trading before the open, on
Yamana's news of a dilutive stock issuance.
...but, Yamana is now up over +30% from that initial reaction
yesterday morning. And THAT is yet another turning point in
this market.
And how about SLW and those put sales in FCX?
You can now cash out those May '09 put sales in FCX for doubles...
***************************************************************
Message 25224422
Today FCX is getting killed. I won't go into the fundamental
story, as you should already know it, given that it's a
flagship stock, and one of the most highly covered commodity
stocks by the media, both online and in print.
Here's the bone...
You can sell the May 2009 $10 puts for a $1.95 premium.
finance.yahoo.com
And here's the drill...
Best case:
If FCX closes over $10 upon the May expiration - you pocket
the $1.95 premium.
Worst case"
If FCX closes under $10 upon the May expiration - you own
the stock $8 bucks or less...
Want a little meat on your bone?
Okay, here's the meat...
If you want to buy more time, and want less risk, then
check out the Jan. 2011 $7.50 puts.
finance.yahoo.com
$2.36 premium!
... worst case?
You get your arm twisted and you own FCX for $5ish.
**************************************************************
And here's what happened in SLW...
11/26/2008 12:20:55 PMFrom: SliderOnTheBlack
Message 25209370
I've been buying SLW all morning... done now, and it's
looking like it's finally about ready to break out of it's
downward trading channel.
--------------------------------------------------------------
From: SliderOnTheBlack12/2/2008 1:51:16 PM
Message 25221332
Check out this action...
finance.yahoo.com
27,101 March $5 Calls bought TODAY.
Nice re-load opp in SLW here.
--------------------------------------------------------------
From: SliderOnTheBlack 12/2/2008 9:01:01 PM
Message 25222572
re: After Hours Action in SLW...
John Najarian of OptionMonster.com was on CNBC's Fast Money
and SLW was his featured pick. He cited the huge call volume
that was noted in the Real Money article I posted about
earlier today.
SLW traded 9.1 million shares today vs. 5.9 average daily
volume. After the September & October hedge fund liquidations
it's been rare to see a PM stock trade over it's average
daily volume, unless it's on one those -500 point down days in the DOW.
Those 27,000 call options and this volume set off a lot
of bells & whistles TA screens.
Most PM stocks are now +50-100% off their Oct/Nov lows.
And SLW is only +25% off it's lows. So you've got .60 cents
downside to it's ytd lows, and $1.30 upside just to it's
November highs of a couple of weeks ago.
That's 2:1 upside to downside in the near term. There just
aren't any quality PM stocks left with this type of
risk:reward. It should be an easy buy & hold double by
spring. And it's been a pretty good trader over the last
few weeks for those so inclined.
I think this is potentially "the best" of the remaining
PM laggards. With today's volume, and with the option activity
noted by the media, it could easily get some momentum players
piling in.
Keep this on your buy list and add on any weakness.
--------------------------------------------------------------
From: SliderOnTheBlack12/3/2008 4:50:14 PM
Message 25224931
Updated SLW trading thoughts...
Today's volume gave any potential institutional tax
loss sellers a "gift horse" opportunity that NONE of
them could, or would pass up - to dump into.
If you were a mutual or hedge fund manager, and you were
even remotely considering taking the tax loss on SLW ...
you did it yesterday, and/or today.
So what does that mean to you if you're long SLW?
It means that this volume today more than likely, absorbed
the vast majority of potential tax loss selling that
existed in SLW.
And that's a reason to NOT be in too much of a hurry
to be taking profits here, because the overhead resistance
of tax loss selling may already have been taken out.
Here are the trading channels SLW has been in of late:
Take a look at that "long tail" spike down on the large
red candle on October 10th.
Technically, if I am correct about the institutional tax
loss selling getting taken out over the last two days,
then we are now set up for the reverse, a spike up.
So hold on, because the fuse may just be getting lit on
this one and we could easily run to that $4.60 high of
November, or even the $5.99 level from mid-October when
silver was only $9.50.
Nothing wrong with taking "some" profits off during the
run up, or raising stops, but give this dog some leash,
because she's running s-t-r-o-n-g.
And look out, if gold and silver can get some wind behind
their backs...
Mo later,
SOTB
---------------------------------------------------------------
And here's where that "reco" stands today...
