buying today, page-3

I would like to see some kind of basing pattern before moving higher at this stage.
We have to consider many variables: but my analysis suggests:

BHP – Current trading price $40.25
Short term trading weakness due to sub prime and fall in equities on top of RIO bid. Rumour of RIO counter bid. $33B share buy back with highest levels of buyback (2M daily) currently underway. Iron ore contracts to be re-written in April. Weakness in base metals, but oil strong (probably at technically high levels currently).
Technically – Retracement from $48 to $40 currently. Movements in $8 usual (recall $40 to $31 overshoot).
Options: $45 or $50 calls for end of December (high risk), January of February. Probably look towards January call to take advantage of Christmas rally.
Stop loss: Break below $38 would spell an exit. Time factor. 2 weeks prior to expiry is a difficult time. Look for the delta.
Risks: Continued weakness due to increases in bid. This is countered by the fact that they have announced no cash addition to the RIO bid. Continued fall in the economy in the US, as well as a drop in metal prices. The strong AUD is a poor sign for future outcomes. Next dividends in 26 Feb.
Benefit: Rougly 100% gains if the sp rises from current levels to 42.50 – 43. A halve in value with a $2 drop in the sp.


Haven't finished my technical analysis, but that should suffice for now. Happy trading.