I bought GDX calls

Follow up post

I filtered my list of short squeeze candidates and put them through a low vol filter.  Here is the list below.  When the Bollinger bands collapse and there is high short interest, the the timer is set for a move higher.

Hypothecation and an epic short squeeze?

By now everyone has read about MF Global and we are all now familiar with hypocathecation and re-hypothecation.  One of the bizarre side affects that we should watch out for is a massive short squeeze in equities, and I think most importantly the metals in the futures markets and the miners in the equity markets.

The miners have been relentlessly shorted in a paired trade for the past year, and the metals/miners index is nearly back to 08 levels.  My view is as more and more brokers decide to reduce their risks, they are going to be calling back their shares or closing short positions they allowed to be borrowed and/or close massive naked short positions and a massive squeeze will be on.  It will only take one broker to start the ball.

To prepare I looked at the biggest short positions per trading volume and posted those below.  There are some nice gold and silver miners, but what stands out are the Uranium miners and GORO.  I will start adding positions in these names.  Days to cover is on the second to far right column.

FCX - A stock to watch

On Thursday, FCX hit on my short term buy signal, and had two confirmation signals hit as well (My daily signal still shows distribution but close to a confirmed buy signal, as well).  This weekend Barrons wrote a positive article on the company that shows a severe discount to replacement values.  Ironically, this is true for almost all the miners right now. When the market reacts to this price/value mismatch in the miners is a mystery to me, but I am anxious to play it again on the long side.

FCX is now on my daily watchlist to trade against my short term signals.  I am passing on this signal for now, and will await the next buy set up and allow some of the euro drama to play out this week.

Personally, I think we either get a sell the news event, or worse, a sell off due to a recognition of the intractable nature of the debt situation.

XG - Textbook

This stock is a traders dream.  It behaves on the momentum oscilators (hourly).

Revving up with Revett

I repurchased Revett.  This is one of my favorite miners and looking for at least double out of this next up phase in the miners.  $4.60

Miners are getting interesting here.

SLW turns positive, SIL and GDX, and GDXJ form doji's and hammers.  Also, watch for GOLD to break that rectangle.

This One may go BOOM

It hit my Elder buy filter, and is sporting a tight BB.  I am going to do a Vertical or a butterfly (25/30) or (25/30/35)

No Carnivale for RIO

The steel stocks look weak, and this miner is a big supplier to this industry.  It broke the 50 EMA today, and if it closes below that level, I am placing a short on it.