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-- Posted Tuesday, 13 May 2003 | Digg This Article
Only in such a benighted redoubt of wishful thinking as CNBC’s Fort Lee studio might we expect to find someone prepared to argue that the relationship between risk and reward favors buyers at these levels. As much was made clear yesterday, when shares failed miserably to sustain the previous day’s come-hither trajectory. Having imbibed the lessons of several hundred option expiration weeks over the last thirty years, we can now lay odds that it is all over for the May series. Tuesday was their traditional day to break out, sending shorts into tongue-biting spasms for the remainder of the week. Instead, investors took news of the bombing in Riyadh like a dose of belladonna, reminding us all that our victory over Iraq was the easiest part of America’s peace-making strategy in the Middle East. Our horse, IBM, was chomping hard on the bit, reined in by the cautious mood that prevailed in thousands of other lesser stocks. We’ve still got plenty of time left to offset our July premium exposure in IBM, but we should nonetheless prepare for an outbreak of tedium -- or perhaps even a scary decline -- given the embarrassing failure of Da Boyz to turn Monday’s hollow but nonetheless enticing rally into an old-fashioned expiration-week squeeze. Upward progress is as labored now as the breathing of a three-pack-a-day smoker on a treadmill, and we can only infer that, even if a last-gasp rally is still possible, the next big move will be down. [The + symbol means we have an open position, while $ means there is actionable advice.] | | 125% TUITION REIMBURSEMENT PROGRAM | | 125% TUITION REIMBURSEMENT PROGRAM: Through our partnership with Terra Nova Online, MarketWise Trading School provides its graduates with the education necessary to adapt to these volatile markets, while taking advantage of our Tuition Reimbursement Program designed to provide 125% of the graduate's tuition back to them. click here |
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Gold
JUN GOLD (350.20): We’ll infer that the Junes are getting some running room for an assault on 353 .70, a hidden-pivot resistance first noted here a while ago. We are no longer suggesting that you try to get sort there, even with a very tight stop.
GoldCorp (NYSE:GG)Quote - Options - News - Profile - Message Board - Website
+ GG (11.09): We hold 400 shares for an average 7.20. There are two impediments immediately above – at 11.61 and 11.83 – as well as conventional resistance near 11.50 from a prior peak, so don’t expect too much from the stock.  
DURBAN DEEP (NasdaqSC:DROOY) Quote - News - Profile - Message Board - Website
+ DROOY (2.30): We hold 200 shares for 2.41. DROOY is hovering above a hidden-pivot support at 2.16, but if it exceeds that number by more than 3 cents, we’d infer it’s on its way down to whole-number support at 2.00. If the stock should delight to the upside, we would presume a minimum target of 2.55 over the near term.
+ RANGY (12.89): Still no change. We hold 200 shares for 10.35. We see little upside potential over the near-term, although there is not much to impede the stock between here and 14.  
Royal Gold (NasdaqNM:RGLD)
$ + RGLD (17.47): We’re risklessly long the July 17.50 – May 17.50 calendar spread eight times, trying to roll into the July 17.50 – June 17.50 call spread buy covering the Mays and selling eight Junes. Take a rest today, since nothing the stock could conceivably do will hurt us, and the spread will be easier to sell as the week wears on.
 
DJIA (8726.73): Our upside target at 9035 remains viable in theory, but we’d reef the sails following a print at 8567.42. That would be the first place where a bearish “impulse leg” could form on the hourly chart. JUN E-MINI S&Ps (941.75): Yesterday’s high flirted with a 947.75 hidden pivot we’ve been using as a minimum upside target, but the futures once again failed to get past it. If the resistance is breached today, the next above it lies at 953.00. JUN BONDS (117.03): The futures are bound for a potentially very important top at 118.09, whence beckons a major hidden pivot. The longer the bonds take to get there, the more bullish it will be for stocks, albei t temporarily. (Note: The approach to the target is occurring quite a bit more quickly than we had anticipated.) OEX (475.41): We’ll stick to our minimum upside projection of 484.93, since the technical picture is unchanged, but we’ll use 458.32 as our threshold to warn of a potentially serious trend change. That is just beneath a low made on May 1. $ + QQQ (28.66): We hold twelve June 30 calls for an average 0.33. Once again, offer twelve May 30s short against them for 0.20, day order. We also hold 24 July 23 puts for an average price of 0.175. Continue to offer eight of the puts to close for 0.35, good-till-canceled.
NASDAQ E-MINI (1151.00): Hard to say whether yesterday’s fleeting lunge to 1167.00 – two points beneath a longstanding upside target of ours – will be a last gasp for at least the near term. In any event, a print at 1094.50 would be the first sign that the bear rally begun in mid-February is in possible jeopardy. *** $ + IBM (89.98): We hold eighty July 105 calls for an average 0.13. Yesterday’s peak fell 0.37 cents shy of our 90.47 target, but it’s not possible to say with confidence whether that will be it for a while. Regardless, we’ll continue to offer 80 June 105 calls short against them for 0.10, g-t-c. FNM (73.13): The stock has extended its gratuitous two-point oscillations to a 20th day, leaving us uninspired and devoid of compelling ideas. $ + C (39.27): We hold eight May 42.50 calls for 0.10. Since the risk here is just $80, we’ll go for it. Odds are approximately 20-to-1 against our calls finishing in the money, but at least we’ll have a potentially exciting longshot to root for come Friday. KLAC (42.75): Forget shorting 44.41, since the stock is taking a roundabout way to the target, assuming it can get there. We’d buy calls on a stiff pullback -- except that we already hold enough of them in other issues. EBAY (94.74): Yesterday’s rally peaked just two cents above the 97.32 target we’ve been using for a while, but it was worth shorting only as a day trade, not as an overnighter. If the stock gets above the hidden pivot today it will be magnetically drawn toward 100.
-- Posted Tuesday, 13 May 2003 | Digg This Article
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