We are sending this alert to you, as the very recent developments on the market made us change our mind regarding coming consolidation. Under current market situation it does not pay, in our view, to bet on lower prices in the short term. This is contrary to what we wrote in the last two reports, but we need to be flexible and always listen to what the market is telling us.
First of all, the USD Index has closed the gap around the 83 level. This rally has also reached the 61.8% Fibonacci retracement level (from the previous high to the previous low) dollar is now technically ready to decline. We expected gold to go much lower once dollar bounces, and it did not. Gold stocks also reacted rather slowly, as dollar rallied. Strong action in PM stocks on Thursday and Friday (high volume!) also suggest that further consolidation in the very short term is unlikely. The same can be written about the general stock market, which has put a very bullish candlestick on high volume on Thursday, which suggests higher prices in the near term.
On top of that our SP Gold Stock Bottom Indicator signaled that a bottom has formed in the PM stocks. In fact, our indicator gave this signal on Thursday, after markets closed (the closing prices are used for calculations), however your Editor was in the hospital, from that day to Saturday, and was not able to send you a Market Update. Naturally, once the Premium Service is released, there will always be someone to send you an update, even under conditions such as the one mentioned above.
Buying Jan puts GDX 30 was suggested on 7-th January, when they were priced about $1. On 14-th January, we sent an Alert in which it was suggested to sell these options (the price was above $2, we sold our options at $2.5) and purchase Feb 30 puts. You would be able to purchase those at about $3.6 at that time. The price closed 2.15/2.30 on Friday and it seems that market will open a little higher, meaning that value of put options will be a little lower. If you followed us on this trade and will close your position when the market opens, your total profit on it should equal around (depending on how high commission you need to pay for trading options) 2.3/1*2/3.6 1 = 27.8%. That is far less than we expected for this transaction, but we still managed to gain over 25% in just 9 trading days, which should not make one complain too much.
The abovementioned factors suggest purchasing call options on GDX or on PM stocks directly (see below). This time we are investing along with the main trend, so we can put up to 5% of the speculative capital in the Feb calls and 9% in the March calls. We prefer strike prices that are rather near current price, but are still below it, which creates the most appealing risk/reward ratio.
As far as our stock selection is concerned, below you will find symbols for stocks that we currently prefer:
Gold stocks: AEM, KGC, GOLD
Silver stocks: SSRI, PAAS, HL
If you wish to use only relatively small amount of capital to purchase options, which doesnt allow you diversify, you can use the GDX ETF as a proxy for the whole sector.
Feel free to pass this e-mail to your relatives and friends. Heres a link if they would like to register and receive Updates from us in the future: http://www.sunshineprofits.com/?q=user/register
If you would prefer not to receive messages from us in the future please follow the instructions on the bottom of this message. If you don't remember your login/password information, simply respond to this e-mail and tell us to unsubscribe you.
Sincerely,
Przemyslaw Radomski
Back
First of all, the USD Index has closed the gap around the 83 level. This rally has also reached the 61.8% Fibonacci retracement level (from the previous high to the previous low) dollar is now technically ready to decline. We expected gold to go much lower once dollar bounces, and it did not. Gold stocks also reacted rather slowly, as dollar rallied. Strong action in PM stocks on Thursday and Friday (high volume!) also suggest that further consolidation in the very short term is unlikely. The same can be written about the general stock market, which has put a very bullish candlestick on high volume on Thursday, which suggests higher prices in the near term.
On top of that our SP Gold Stock Bottom Indicator signaled that a bottom has formed in the PM stocks. In fact, our indicator gave this signal on Thursday, after markets closed (the closing prices are used for calculations), however your Editor was in the hospital, from that day to Saturday, and was not able to send you a Market Update. Naturally, once the Premium Service is released, there will always be someone to send you an update, even under conditions such as the one mentioned above.
Buying Jan puts GDX 30 was suggested on 7-th January, when they were priced about $1. On 14-th January, we sent an Alert in which it was suggested to sell these options (the price was above $2, we sold our options at $2.5) and purchase Feb 30 puts. You would be able to purchase those at about $3.6 at that time. The price closed 2.15/2.30 on Friday and it seems that market will open a little higher, meaning that value of put options will be a little lower. If you followed us on this trade and will close your position when the market opens, your total profit on it should equal around (depending on how high commission you need to pay for trading options) 2.3/1*2/3.6 1 = 27.8%. That is far less than we expected for this transaction, but we still managed to gain over 25% in just 9 trading days, which should not make one complain too much.
The abovementioned factors suggest purchasing call options on GDX or on PM stocks directly (see below). This time we are investing along with the main trend, so we can put up to 5% of the speculative capital in the Feb calls and 9% in the March calls. We prefer strike prices that are rather near current price, but are still below it, which creates the most appealing risk/reward ratio.
As far as our stock selection is concerned, below you will find symbols for stocks that we currently prefer:
Gold stocks: AEM, KGC, GOLD
Silver stocks: SSRI, PAAS, HL
If you wish to use only relatively small amount of capital to purchase options, which doesnt allow you diversify, you can use the GDX ETF as a proxy for the whole sector.
Feel free to pass this e-mail to your relatives and friends. Heres a link if they would like to register and receive Updates from us in the future: http://www.sunshineprofits.com/?q=user/register
If you would prefer not to receive messages from us in the future please follow the instructions on the bottom of this message. If you don't remember your login/password information, simply respond to this e-mail and tell us to unsubscribe you.
Sincerely,
Przemyslaw Radomski
