Four Warning Flags For NEM Longs

  • July 28, 2003
  • Derrick Hobbs

Even though
gold futures were up today, Newmont Mining
(
NEM |
Quote |
Chart |
News |
PowerRating) made
a reversal to the downside. The stock has been on a solid upside run for a few
weeks now. However, the warning flags are being thrown up right here for you
active traders that may be long the stock.

Here’s my case:


  1. Newmont Mining     has hit a large Fibonacci price resistance zone from 36 to 40.

  2. NEM has completed a Bearish
    Butterfly pattern on the weekly chart into this zone.

  3. Today NEM put in a Bearish Engulfing candlestick pattern.

  4. The daily chart has also
    completed my Shark Attack pattern suggesting a downside reversal in the short
    term.

Now, let’s frame this properly. The yellow metal and
unhedged stocks are in an uptrend. So I can’t argue that fact. I can argue that
NEM has gotten a bit extended and we could be in for a 10%-20% tradeable
pullback. If not interested in shorts, I would consider being patient and
waiting for a pullback in this stock to consider longs.

Below is the weekly chart with the Bearish Butterfly chart
and the daily chart with the Shark Attack pattern and bearish engulfing
candlestick set up today.



Have a great night!


Derrik Hobbs

 


“Fibonacci
for the Active Trader is by far one of the best trading books to come along in a
long time. It deals with specifics in market entry, exits, and stop placement in
a simple, understandable approach. This is a jewel-defined trading plan that
will benefit both the long-term and short-term stock trader. Thank you for
sharing your trading experience and method. Your trading book is one of the best
I’ve read out of 50 and very enjoyable …”
–Daniel G.