re: [Slider, what do you think about the explorers
right now?"]
Hey Jillad,
Good question and good timing for "that" question.
Here's "my" thinking...
When gold pops $40 in a day, everything rallies...
big caps, small caps, micro caps, emerging producers,
the royalty plays, and the explorers.
The problem is on the pullbacks.
Right now I still like the bigger, safer, more liquid names
for both trading, and as my core holds. And here's why...
Look at the large cap institutional names like ABX, NEM, GG,
and AUY today. Those are the four largest components of the
HUI Gold Bugs Index. And they were up +11.27%, + 8.66%,
+10.10%, and +11.08% respectively.
3 of the 4, outperformed the HUI index itself, which was
up +9.07%. Only NEM failed to beat the HUI today, but over
the last 5 days, it also, has outperformed the HUI.
When I can get double digit single day moves out of the
safest, and most liquid large caps... and when they are
outperforming the index itself, that tells you that the
large hedge funds & institutional buyers are driving the
market.
It's never just about what sub-sector, or what individual
stock has the most potential upside; it's about what
sub-sector, or individual stock has the best upside on
a risk:reward basis.
And right now, with the biggest, and safest names leading
the index... I think you need to stay with them.
I'm always willing to give up some upside, for safety.
In "this" market environment with small caps and explorers,
it seems like the money leaves twice as fast as it entered,
when bad news, or a bad tape arrives.
Now that doesn't mean that you don't buy some small caps,
juniors, or explorers here; it just means that you stay
weighted to the bigger names, until they give up their
leadership.
This is still a very dangerous market.
Don't think that gold "stocks" will forever move up into
triple digit down days in the DOW.
That will only happen in the early stages of institutions
establishing (or, re-establishing) their positions in the
sector.
And we've now rallied enough, that there will be lots of
profit taking, on any signs of fundamental, or technical
weakness.
...remember that point.
Let us wake up to a lock-limit down day... and you'll
be happy you're weighted to the large, safe, and liquid
names.
I like to start backing & filling into the small caps, the
emerging producers, and then the explorers, after the large
cap leaders show fatigue, and begin to under perform the
index. And when the momentum players and the individual
investors start piling in.
I also have 3,4 smaller cap names that I like to trade, that
I literally follow the tapes on, like a cross-eyed zombie.
MFN is one of those stocks for me.
And here's a tip...
One of the more esoteric aspects of trading is "pulse, or feel."
If you trade individual stocks long enough, you can acquire
a feel for the tape that goes beyond the charts, TA, and
the fundamentals.
It's a feel.
Some call it being in "the zone."
You reach a level to where you literally know, and can feel
where the stock is going, and when it's at a turning point,
or poised for a breakout.
It's not 100%, no one, or no thing - ever is. But, over time
and after many tests, and many successful trades based on
"feel"...you'll begin to trust it.
It's impossible to develop that "feel" for more than just
a couple of stocks. And what I do, is pick one, two, maybe
three at the most... stocks that have a little higher risk
profile, but that also have the upside potential to outperform
the index because they are over-sold, are recovering from
bad news, a downgrade, or some non-crippling event.
That's where I like to put my "mad" money. I feel a little
safer in a MFN, which is now rolling into production, than I
would an explorer. And I feel a little safer in MFN now
that it's raised some cash, and weathered a little dilution
storm, than I do a company that may have that dilution still
ahead of it.
That's "my" thinking and what works for "me."
Doesn't mean it's better than someone else's strategy, nor
is it a guarantee that it will work for you.
I hope that helps.
For the juniors and explorers... go see Claude Cormier,
you can check out his newsletter here:
ormetal.com
While I follow a handful of juniors and explorers, that is
not my specialty, nor my strength. I focus on the large & mid-
cap names, the HUI Index, and the ETFs. But the juniors
and explorers are Claude's specialties.
Claude's been around SI for years. He's a straight shooter,
and you can probably count the "straight shooters" in the
gold stock newsletter business on one hand.
Just be sure to tell him to keep an eye on the Queen's
Governor Generals, and her "Royal Prerogatives"... because
while we love our Canuck cousins... we don't be wanting no
stinkin' SPP, or North American Union <vbg>.
Twas a good day in gold bugdom.
Cheers everyone,
S.O.T.B. |
