New Plays, Tuesday, 03/04/2008
HAVING TROUBLE PRINTING?
Play Editor's Note: My market bias remains bearish but
today's afternoon rebound really throws a wrench in our short-term trading
strategies. Plus, a real bailout plan for ABK could spark some serious short
covering and a real rally for equities. The next couple of days could be pivotal
for the market.
New Long Plays
Gold Miner ETF - GDX - close: 52.75 change: -1.87 stop: 47.95
The GDX is the Market Vectors Gold Miners ETF or Exchange Traded Fund. This
equity simulates the performance of the AMEX gold miners index.
Why We Like It:
Our market bias is bearish for stocks but gold, even amidst all the hype,
continues to look strong. Why would we want to consider going long gold or the
gold miners? A couple of good reasons are the U.S. dollar and investor fear. The
more the U.S. dollar falls the more expensive gold gets. Plus, gold is
traditionally a "safe haven" play as stocks get more volatile (a.k.a. go down).
Now gold futures have natural, round-number resistance at $1,000/ounce and will
back. We'd actually look for a short-term bullish trade in the GLD
if it pulls back near $92.00 with a stop under $90.00 and a target in the
$99-100 zone. However, this play is on the GDX or the gold miners. Right now the
GDX looks short-term bearish. The GDX has just failed near resistance around
$55.00 and produced a bearish engulfing candlestick pattern on strong volume.
However, instead of shorting the GDX and fighting with potential support near
$50.00 we're suggesting readers
buy a dip. If the GDX slips under short-term
support near $52.00 it's a quick and easy drop to $50.00. We are suggesting
investors buy the GDX in the $50.50-50.00 zone. Our suggest stop loss is $47.95.
More conservative traders could try a stop near $48.45 instead. We'll list two
targets. Our short-term upside target will be $54.75-55.00. Our second, more
aggressive target will be the $58.00-60.00 range. FYI: The Point & Figure chart
for the GDX is sporting a bullish triangle breakout
with a $79 target.
Picked on March xx at $xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 00/00/00
Average Daily Volume: 4.2 million
New Short Plays