SOLID RECOMMENDATIONS from SGGroupWHEN A HOUSE OF CARDS COLLAPSES
Options
Market Leadership
A Potential Bottom
PUT OPTIONS : If anyone followed my recommendation of 'Put Options' on general equities consider selling tomorrow, (Tuesday) or at least withdraw all of your initial investment. Indicators have limitations. They are at extremes and will be very much more extreme Tuesday. Picking the optimum selling point is not easy, and if you're familiar with 'Put Options' you want to sell when downside pressure is maximum to capture the Put Premium.
INDICATORS: Some suggest that there could be continuation, others are close to a turn and we could see a 'Key Reversal' shortly. Right or wrong, expect Wall Street and the U.S. Government to support the market at 10,000 (D.J.I.A.). There will be a determined & concerted effort to contain the decline at this level which was the original target mentioned earlier in this forum. Watch out for a bold surprise with possible accounting rule changes of 'Mark To Market'.
MARKET LEADERSHIP: If there is any certainty about the current economic environment, it's that Gold will thrive for a long time, Silver too when the market pressures lessen shortly. The equities of MAJOR mining companies have been really hammered. Look at the price of major equities while Gold is soaring from strength to strength. Gold refuses to pull back even to establish an orderly uptrend. This is an early stage run into Gold and we are going to see ordinary bigger daily increases of perhaps $20 - $40. Trying to put a price on Gold may not be possible.
The biggest beneficiary will be the MAJOR mining shares. Money on the sidelines will pour into the MAJOR mining issues. It's almost certain that far and away these issues will be the market leader. Watch for an absolutely explosive move shortly that will only become stronger as we move along.
VERY JUNIOR ISSUES: Where it turns is hard to say, but the nearest chart support for the Venture Exchange is now near 1,000. When the decline ends, the recovery is likely to resemble the NASDAQ recovery after the decline from 2000 - 2002. Typical of hard declines, expect a 50% retracement from the bottom to the top. Stick with issues that have proven resources that can be mineable.
MORE OPTION CHOICES : One more roll with the options, and of course it should be MAJOR Gold mining issues, 'THE' Certain Market Leader BUT for small or modest amounts. 'At The Money Calls' are very reasonably priced. Perhaps you would want to chose an expiration around May 2009, and I'll leave it at that because experienced investors will understand.