Trading Thoughts: "The Turn"...
This morning, we saw some momentum money exit the gold stock
trade, and rotate to the broad market on the expectations of
the final approval of the bankster-gangster, bailout & stimulus
package, part II.
Nothing unexpected there.
And as far as any rally in the DOW...
I actually hope we see a rally up and through DOW 9250ish+
which will give us an excellent risk:reward short trade,
based on the still horrendous jobs numbers, earnings, and
economic news.
For gold stocks, presently we are seeing a key "triple
technical convergence" of the HUI's support trend line,
and the 50 & 200 moving averages on the 60 minute chart:
And with a $900-$930 gold price, the HUI is fundamentally
undervalued by nearly 50% at these levels.
And we're seeing the global debasement of currency...
Larry Kudlow spoke this morning on CNBC, about the Fed's
exploding the money supply, with M-2 up + $600 Billion
and +20% on an annualized basis.
The British pound is being pounded, and they are
questioning the survivability of the Euro, as the Greek,
Italian, Irish, Spanish and Austrian bond markets implode...
telegraph.co.uk
Given all of the above, we should be right on the verge of
a breakout and a major rally for the HUI gold stocks.
However, given the gains we now have to protect, I would move
stops up very tight here. I would take a look at your
individual positions, and stagger stops from HUI 285 to 296.
And yes, set 'em that tight. Because here's my thinking regarding ...
"The Turn"
I either nail "the turn" right here and right now, for a
major HUI rally... or I lock in the profits on this run,
and REFUSE to give up one red cent under 285, and I'll
start triggering stops at HUI 296.
Given all the positive fundamentals underlying gold,
and the convergence of the technicals... we either make
"the turn" right here, and right now, or we don't.
In essence, I'm giving 'em some leash to run here, but I'm
also taking up the slack.
And should the HUI rollover here...
Be patient. There was buying support at HUI 285ish, and we
had the pivot point on Jan 15th at HUI 250ish.
I would only re-enter at HUI 285ish, if the gold price
remains strong at $885ish plus. And if gold breaks $885,
then I think the HUI could pullback to the 250ish level.
And if we get a pullback, use "put sales" as your initial
re-entry tool.
I know I've pounded the table on "put sales" a lot, but for
good reason...
While not a HUI component, I'll use an earlier reco on FCX
put sales as an example:
FCX has been one of my favorite trading stocks, and selling
puts has been an incredibly profitable strategy given it's
volatility...
Message 25224422
Message #13784 from SliderOnTheBlack at 12/3/2008 2:05:03 PM
"A Big Fat Succulent Bone Dripping With Juice"...
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
Update: You can now close out that trade for .26 cents.
$1.95
- .26
_______
= + $1.69
= 6.5 x return on .26
FCX May 2009 10.0000 put
(OPR: FPAQB.X)
Last Trade: 0.26
Trade Time: 1:41PM ET
Change: 0.00 (0.00%)
Prev Close: 0.26
Open: 0.29
Bid: 0.14
Ask: 0.18
Day's Range: 0.26 - 0.26
Contract Range: 0.34 - 2.17
Volume: 40
Open Interest: 2,323
Strike: 10.00
Expire Date: 15-May-09
*********************************************
Let 'em run, but start taking up slack on the leash,
as this should be -- "The Turn."
Mo later,
SOTB |