An 88% run and 6 X outperformance to the HUI index and
the Big Dogs like ABX, NEM & GG.
*************************************************************
And fwiw...
I am NOT sorry for "going off" on the posters who brought
their losers limp game to this thread, with their
mindless babble and drivel about "doing your own DD" and
the volume in SLW being a "hype job" etc.
Fidelity Funds invested $90 million dollars in SLW, and those
27,000 March '09 $5 calls are now nearly in the money.
The story on SLW was a fundamental one, and to deny the
strength of big and smart money literally pouring into the
stock into the face of weakness is moronic.
I will never apologize for calling a spade - a spade,
a chihuahua - a chihuahua, or a wannabe - a wannabe.
And where were all these do-gooder's when the perma-bull
cheerleaders we're telling people to "hold tight" and
stay loaded up at the top last March?
Where were they on "the Chinese ETF", on "Hold Tight", on
"re-pricing gold for inflation in 1980 dollars @ $2158", or
on all the "imminent collapse of the dollar" calls?
To come on here and poo-poo Fidelity INVESTING $90 million
into SLW, and not the daily drivel from the cheerleading,
perma-bull hypesters of Kitco & Gold-Eagle is ludicrous.
I've never had any problem with anyone who disagrees with
anything I have to say, as long as you present an honest,
well thought out reason for it.
I have no problem with agreeing to disagree.
Never have -- never will.
But, what I won't tolerate is wannabes who pop up out of their
weasel holes and try to play front running games (and you know
who you are), or ankle biters who want to bitch, whine, and
moan.
If you want to disagree - nolo problemo. Just state your case
and why.
But, please... save the sophomoric pablum about "doing
your own DD" and something being a "hype job" on a billion
dollar market cap stock that trades 5 million shares a day,
with players like Fidelity Funds dropping $90 million dollar
"investments" into them, for the charlatans who take shares
from the penny stock promoters, and do pump & dump them to the
gold bull public on the permabull sites.
Anyway...
I've had a couple of options offered to me, and am deciding on
a couple of projects of my own that would be up and running by
the first of the year in January.
I've decided to keep a limited presence here on SI, as I've
established a lot friendships, and SI has been very good to
me over the last 10 years.
But, SI has it's limitations in both technology and format,
and people can only expect so much for free.
Free is a double-edged sword...
I have other business and family commitments, and when
those commitments are weighed against "free" -- free loses.
The main benefit for me in being involved here on SI, is that
it helps me keep a pulse on the sentiment of traders.
And that "pulse" is perhaps the single most under-valued
asset among traders.
And if you don't think that "pulse" is valuable, or that SI
is among the best, if not "the" best place to keep it, consider
Mr Pink...
For some of you old timers here on SI, you undoubtedly remember
"Mr Pink."
Mr. Pink was a top poster here on SI during the internet and
tech stock mania.
Mr. Pink was Dan Loeb.
FYI, Dan Loeb runs the $5.7 Billion Dollar Hedge Fund "Third
Point Management" and also broke the record for the highest
price paid for a NYC apartment with his $40 Million Dollar+
purchase of a New York brownstone.
Doyle Brunson the World Series of Poker star was the one who
said -- "Play the players, not the cards, because while the
cards always change -- people never do."
And that same principle translates even better to the markets
than it does in poker (imho), hence my take on it of ...
"Trade the traders not the markets, because while markets
always change -- people never do."
Becoming a master at reading sentiment and being able to
accurately take the pulse of the market at any given moment
in time, is not only possibly the single most valuable talent
that a trader can have, but is also perhaps the one thing that
can not be taught, and best represents the "art" as opposed to
the "science" of trading.
For that reason... I'm going to stick around here, but on
a much more limited basis.
I've met some good friends here on SI, and SI has always been
very good to me, but SI is limited in it's technology. You
can't do video, can't have conference calls, Q&A webinars,
can't post power points etc. And perhaps most importantly,
you can't keep the riff-raff out, and even if you ban them,
they can pop up 5 minutes later with another screen name
under a fresh IP.
This weekend I'll post a link to a survey where you can have
some input as to what you'd like to see and hear from me here
on SI, as well as what you'd like to see in the other venues.
Tell me what you like, what you don't... what you want to see
more of, or less off...
Until then...
Mo later,
SOTB |
