It really doesn’t matter what the broader market is doing if you happen to be in gold. Gold up, market down? Seems like it. Here are some thoughts. (April 11, 2016)
GLD AUY ABX NEM GG AUY GG GOLD AUY DUST NUGT AUY
Gold; ultimately I’m going to get to Yamana Gold ( NYSE:AUY ) because I want to show you a really good squeeze. But first lets just look at the gold picture here, SPDR Gold Trust ( NYSEARCA:GLD ). This is in the middle of a trading range. I could make a pretty good argument that this is ultimately going to break out for various reasons, but I don’t know for sure. I can lie and tell you that I do, but then I’d probably be on TV more than I am. Here’s resistance right about 1200.00 to 1210.00 and ounce, something like that (when I say stock you know what I’m talking about, I’m talking about an ounce of gold). This is right up against resistance here and look how high up above the 200-day moving average it’s extended. It’s about as extended upward as this was downward.
When you see these extensions they virtually always lead to some type of sideways consolidation; we saw that here, and so we’re still seeing this consolidation. I think it could go for a while, but ultimately I think the move can be up. Look at Yamana Gold ( NYSE:AUY ). I would just say that you want to keep your stops in place. Don’t expect this just to keep going, “Oh, it must be a big, massive short squeeze.” Short interest is 1.23, it takes till less than noon on the second day of short covering to cover this stock. So it’s not a short squeeze, it’s just a demand on these miners due to higher gold prices, and it’s not just limited to Yamana ( NYSE:AUY ), though that’s a pretty nice squeeze.
Barrick Gold ( NYSE:ABX ) is up, that’s working. Newmont Mining ( NYSE:NEM ), big squeeze as well. These are all really good solid squeezes. The best ones, it’s nice when they’re right near the 200-day moving average, but we don’t get that for gold, because gold has already been on the move. These are just continuation patterns. Goldcorp ( NYSE:GG ) is one that looks pretty much like Yamana Gold ( NYSE:AUY ), same configurations, so really either one of these work. Huge volume so you don’t have any issues there. And then even Randgold ( gold ) here is breaking out as well.
So there are a lot of reasons to be bullish on gold. The only question is, how do you actually get into it? And like with Yamana Gold ( NYSE:AUY ), frankly, if you’re getting in now you’re chasing. I’m not saying that you can’t chase. I’m just saying that if you’re getting in now you’re chasing. So the stock gapped up to, it opened at 378.00 the low was 375.00. If you want to chase this stock your risk is not that it falls back down into the low 3s. Your risk is that it falls back down to start to fill this gap. And so IF you are chasing this stock you keep your stop just a little bit below 375.00, and that way you’ve got less than a 10 percent risk on this stock.
So watch to see how gold trades. And my bet is if it keeps moving higher Yamana Gold ( NYSE:AUY ) is going to work out really well. By the way for you fast movers, triple your fun here, here’s a shortened ETF, Direxion ( NYSEARCA:DUST ). When gold is bad this is good. When gold is good this is bad, down almost 20 percent today. This is a day trading stock. Obviously you would be short trading this during the day. And then the opposite is ( nugt ). The reason this looks a lot like the gold stocks it’s just this is up by 18 percent. I just wanted to give you a lot of different stocks to look at, but my main focus here was Yamana Gold ( NYSE:AUY ).
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