Golden Opportunities
Despite
a rather ugly day when viewed
simply by the box scores, yesterday’s sell-off was, to say the least,
rather orderly and without a whole lot of panic selling. I find that very
interesting, even as the market broke through some key support levels. I am not
real sure it means that a turn to the upside is imminent, but something to be
cognizant of.
Naturally, most of the good trading was in the stocks which were under pressure
due to accounting concerns. Tyco
(
TYC |
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PowerRating) and
Elan
(
ELN |
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PowerRating) both offered
excellent setups throughout the day. Additionally, as I had mentioned in
yesterday’s piece, the Consumer Finance Stocks continued to be active, however,
not necessarily from a “scalp” standpoint. There were several good setups
throughout the day on the 5- and 15-minute bars. Going into the last hour or so
of trading, it became obvious that these stocks were putting in a nice base right
at last week’s lows. I plan on keeping an eye on these stocks over the next few
sessions as it appears that there will be some great opportunities from either
the long or short side.
Another item which I am finding quite intriguing is the absolute out-performance
by Gold Shares so far this year. I cannot recall the last time when gold had
such a nice run. I have been long a couple for a few weeks now, and while they
do seem extended, it appears that the demand for them is still there. I am
keeping close tabs on Agnico Eagle
Mines
(
AEM |
Quote |
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PowerRating) and
Gold Fields Ltd
(
GOLD |
Quote |
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News |
PowerRating) .
These two stocks offer what I would term a pure play on gold. Both of these
companies do not engage in hedging their future production, as a result any
increase in the price of Gold in the open market flows right to the bottom line.
I even read that a company like Gold, whose headquarters are in South Africa,
may also benefit from a recent decline in the Rand.
The argument goes as
follows:
“No matter where on the planet that gold is wrestled from the earth, it is sold
for US dollars. The South African mines pay their expenses in local currency,
the rand. Mining labor, administrative salaries, electricity, some heavy
equipment, and most expenses are settled in rand. At the dawn of 2001, times
were lean for South African mines with gold fetching around US$270/oz, or
R2,049. On December 31, gold was trading at US$279/oz, a meager 3.3% gain on the
year. In rand terms however, gold was selling for R3,337/oz at the end of the
year. This is an amazing 63% gain in rand gold! Since the South African mines
sell gold for dollars and pay expenses in rand, they have earned wondrous
profits in 2001, especially in Q4 when most of the rand slide occurred.†Adam
Hamilton, Zeal Intelligence
Key Technical Numbers:
S&Ps |
Nasdaq |
| 1129-31 | 1535 |
| 1120.85Â | 1521 |
| 1114 | 1509 |
| 1105-07Â Â |
1497 |
| 1101Â Â |
1484-86 (key) |
| 1090Â | 1462 |
| 1085-86 (very key) | 1452 |
| 1081Â | 1433 |
| 1070 | 1425 (critical support) |
| 1061 (critical support) |
 1403 |
| 1056 | Â |