I’m going to leave off the general market commentary today, as it is getting to be redundant – new highs, new highs, new highs despite all sorts of crumbling internals and a global currency war. If you haven’t read the book Currency Wars, I highly recommend it. You’ll see parallels that have and are occurring with respect to China, Japan, Russia, the Middle East etc.
I published a trade idea on Slope of Hope today on selling SQNM June puts at the $4 strike. I will not be taking that trade here (in our Model Portfolio) as we already have 40% of our portfolio, 10000 shares, allocated to SQNM. But I think it’s a nice play, though there are significant technical hurdles for the stock in the short term. Perhaps it would be worthwhile to take a position after options expiration, or next Monday, but there is enough time to see how SQNM trends the last half of May.
This weekend, I will publish an update of my SQNM fundamental model, using the earnings numbers released last week. I will use the analysis to figure out the next move to make on SQNM. You will see it here first, have the opportunity to get positioned before it is released to a wider audience.
Once I put up the updated Model Portfolio on Monday, it will be obvious how much of a life-saver it has been to be in SLV for no more than a day or three. This thing is seriously volatile and has been trending down for months. The precious metals and the miners should have been and continue to be a haven for bears. Let’s hope they have been riding the fluffy teddy down the precious metals slide.
I was thinking this week that we might be able to take a take a quick swing going long at SLV, but this has officially slipped past one of its smaller volume poles holding it just above $22 (see chart below). It now has no real volume support until it gets down into the range of $17.50-19. In other words, the technical odds favor at least a 10% decline ahead for SLV.
I may present this bear thesis on SLV l sometime next week on Slope of Hope, but you will have ample time to get positioned before it gets released to the wider public. It’s tough to buy puts to play this short, as those have a premium placed on them, more so than selling calls. The problem with selling naked calls is that it leaves you open to unlimited risk and options are expensive to trade. The best way to play SLV short is to short it outright (also unlimited risk), but limit the size of the position and monitor it closely so you can jump out if it moves aggressively against you, or put a stop on it at the most recent little bounce high around $23.50. Please stay tuned for an intra-day trade alert if I choose to enter a short on SLV.
I realize that everyone thinks that Blackberry is dead, but I respectfully disagree. This is a company that is cash-flow positive, has a big cash war chest, is on a war path of phone releases and is entirely unloved by the larger public. Their new phones are actually of great quality (according to reviews on the blogosphere, especially by Karl Denninger on market-ticker.org). Looking at the chart below, BBRY has good volume support from the $13.20-16.40 range, which is where it has been trading for most of 2013, after recovering from its panic sell-off.
The most recent trend on this suggests that it should bounce once it hits $13.50 or so. The volume poles suggest decent support down to $13.20, after which a volume hole opens up and there is no support again until $12.40. The way this has traded this year, the draw downs have been steep, but very quickly reversed. I will watch this for a suitable entry point. As always, stay tuned for a n intra-day trade alert.
That’s all I have for this evening. Keep an eye out for an intra-day post. Happy Trading!