Early Morning Calls: Stocks Up, Gold Up, US $ down

Many market sectors are continuing their extended moves, with US stocks calling higher early Tuesday morning due to the G-20 stimulus pledge. On Labor Day Monday, most world stocks were up 1%-1.5%. Our stock indicators remain long http://z-trader.blogspot.com/2009/09/stocks-all-systems-go.html .

This is causing gold to extend its push higher -- and is newsworthy, with gold currently trading hands at more than $1000/oz ($1007 in early morning trade, in the Dec futures contract). Gold has the potential to be a major mover today, as stops above $1000 are taken out. On the other hand, some traders will take profits at the round $1000 level. The US dollar is lower.

At some point, the fundamentals say that we may have to "pay the piper" -- but for now, traders need to be neutral or following these trends. Some traders may even be "dipping their toes in" and taking small contrarian positions -- but we typically follow extended moves. The global economy has hopefully averted more drastic moves in the financial markets, but only time will tell.

Quick follow-ups:

• After running to multi-year highs, the Sugar market is taking a breather and is down significantly in just a few days. Traders should look for a base before accumulating long positions again. http://z-trader.blogspot.com/2009/08/sugar-market.html
• Soon after our pre-market followup on Rambus last Friday, rumors of Samsung buying RMBS -- or at least in serious talks -- caused the stock to pop back up towards its upper range. We have no information besides the rumors swirling around. However, we believe that (1) the court delay under "weird" circumstances, combined with (2) a "big volume day" (share volume was more than four times the recent average volume; options volume was more than three times normal!) -- means that something could be in the works.
• Rambus is currently trading around $19 in Germany, after closing at 17.75 last Friday and 15.93 on Thursday. http://z-trader.blogspot.com/2009/09/rmbs-update.html

RMBS -- update

Back in April, we mentioned a high-return, high-risk "flyer" named Rambus.

http://z-trader.blogspot.com/2009/04/rmbs-flyer.html

As we stated, we like having a few "flyers" in our portfolio that have the potential for huge gains.

Rambus is involved in patent and anti-trust litigation (with Memory Manufacturers [MM]) that could bring in billions of dollars in damages and ongoing royalties -- or could wring the company dry. Since we mentioned the stock in April, the stock has moved up steadily from around 10 (after bottoming at around 5 and 7 in Nov 08 and Feb 09 respectively) to the high teens.

The stock hit recent highs of around 19.5 as the anti-trust suit scheduled for the end of Sept 2009 neared. This date has now been postponed to Jan 2010 due to the illness of a MM attorney. The delay caused the stock to move from the 19 range down to the 15's. However, due to the strange circumstances surrounding the delay, there is chatter that other things are going on "behind the scenes." While this remains to be seen, the drop to the 15's indicates increased uncertainty, but not "horrible" news.

We continue to see RMBS as a high potential flyer -- with associated risk. As litigation moves forward, and with the stock recently penetrating upside resistance at 19.1, we see the stock moving back to the high teens --- and into the 20's barring other unforeseen obstacles. Next upside resistance levels include 26 and mid-40's (!!) -- nice gains from the current 15 price range.

Traders may want to see a base form before buying RMBS.