Four Weeks and a Forlorn Price for Gold (FCX, DXY, HYG)

‘Fess up, gang.

You know it’s true.

There’s no single market letter out there that offers you such a wealth of money-making trade ideas on such a consistent basis, none whose social and political acumen is so finely honed, and certainly none that at the same time provides you with first-class weekly entertainment value like arch-egomaniac McAbby’s Bourbon and Bayonets.

mcabby

Just a quick review of the last few weeks’ trade ideas that have moved nicely for us –

On July 31st, in our letter called Dollar Fires Shake up the Market, we got very excited about the near term prospects of the dollar, and our bet was both right on time and right on the money.

The dollar has risen magnificently since then and made a very nice profit for anyone who went long CALL options at the time.

dxy821

By the way, dollar strength, as we mentioned in that letter, will not be a passing phenomenon. It will continue so long as America is seen as the best bet in the global investment landscape. And with tensions in the Ukraine keeping Europe off the radar for now and the Middle East glowing ever hotter, money flows should continue toward our shores, strengthening the greenback.

In that same letter we also urged you to consider a trade that went long the Select Sector SPDR Industrial ETF (NYSE:XLI) and short the Select Sector SPDR Technology ETF (NYSE:XLK), at a cost of roughly $1315 per board lot traded.

And that too has been profitable. Closed today, you would have a profit of over ten percent. And for those who employed options, you would have come close to doubling your money, depending upon your option selection.

Just a week later…

Seven days hence we issued a call to go long junk bonds, and that, too, has panned out beautifully.

The letter was called Junk Sale Offers Profit Treasures, and there we urged you to consider a long trade on HYG.

We wrote –

“In the rising rate environment that we see coming, junk will return far more than Treasuries, and because of her higher inherent yield and an enhanced corporate profit picture, we see little danger for those interested in cashing in on the increased yields now on offer.”

And what happened?

The charts tell the tale.

hyg821

An asset class that was ready to soar did exactly that.

And everyone who jumped in when those fatter yields were on offer also stands to cash in with a few extra percentage points return annually.

Junk, eh?

That was on August 7th. A week later (or last week, if you prefer), we told you to jump off the copper train, as we felt it was about to head south in dramatic fashion.

We recommended you play it using copper giant, Freeport MacMoRan Copper and Gold (NYSE:FCX), one of the world’s leading producers, as her chart and that of copper looked almost identical.

And now?

They still do.

Here’s copper.

testingresistance

As you can see, she bounced higher in the last two days and is now testing resistance.

What’s more meaningful, however, is what’s happened to gold, Freeport’s other major mineable asset.

Look here –

tumbling

In the last 24 hours, gold has taken a major hit. She’s dived below her former lows set at the end of July (in black), and in so doing, has set off a sell alarm that we expect to hear as soon as trading resumes in gold today. All the miners will be hit. And that includes Freeport.

But before we get to her chart, let’s take a look at silver.

silver821

Silver has been dropkicked and bitten in the ingots ever since it registered retracement highs at $21.60 back in mid-July. And there’s little in the way of stopping the slide until it tests support in the $18.60 range.

We mentioned Freeport earlier, but we don’t hold out great hope for any of the miners in this environment. With the dollar climbing and equities nearing all-time highs, nobody wants to hear about gold and silver. In the minds of most investors the PMs are yesterday’s investment. They’d prefer to focus on stocks like Tesla (NASDAQ:TSLA) and Twitter (NASDAQ:TWTR) and tickle themselves with Samsung’s latest vibrating knob-pod.

Here’s Freeport –

fcx821

We have little to offer FCX bulls at this hour. With the metals tumbling, we see Freeport falling at least 10% to her bunched moving averages in the $34 range (black square).

Only then will there be a chance for a bounce.

Many happy returns,

Matt Mcabby, Senior Analyst, Normandy Research

See what people are saying...

  1. Tiggeerr

    I would like to know how you arrived at your conclusion. Fibonacci? Elliott Wave?

  2. Tiggeerr

    How did you arrive at your conclusion? Fibonacci? Elliott Wave?

  3. Fabian

    FCX, I don’t know but the potential down play is small. Anyway, thanks for the MBI puts, that worked well.

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