Stillwater Mining Co. (SWC)
(5/29/07)

We're looking at a short-term technical play on SWC, a mining company engaged in platinum and palladium.  You may want to use options leverage on this trade to benefit from what would offer a 2-3 point gain. 

We'd be playing a Wave (C) rally to retrace all or most of the Wave (B) pullback that developed from April 26 to May 18.  As the chart indicates, the first the part of the bounce is counted as Wave 1 of (C), and the pullback Wave 2.  A break above 13 should indicate Wave 3 is in effect, so I'd suggest waiting for that to occur before committing.  11.55 should not be violated in a pullback if Wave (C) has begun, so you might want to work with a stop at 11.50, since a break this low would invalidate the wave count, and therefore no point in spreading the risk beyond this.  The 14.08-14.69 level offers some resistance, with targets at 15.53 and 16.47 projected as possible conclusions to Wave (C).

For an option play, you can consider the January 2008 $12.50 Call (symbol SWCAV), which was selling for $2.10, with the Delta at 0.61.  

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