Never do I contemplate blogging about a trade, but the rarity of documenting my spontaneous trade ideas has forced me to finally sit down and spill. My new trading idea is as rare as i blog. The idea began when news recently turned uber bullish on the sector, as China limited exports on this sector and the world demanded more and more of it. If you're still clueless about what I'm alluding to, the sector is none other than the Rare Earth Metals.
My trade is focused on MCP (MolycorP) the only producer of rare-earth oxides in the Western Hemisphere, currently ramping up production at its facility in Mountain Pass, Calif., one of the world’s richest and largest rare-earth deposits.
Thesis: Not only have rare earth prices spiked in the past 6 months, there appears no sign of lower prices as week after week China reasserts its policy of limiting exports. However, the metal price alone is not what's driving me into this trade. As Oil prices continue to climb as I predicted on Facebook back in November with a price objective of $150 within 6 months, (I know pple thought i was CRAZY!) alternative energy will be the talk of the town. Wouldn't you know what most alternative energy are composed of, the currently hard to find rare earth metals!
The Trade: As the company has digested its secondary offering, hovering below the $50 mark, I expect a new fuel of buyers to march the stock above the $60 level before April.
I bought MCP $60 April calls for 75 cents.
I intend to milk this for as long as i can, meaning i'll wait until April to close it even if im up 300% on it.
Tuesday, March 1, 2011
Sunday, January 2, 2011
No Talk of Hindenberg Omen NOW?
We actually witnessed the occurrence of another Hindenberg Omen for 2010. This technical indicator has been a prelude to many market crashes and corrections alike. The previous signal happened in August of 2010 and many spoke of the gloom ahead. However this never happened and what resulted was a large rally and false signal which happens. We must remember its a probability business and never a sure thing. With that said, this new Hindenberg Omen signal which took place on Dec. 23rd has gone unnoticied by many. It must be largely due to the fact that it occured during the holiday season and most are on vacation, and also because many are thrilled by the rally and cant see a crash occur.
Remember, its a game of probability. There's about a 1/4 chance no correction (5%) occurs, 1/2 chance a %5 correction, and 1/8 chance a Crash occurs (20%+). This time i feel its VERY PLAUSIBLE we get a Correction(5-10%) given the sentiment of the market, but i doubt it would be any more than that mainly due to the Fed's money printing.
The H.O. expires in Apri.
Forcast:
Sideways action into March 8th 2011. (Mid January Selloff and Early Feb Selloff 5-10%)
March -July-> Dow 13,000 by July 2011 with sideways action for the rest of the Year.
Remember, its a game of probability. There's about a 1/4 chance no correction (5%) occurs, 1/2 chance a %5 correction, and 1/8 chance a Crash occurs (20%+). This time i feel its VERY PLAUSIBLE we get a Correction(5-10%) given the sentiment of the market, but i doubt it would be any more than that mainly due to the Fed's money printing.
The H.O. expires in Apri.
Forcast:
Sideways action into March 8th 2011. (Mid January Selloff and Early Feb Selloff 5-10%)
March -July-> Dow 13,000 by July 2011 with sideways action for the rest of the Year.
Wednesday, December 8, 2010
A Test of 1210 coming by 12/10
The SP500 should test 1210 as early as tomorrow given the nature of today's reversal. That should be the biggest downside i see for a while, as the Santa Rally will cream all the shorts and doom and gloomers into the end of December. For now, its a test of 1210 then sideways action in the 1225-1220 range for much of the week. Next Tuesday, Fed Day, will give this market the fuel to push higher to 1250.
I will be looking to get long on friday and will load up many speculative plays.
Lookn to Buy FXE, Line, Pal, and Ree December Call Options.
The money printing wont stop stop and the dollar will be sacrificed.
CIAO CIAO DOLLAR... You've been sacrificed
I will be looking to get long on friday and will load up many speculative plays.
Lookn to Buy FXE, Line, Pal, and Ree December Call Options.
The money printing wont stop stop and the dollar will be sacrificed.
CIAO CIAO DOLLAR... You've been sacrificed
Friday, November 26, 2010
Will There Be a Santa Rally?
I expect one as i believe we could see Dow 12k by January 2011.
After a volatile week of going nowhere for two weeks and the filtering out the noise of a potential Korean Civil War, we are still trading above the 50dma. In Elliot wave terms, we are in wave 4 correction, which is notable for its oscillations. If we break out next week to above 1210 that would set in motion the Santa Rally and we could see 1300 by January.
If history is any guide, we should see a Monday breakout or consolidation.. as the two worst Thanksgiving Mondays were in 2000 and 1973..both bear markets.. not the case now.
After a volatile week of going nowhere for two weeks and the filtering out the noise of a potential Korean Civil War, we are still trading above the 50dma. In Elliot wave terms, we are in wave 4 correction, which is notable for its oscillations. If we break out next week to above 1210 that would set in motion the Santa Rally and we could see 1300 by January.
If history is any guide, we should see a Monday breakout or consolidation.. as the two worst Thanksgiving Mondays were in 2000 and 1973..both bear markets.. not the case now.
Thursday, November 11, 2010
Never Fought the Fed
Wall St. Adage- Dont Fight the Fed
Is it really wisdom or just plain old follow the herd mentality? This adage will be tested in the future, so far so good.
Well Summer has pasted, where Bear Market Paranoia was entrenched in all our minds this summer, including my own. The summer falloff corrected some of the bull market gains and provided the necessary doubt in most investors minds to fuel a new high, forcing them to chase or in most cases cover their shorts.
Forecasts still look rosy.
I see a top forming by next week, as the SnP should hit 1250. Then a correction into the end of December, followed one final push into March 2011, where the bull market top will reveal itself as the cycles from low (March 2009) to high (March 2011) will once again rein supreme, as other past cycles have proven.
Is it really wisdom or just plain old follow the herd mentality? This adage will be tested in the future, so far so good.
Well Summer has pasted, where Bear Market Paranoia was entrenched in all our minds this summer, including my own. The summer falloff corrected some of the bull market gains and provided the necessary doubt in most investors minds to fuel a new high, forcing them to chase or in most cases cover their shorts.
Forecasts still look rosy.
I see a top forming by next week, as the SnP should hit 1250. Then a correction into the end of December, followed one final push into March 2011, where the bull market top will reveal itself as the cycles from low (March 2009) to high (March 2011) will once again rein supreme, as other past cycles have proven.
Wednesday, September 29, 2010
September to Remember
One more day and September will be registered in the record books as one of the greatest abnormal rallies in many decades. But remember just as fast the market ramped up, it could easily crash back into place.
Look for a firm selloff to begin Friday as more skeletons will be coming out of hiding and make October 2010 feel like a reenactment of October 2008.
Look for a firm selloff to begin Friday as more skeletons will be coming out of hiding and make October 2010 feel like a reenactment of October 2008.
Saturday, May 8, 2010
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