-- Schaeffer's Market Observation Features XAU, FCX, GG, AEM, NEM, and AU --
/FROM PR NEWSWIRE CHICAGO 888-776-6551/
-- WITH PHOTO -- TO BUSINESS EDITOR:
Schaeffer's Market Observation Features XAU, FCX, GG, AEM, NEM, and AU
CINCINNATI, Jan. 10 /PRNewswire/ -- Today's Market Observation features the
PHLX Gold and Silver Index (PHLX: XAU), Freeport-McMoRan Copper & Gold
(NYSE: FCX), Goldcorp (NYSE: GG), Agnico-Eagle Mines (NYSE: AEM), Newmont
Mining (NYSE: NEM), and AngloGold (NYSE: AU). Schaeffer's Market Observations
are market-based reports that provide insight and analysis from a unique and
unbiased perspective. Market Observations are published on
www.SchaeffersResearch.com - the home of Bernie Schaeffer and Schaeffer's
Investment Research. To receive a free email notification each time a new
commentary is written about one of the featured stocks or any of your favorite
stocks, click on the following link:
schaeffersresearch.com .
(Photo: newscom.com )
A Golden Opportunity?
Gold continues to draw a lot of attention in the current market
environment. A number of factors (including strong technical formations,
geopolitical risks, a declining U.S. dollar, and pessimistic sentiment) have
combined to send the yellow metal shooting higher in recent months. In the
past week, gold and gold stocks have posted some declines, leaving many to
wonder if the good times are over. In fact, it could be that the party is
just getting started.
Consider the recent pullback. Many gold stocks are now closing in on
areas of potential support that could provide a staging ground for their next
move higher. The PHLX Gold and Silver Index (PHLX: XAU), which represents a
basket of these stocks, has spent the past few weeks consolidating into its
rising 20-day moving average. This follows a break above previous resistance
at the 76 level (from September) that could now act as additional support.
The combination of potential support at the 20-day trendline and the 76 mark
bodes well for the XAU.
Click on the following link to see a Daily Chart of the XAU since July
2002 with 20-Day Moving Average:
schaeffersresearch.com .
Similar patterns can be seen in the charts of Freeport-McMoRan Copper &
Gold (NYSE: FCX), Goldcorp (NYSE: GG), and Agnico-Eagle Mines (NYSE: AEM)
below. In all cases, these stocks are drawing closer to their rising 20-day
trendlines and other potential support levels. For example, GG has found a
solid base at the 12.50 mark during the past two weeks. This level coincides
with peak put open interest in the January series of nearly 4,000 contracts,
which could provide valuable options-related support to the shares. AEM has
cleared previous resistance in the 14 area from October and appears to be
moving higher off its 20-day.
Click on the following link to see a Daily Chart of FCX since October 2002
with 20-Day Moving Average:
schaeffersresearch.com .
Click on the following link to see a Daily Chart of GG since November 2002
with 20-Day Moving Average:
schaeffersresearch.com .
Click on the following link to see a Daily Chart of AEM since October 2002
with 20-Day Moving Average:
schaeffersresearch.com .
How about the geopolitical landscape? As many know, gold is often viewed
as a "safe haven" investment in times of war or unrest. Is the United States
at war? Some would argue that officially we are not. But look at the
headlines. Yesterday, chief U.N. weapons inspector Hans Blix blasted Iraq for
violating U.N. sanctions and providing an "inadequate" account of its weapons
programs. Today, North Korea officially withdrew from the nuclear non-
proliferation treaty -- a move the White House said is proof the country
continues to "take steps in the wrong direction" and that Vice President Dick
Cheney called a "serious concern." In the meantime, the U.S. military
presence in the Middle East continues to build. It's clear that the
geopolitical arena remains one fraught with pitfalls, hot spots, and itchy
trigger fingers.
Let's look at sentiment, which often provides a good contrarian read on a
stock's future direction. In a nutshell, this means that low expectations
(i.e., "high pessimism") on a stock in a technical uptrend can often lead to
higher prices. That's because there are plenty of potential buyers on the
sidelines that can still jump into long positions -- driving the stock to new
heights. The XAU's Schaeffer's put/call open interest ratio (SOIR) has
increased from 0.54 on December 30 to its current reading of 0.75. This is a
sign that puts (bearish bets) are increasing at a faster rate than calls on
the sector. Newmont Mining's (NYSE: NEM) SOIR has climbed from 0.35 to 0.55
during the past few weeks. The current reading is higher than 83 percent of
those taken during the past year. AngloGold's (NYSE: AU) SOIR has also been
on the rise -- with a current reading that's higher than 93 percent of those
from the past year.
In addition, puts on gold futures have been rising and recently topped
90,000 contracts. This has the call/put ratio for gold futures breaking below
2.00 and declining to 1.68, which may well be the lowest ratio in a decade.
(Keep in mind we're talking about a call/put ratio here, so low readings
indicate higher levels of put activity and/or decreased call activity).
Pessimism is definitely rising on gold stocks and as long as the group
continues to show strength, this has bullish implications from a contrarian
point of view.
Finally, take a look at the U.S. dollar, which often exhibits an inverse
relationship to gold. The U.S. Dollar Index (DX/Y - 101.43) is now trading
below its long-term 80-month moving average. Despite a few "up" days
recently, the DX/Y continues to be capped by its declining short-term
trendlines. Bottom line: a weak dollar is good for gold.
Click on the following link to see a Monthly Chart of the DX/Y since
December 1996 with 80-Month Moving Average:
schaeffersresearch.com .
So the outlook for gold remains bright. The recent pullback in many
stocks could provide a perfect opportunity for investors to get in on the
"ground floor" before the yellow metal makes its next run higher.
About Schaeffer's Investment Research ( www.SchaeffersResearch.com )
Schaeffer's Investment Research, founded by Bernie Schaeffer in 1981, is a
financial information and trading resources company. It publishes Bernie
Schaeffer's Option Advisor, the nation's leading options subscription
newsletter. The firm's contrarian approach focuses on stocks with technical
and fundamental trends that run counter to investor expectations. The firm's
website, www.schaeffersresearch.com, is recognized as one of the leading
information sources for stock and options traders and was cited as the top
options website by both Forbes and Barron's. Click here for more details
about Schaeffer's trading methodology: www.schaeffersresearch.com/method .
Contact: Tom Godich at Schaeffer's, Phone: 513-589-3800; Email:
pressrelease@sir-inc.com
SOURCE Schaeffer's Investment Research
/CONTACT: Tom Godich of Schaeffer's, +1-513-589-3800,pressrelease@sir-inc.com /
/Photo: newscom.com Archive:
photoarchive.ap.orgprn Photo Desk, +1-888-776-6555 or +1-212-782-2840/
/Web site: schaeffersresearch.com /
Symbols:
US;XAU US;FCX US;GG US;AEM US;NEM US;AU US;FXB CA;G DE;GO5 CA;AXG
10-Jan-2003 20:15:00 GMT
Source PRN - PR Newswire |
