Weekly Report: Gold Mining Stocks, Here Is The Trade
Last week, the major stock market indexes inflated sharply higher. The highly followed and popular Dow Jones Industrial Average (DJIA) gained 787.0 points by the close on Friday afternoon. The catalyst for the stock market rally last week was once again, the central banks around the world stating they would provide liquidity for the frozen banks. This announcement is simply more of the same news that many traders and investors recall hearing in September 2008. Perhaps this time around thing are different and the markets are really going to heal, however, it appears that it is simply a traders market for the foreseeable future. When central banks intervene in the markets on a daily basis the precious metals will be active. One particular sector that was extremely volatile last week was the leading gold mining stocks. This week, we shall examine three different stocks in the gold mining sector and find where the best near term support and resistance levels are. Make careful note of these levels, place them on your charts as they will present trading opportunities.
The Market Vectors Gold Miners ETF (NYSEARCA:GDX) staged a sharp outside reversal day to the downside on December 2, 2011. Often declines such as these will signal further declines over the next week or so. Traders can watch for short term support around the $56.00, $53.00, and $49.00 levels. Should the GDX reverse and trade higher there will be important near term daily chart resistance around the $63.50 area. The GDX has made a series of lower highs on the daily chart since September 9, 2011 when it traded as high as $66.98 a share. This type of action tells us that the GDX will simply remain a volatile short term trading vehicle at this time.
Newmont Mining Corp (NYSE:NEM) is considered to be one the best mining stocks in the entire stock market. NEM stock also staged a sharp reversal day to the downside on December 2, 2011. This stock just made a new 52 week high on November 9, 2011 when it traded as high as $72.42 a share. The stock will have short term daily chart support around the $63.50, $60.00, and $55.50 levels. Should the stock reverse and rally higher from its current level traders should watch for important near term resistance around the $72.50 area.
Yamana Gold Inc (NYSE:AUY) is another leading gold mining stock that reversed lower on December 2, 2011. This stock is trading above the daily chart 50, and 200 moving averages which puts the stock in a strong technical chart position. The stock will have important near term daily chart support around the $15.00, $13.90, and $12.25 levels. Should the stock rally from its current price level traders should watch for short term daily chart resistance around the $17.50, and $19.00 levels.