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What is 'The 99?'

Saturday, June 6, 2009 Read My Posts at TraderPlanet.com and Traders.com Advantage For those of you new to the ChartW59.com website, don't miss my articles at TraderPlanet.com and Traders.comAdvantage. Since late October 2008, I've posted nearly 160 articles (related to trade setups, systems trading, option selling and relative strength (momentum) investing) and you're sure to find something of value there that can help you in your trading and investing methodology. 10:56 pm est  Wednesday, January 7, 2009 Energy - has it made a major low? The action in the crude oil and  natural gas markets over the past two weeks does appear to have marked the completion of a major cyclical low in the price of these two energy commodities; the bounce from $32 to $50 in crude was especially encouraging for energy bulls. 12:51 pm est  Friday, December 12, 2008 USO : Another Look at an Attractive Technical Rally Play Last week, I urged subscribers to look for values in the energy sector; as it turns out, I was fairly close to calling a significant (for the time being, anyway) low in USO as well. After bottoming out near $33, price has rebounded nicely, sitting near $38 as I write this post. I have identified  a potential trade setup in USO, one that has a bit of protection included, in case the trade doesn't pan out. Of course, this is strictly for educational purposes, and is not specific trading advice for any particular individual. Here's the setup: A trader could buy 100 shares (or multiples thereof) of USO and then sell a January 2009 $42 call option against the shares for approximately $2.65. If the shares are called away at January options expiration, the trade will net a profit of about $665. If the stock fails to close at $42 or higher on expiration Friday, the option will expire worthless, the trader can sell the shares (at a profit, if above $38) or he could sell another call against the position, if desired. Right now, option volatility is high, creating inflated option premiums, making the sale of calls against a long stock position an attractive strategy, all else being equal. Technically speaking, this is a fairly low-risk trade as the odds favor a continued technical rally in crude oil; in fact, USO won't run into significant Fibonacci confluence resistance until $42.78/42.90, and the $42 call is well shy of those levels. As always, remember, this is not trading advice, it's technical analysis education and market commentary. A great weekend to all ChartW59.com readers!  - Donald W. Pendergast Jr.  Join our list at ChartW59.com and get a great deal on Metastock, the world's most powerful technical analysis software - your first 30 days are FREE. Plus get a free e-book and our value-packed newsletter three times a month .... sign up now and take your trading education to new heights.  Disclaimer: This is not trading advice. Only trade or invest after consulting with your trusted financial advisor.     3:46 pm est  Thursday, December 4, 2008 Party time at the USO? When does a downtrend end? Usually it will end at the point of maximum pessimism, fear and disgust, or when 'end of the world' type headlines appear in major financial and business publications. I don't know about you, but when I see a commodity-based equity such as USO drop by nearly 70% in five months, it causes me to reflect on the underlying economic realities surrounding such a collapse. Several key energy analysts have suggested that world oil and gas production peaked just a few years ago at around 87 million barrels a day. Meanwhile, China, India and other developing nations are increasing their per-capita use of these commodities at a rapid pace, even though their economic growth rate of change has slowed somewhat over the past year. At the same time, some of the world's giant oil fields have already begun to yield less product on a year over year basis. The North Sea, Mexican and Saudia Arabian oil fields are commonly cited examples of this disturbing trend. Given all this, does crude oil at $45 a barrel make any sense? Is it economically justifiable to explore for $45 oil, given that most of the 'easy pickings' have already been tapped? I don't think so, yet, at the same time, it's hard to justify last July's price spike to $147 per barrel, either. Markets tend to swing to extremes as the emotions of fear and greed take precedence over rationality, reason and common sense. Fortunately for us, as traders, we're the elite group of individuals who are uniquely situated to take advantage of these fear-greed price discrepancies. Right now, USO, crude oil and natural gas have sold off hard as mass fear took over. I suggest that you look at some of your own market timing templates, systems, etc. and see if you can profit from the current 'fire sale' that's now taking place across the entire energy sector. For patient investors, the beaten-down share prices of solid, dividend-paying energy giants could prove to be among the best investments should the price of oil and gas rise, seeking equilibrium somewhere between the extremes of fear and greed. Today's super high volatility in the energy sector may also offer unique opportunity to sell overvalued, high implied volatility put options on fundamentally sound energy-related equities. Anyway, for what it's worth, I am not calling the bottom in the energy market. I am simply suggesting that we may be much closer to the ultimate low than many realize, and that the odds favor at least a strong technical rally to correct 25-40% of the massive sell-off since last summer. Take some time and start analyzing your own charts of your favorite energy-related stocks and commodities, do the fundamental reseach, dig through the option analysis stats and then see if you can't locate a 'gem' or two as the downtrend in energy finally plays out. Use my USO chart as a rough guide, if it helps you. Stay safe and always consult with your trusted financial advisor before trading the financial markets.   - Donald W. Pendergast Jr.  Join our list at ChartW59.com and get a great deal on Metastock, the world's most powerful technical analysis software - your first 30 days are FREE. Plus get a free e-book and our value-packed newsletter three times a month .... sign up now and take your trading education to new heights.  Disclaimer: This is not trading advice. Only trade or invest after consulting with your trusted financial advisor. 12:53 pm est  Thursday, November 27, 2008 The Amex Gold Bugs index is at a critical resistance level. After months of plunging precious metals share prices, it finally appears as if the .HUI, also known as the Amex Gold Bugs index, has put in a significant low, based on weekly and monthly cycles. Given the recent bullish action in Gold, and the very bullish COT net commercial position, it looks like this current rally has some staying power, one that should carry Gold back up to $1,000 for the third time. The Gold Bugs chart shows us that price is currently sitting a tad above the all-time great trend phase delineator, the 50-period exponential moving average. While the close above the 50 -period EMA is bullish, for this rally to get going, the 'Bugs are going to need to take out the blue down channel line and then the pair of Fibonacci retracements that coincide in the 276-280 area. If all of these are taken out on heavy volume, then the 'Bugs should have smooth sailing up to 355, which is the next major overhead resistance, where there should be quite a bit of profit-taking. Some of the better-performing stocks within the .HUI include: Royal Gold (RGLD), Harmony Gold Mining (HMY), Gold Fields Limited (GFI) and Kinross Gold (KGC). All have significantly outperformed the Amex Gold Bugs index over the past 13 weeks. Aggressive traders may want to play the action around the previously mentioned resistance points, while more conservative traders may choose to wait for possible breakout moves followed by a retracement before considering an entry.   - Donald W. Pendergast Jr.  Join our list at ChartW59.com and get a great deal on Metastock, the world's most powerful technical analysis software - your first 30 days are FREE. Plus get a free e-book and our value-packed newsletter every other week .... sign up now and take your trading education to new heights.  Disclaimer: This is not trading advice. Only trade or invest after consulting with your trusted financial advisor. 2:45 pm est

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