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-- Posted Friday, 3 April 2009 | Digg This Article | Source: GoldSeek.com

Rick’s Picks

Friday, April 3, 2009

“Phenomenally accurate forecasts”

Rick’s Picks subscribers were well prepared for the diabolical price action in gold yesterday, since a forecast sent out the night before caught both the high and low of June Gold’s $35 swing almost exactly. Comex futures were in a promising rally when we published an advisory just after midnight that warned of potential trouble precisely at 931.60 (a “Hidden Pivot” resistance). Gold in fact topped moments later at 931.80, then plummeted to 896.10 -- just 80 cents from a bearish target we’d spotlighted in yet another midnight bulletin.  Price action in the E-Mini S&P proved equally felicitous, since we’d identified a rally target at 843.75 that came within 1.50 points of nailing the top of yesterday’s 37-point surge. That target also went out to subscribers in the wee hours on Thursday.

So what are we forecasting now?  More of the same, actually. If Gold takes out yesterday’s bottom, it is likely to fall to at least 874.00 or to 856.00 if any lower. As for the S&P futures, currently trading for around 835, they look like a good bet to rally to at least 852, which would imply a 150-point surge in the Dow Industrials. The picture of strength is reinforced by the strong leadership of Goldman Sachs, a favorite bellwether of ours that looks all but certain to reach a Hidden Pivot target at 120.34.  With the stock trading in the $90s a while back, we advised purchasing some July 115-April 115 calendar spreads for $6, and the trade has worked out nicely. But with a further rally to $120 now in prospect, we advised adding some July 120-April 120 call spreads to the position for 9.80. This spread could widen to as much as 18.00 if Goldman shares are sitting just below 120 when the April options expire in two weeks.

Leveraging Google Target

In Google, a June 390-April 390 calendar spread looked tempting for $12 when we examined the stock during an impromptu webinar held for subscribers yesterday morning. We keyed on the 390 strike because we are anticipating a $25 rally that would push GOOG up to around $387.  Please be aware that option trading can be risky, and that any gains we have made trading puts and calls in the past do not guarantee that future option trades recommended in Rick’s Picks will be profitable. You should check with your broker to determine whether option trading is for you. 

If you want to know more about the calendar-spread strategies we use to dramatically reduce the risk of holding puts and calls, click here for a detailed description; and here if you want an even more detailed article on the topic that we wrote for Stock, Futures & Options magazine.

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Rick's Picks publishes a daily trading newsletter for gold, stock, commodity, and mini-index traders 240 times per year. Information and commentary contained herein comes from sources believed 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 © 2009, Rick Ackerman. All Rights Reserved. www.rickackerman.com 

-- Posted Friday, 3 April 2009 | Digg This Article | Source: GoldSeek.com

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