Gold stocks got pounded once again yesterday, buttressing an earlier forecast here of a further decline in December Gold futures to at least $513. We’ll continue to fish for a bottom in selected stocks as gold falls, since this can nearly always be done without risking much more than small change, However, I have my doubts that any significant turn will occur before the target is reached.
In the meantime, the Rick’s Picks chat room has been attracting its share of gold bugs, some of whom are becoming adept at buying mining stocks at Hiden Pivot supports without risking an arm and a leg. (When we tried this in Newmont last week, we actually exited with a small profit on a long position before the stock succumbed once again to gravity.)
One stock that attracted particular interest in the chat room yesterday morning was Coeur d’Alene, a popular silver play. A Hidden Pivot denizen posted a “buy” in CDE shares at a support that proved to be just 11 cents off the intraday low, and although the subsequent bounce left him in-the-black by day’s end, the rally was not quite strong enough to have made him very confident about holding the stock overnight.
There is good reason to be cautious in silver, as I pointed out during the session. To wit, last Friday’s low in December Silver at 10.55 created a menacing impulse leg of daily-chart magnitude. This suggests that the Decembers are about to fall to 9.61 or lower, which if true would have bearish implications for Coeur d’Alene, not to mention dozens of other companies that produce silver.
Not surprisingly, crude oil is showing signs of further fatigue as well. The downside target we looked at in the chat room is 60.57, basis the December mini-contract. If it’s achieved, that would represent a decline of 2.5 percent from current levels, with a similar decline expected in the pit-traded futures.
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