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=============== TECHNICAL REGISTER: September 16/98 ==================
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THE TECHNICAL REGISTER
By Mr. Chartist
September 16, 1998
More Resource Stock Correction, Short Term
"A brave soul might try the Barrick Gold call options - September 15 calls
(ABXIC) closed at 5/8 ask on Friday; October 15 calls (ABXJC) closed at $1 ask
on Friday."
--- From The Technical Register, August 31st
The Barrick Gold (ABX) September 15 equity call options -- ABXIC -- topped out
at $3.50 for a 500% increase over 9 trading days. If you didn't close your ABX
equity call position, yet, you should immediately do so. The Slow Stochastic
lines have crossed and the candlesticks show a complicated "dark cloud cover"
formation.
Tuesday's trading in Barrick Gold (ABX) produced another dark cloud cover. The
Philadelphia Gold/Silver Index (XAU) appears heading lower, having peaked on
Friday. December Gold is showing weakness. This offers two trading
opportunities:
A. High-Risk Traders: ABX September 17-1/2 put options - ABXUW
Ask: $0.50
Expires this Friday
B. Lower Risk Strategy: ABX October 17-1/2 put options - ABXVW
Tuesday's trading - Bid: $1.12, Ask: $1.31, Last: $1.25
Theoretical Value: $1.28
Expires 3rd Friday in October
Trading Hint: Options are not investments. Your greatest enemy is time as the
premium value of an option decays the closer it approaches expiration. In a
high-risk strategy, such as ABXUW, the share price of ABX must decline below $17
for a breakeven (excluding commissions) during trading on Wednesday, Thursday or
Friday. The sooner ABX drops below $17, the higher your chances for a profitable
trade. A rally in ABX shares would make your options worthless.
UPDATE ON OILS
We remain pessimistic on the oil stocks, for the short-term. The
technicals are showing overbought and we observed a few CNBC-TV analysts
chatting about "liking oil stocks." Crude oil was reported to "have firmed up"
but we noticed a mere 5 cent increase in December Crude Oil. December Crude
bumped against a $15 resistance level and backed off. The Oil Index (OIX) and
numerous oil stocks are in overbought territory.
In Tuesday's report, several oil companies were mentioned for put option
opportunities. They are pricey for leveraged trading. However, there is one to
consider: Chevron Corporation.
A. High-Risk Traders: CHV September 80 put options - CHVUP
Tuesday's trading - Bid: $0.25, Ask: $0.38, Last: $0.38, Theoretical Value: $0.16
Expires this Friday
B. Lower Risk Strategy: CHV October 80 put options - CHVVP
Tuesday's trading - Bid: $1.81, Ask: $2.06, Last: $2.00, Theoretical Value: $1.78
Expires 3rd Friday in October
Mr. Chartist
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Note: To discover more about the components of Dynamic Investing, please
visit our new website stockhouse.com and read our
Traders Special Report: When to Sell. This may be one of the most important
reports you will read this year.
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"ABOUT THE TECHNICAL REGISTER" -- The Technical Register is the final word
on technical analysis. Published more than 200 times per year, The Technical
Register applies an arsenal of technical indicators to evaluate the most
actively traded issues on the North American stock exchanges: Toronto, New
York, NASDAQ, Vancouver, and Alberta. The Technical Register issues buy and
sell recommendations on the most widely watched stocks on these exchanges.
SEE our introductory articles acquainting you to our methods: "When to Sell;
When to Buy." and "An Introduction to the Technical Register" on the web.
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