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-- Posted Tuesday, 18 February 2003 | Digg This Article
Gold has only to fall for a few days before the "I-told-you-so" pests start to scuddle from their dark, pungent crevices. Such a bummer! After fumigating him thoroughly in Trading Notes a few weeks ago, I thought I was finally rid of Jim "sour grapes" Davis. Evidently not. He wrote the other day to suggest that I feature the comments of – no kidding – Kip Reich more often, so supposedly prescient has Kip been, avers Davis, in timing gold’s recent ups and downs. Thanks but no thanks, Jimbo. Take it from a professional timer: Neither you nor I will ever be quite smart enough to call gold’s every turn correctly over the course of this still-nascent bull market. Not that that’s apt to dissuade at least a few of you from trying – or even from admonishing those who would try to ride out the inevitable squalls in gold’s price. Take, for example, this Lombardi-esque denizen of the chat rooms, writing under the subject heading "Gold bugs get their noses rubbed in it." Upbraiding those who have simply held onto their gold shares during this most recent swoon, he writes, "This is not a one dimensional game. It's about YOU versus the market (your opponent). In Football, when you are on Defense, do you just let the opponent snap the ball and run play after play against you without any preparation…without calling a defensive formation, without reacting to their formation, men in motion etc...do you not have a game plan going into the game... did you not review/scout their past games (read market cycle history/war hedges), do you not have "keys" that you look for ? - do you not have a game plan based on their past performances ? When on Offense, if you're 4th & 1 and you've called an Off-Tackle Dive play...and they stack 9 guys on the line of scrimmage with Linebackers in your Off-Tackle Gaps and 2 Safety's standing right behind them - do you just go ahead and run the play; or do you audibilize on the line of scrimmage & call a quick Dump-Off Pass Play ? [Editor: Well do ya, punk?] Gatorade Gofer Unless I miss my guess, this is a guy who got his varsity letter by tending to the Gatorade on weekends, and who spent many a Saturday evening scraping mud from cleats. Granted, it behooves investors to actively manage their portfolios rather than remain passive as market conditions ceaselessly change. Indeed, that is what we have tried to do in the gold stocks we hold – up to a point. But consider how one might have fared trading in and out of Cisco System’s shares as the stock’s price increased a hundredfold during the 1990s. There may be a few stellar technicians who could have bought and sold, respectively, interim bottoms and tops all the way up, but market timers with that kind of skill are one in a hundred. Better for most of us to have simply bought $1,000 worth of the stock in the early 1990s and to have sat tight as it grew to be worth $100,000. And so, I expect, it shall be with gold. For if the bull market is eventually to challenge the $850 peak made more than two decades ago, there is little justification for trying to capture the theoretical benefits of every ten percent swing up or down. We can try it when the odds appear most favorable, such as when a gold stock is approaching a high-confidence hidden pivot. But we needn’t curse ourselves when we miss such an opportunity to extract some extra change from the countertrend. [The + symbol means we have an open position, while $ means there is actionable advice.]
Gold
APR GOLD (344.30): The April contract has fallen to within less than a point of the 344.86 Fibonacci level that served as our target. If it sinks further we could look for support near 340, the lower threshold of a compelling channel on a point-and-figure chart that was sent to me yesterday by a subscriber. To get the worst case out on the table: Any close below 338 would probably set the futures on course for a test of support near 330, where a lengthy consolidation occurred between late October and early December.
+ GG (11.68): We hold 200 shares for an average 4.65. We should monitor a hidden-pivot support at 11.15 closely, since its breach would imply that the correction has an additional ways to go, to an even more important pivot at 10.26.  
DURBAN DEEP (NasdaqSC:DROOY) : Quote - News - Profile - Message Board - Website
$ + DROOY (3.72): We own 600 shares for an average 4.38. Our 3.69 bid for 200 more shares expired, but let’s enter a day order for those shares, 3.41 bid.  
RGLD (24.76): There’s a minor pivot at 23.97 that we will use for a pullback target, but it’s too close to the February 11 low at 23.81 to be useful as a place to bottom-fish. Remain patient.  
DJIA (8041.10): We’ll put aside our 7467.65 downside target for the moment, since the bulls evidently have been emboldened by the constant delays in Mr. Bush’s plan to invade Iraq. To kick a short-term rally into high gear, the Dow would need a booster surge today of at least 88 points, starting from anywhere within the range 7856 – 7975. If there is no such pullback but the Indoos are trading above 8079 after the first hour, I’d look for the rally to achieve a minimum 8162.74. A decisive breach of that pivot intraday, or a close above it, would portend a minimum 8330. $ E-Mini S&Ps (851.00): The futures closed a hair above a hidden pivot, implying the rally will continue at least to the next, 864.50. We can try shorting against the trend by offering a single contract at that price, stop 865.25, good in the first hour only. Switch to a 2.50-point trailing stop on a pullback to 859.50, using 851.00 as a target. MAR BONDS (112.20): The penetration last week of December’s 113.26 high, as predicted, portends further upside, to a minimum 115.30. That is the easy part of the forecast, but speculating on what it might mean is beyond current reckoning. It would appear that it will not be a flight-to-quality that does the trick. OEX (431.48): Ideally, the OEX should pull back into the range 419.94 - 427.26, then rally at least 5.11 points, to initiate a booster rally that could energize a surge with an additional 15 points of upside potential. Alternatively, If they’re off and running from the opening bell, a serious rally should be able to clear 433.72 in the first 90 minutes, and a more formidable pivot at 438.83 before midday tomorrow (Thursday). QQQ (25.25): Hidden pivots just above are somewhat vague and esoteric but I’ll hazard a guess anyway -- with 25.59 as first-line resistance and 26.26 as a minimum target if the first is exceeded by more than a 0.04 points. APR GOLD (344.30): The April contract has fallen to within less than a point of the 344.86 Fibonacci level that served as our target. If it sinks further we could look for support near 340, the lower threshold of a compelling channel on a point-and-figure chart that was sent to me yesterday by a subscriber. To get the worst case out on the table: Any close below 338 would probably set the futures on course for a test of support near 330, where a lengthy consolidation occurred between late October and early December. MAR NASDAQ 100 (1019.00): By rallying easily and without interruption through several prior highs the futures have clinched the bullish case for the next 4-6 days (at least), but we’ll need a pullback to attempt to get long. Stay tuned.
-- Posted Tuesday, 18 February 2003 | Digg This Article
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MarketWise Black Box is published on weekdays 240 times per year. Copyright 2003 by MarketWise. For further information please go to www.marketwise.com. All information was gathered from sources believed to be reliable The risk of loss in futures, stocks or options can be substantial; therefore only genuine risk s should be used for such trading. Futures, stocks and options may not be a suitable investment for all individuals, and individuals should therefore carefully consider their financial condition in deciding whether to trade. Commodity option traders should be aware that the assignment of a short position will result in a futures position. Past profits are not indicative of future profits.
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