Fortunately, we did so with a 4-cent stop-loss, removing ourselves from harm’s way when NEM failed to bounce from the pivot. In fact, the stock exceeded the 50.33 stop-loss by a whopping 13 cents, strongly implying that it will now fall to the next, at least – 49.08 – before it can find decent traction. Today’s “Touts” provide a detailed strategy for bottom-fishing, since 49.08 looks like a more felicitous spot to initiate a long position than the pivot we used yesterday. Even so, judging from the way NEM squashed the lesser support at 50.37, we should be as careful as always in trying to pick a bottom. Incidentally, my worst-case low for the near-term is 48.63, give or take the usual farthing or two.

Caution is also warranted as we try to pinpoint tradable tops in some stocks that look, well, toppy. In the case of one of them, IBM, we bailed out of a small put position yesterday for a modest profit. This was not because the stock looks unlikely to reward us, but because the mere waiting was growing quite tedious. However, we still hold puts in Merrill Lynch, and while we narrowly missed taking a 100% profit on half of them yesterday, there is reason to be confident that we will get our price before the week is out. If so, we’ll still hold ten of the puts without cost – about as much as one can afford to pay for them, considering that stocks have risen most of the time for as long as they have been traded.

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Information and commentary contained herein comes from sources believed to be reliable, but this to be reliable, but this cannot be guaranteed. Past performance should not be construed as an indicator of future results, so let the buyer beware. Rick's Picks does not provide investment advice to individuals, nor act as an investment advisor, nor individually advocate the purchase or sale of any security or investment. From time to time, its editor may hold positions in issues referred to in this service, and he may alter or augment them at any time. Investments recommended herein should be made only after consulting with your investment advisor, and only after reviewing the prospectus or financial statements of the company. Rick's Picks reserves the right to use e-mail endorsements and/or profit claims from its subscribers for marketing purposes. All names will be kept anonymous and only subscribers’ initials will be used unless express written permission has been granted to the contrary. All Contents © 2006, Rick Ackerman. All Rights Reserved. www.rickackerman.com

-- Posted Tuesday, 7 March 2006 | Digg This Article