Charts of the Biggest Losers

These look like the best setups from the list I published earlier this evening. I included TXG as a reminder not to ignore price targets. Time is an issue with options, but a lot of these will be great straight up shorts to "sell and hold." Charts after the jump.

Barrick and Newmont Ready to Crater 30pc

Today's Losers

More familiar names. These all fell at least 3 percent on high volume. I shrank the list with daily volume and market capitalization limits. A ABNB ACIW ADSK AER AMCR ANSS APTV ATI AVNT BALL BILL BL BLCO BR BRKR CBRE CDAY CE CF CFLT CGNX CHRW CLX CROX CRWD CTLT CWH CWK DDOG DLO DNB DOCN DT DV DVN ECL EL ELF ENTG ESI ET ETSY EW EWBC EYE FIVN FND FROG FRSH FTNT GDDY GH GLBE GOLD GPN GSAT GT HL HOOD HRB HUBS IDXX IOT JOBY JXN KSS LEA LNC LNTH LTHM LUMN MKSI NCNO NEM NLOK OI PARA QCOM ROK ROKU RPD RUM SOFI SSNC TEAM TEL TNDM TPX TRMB TWLO TXG VEEV VRSK XRAY Z ZBH ZI ZIM ZS

Prepare for a Gold Miner Collapse

Gold mining stocks are imploding. There are three main reasons. One, bad stocks. Nothing can be done for them. Second is they didn't raise enough cash in the prior bull cycle. One of my former favorites, Maritime (MAE) is out of cash as the bear market hits full stride. Third are companies that are finally raising at horrible prices. LIO is an example of this. Both stocks are below March 2020 lows.

Benchmark hasn't been managed as poorly, yet it has also reversed everything.

Some silver and gold stocks:

It looks like a low could be put in, except I believe the bear market is about to kick off. I believe gold and silver stocks will implode. The time for stink bids is now.

Gold Analog Update: Bomb Bay Doors Open

Two weeks ago: Gold Screaming Deflationary Collapse

If the pattern proceeds as it did in 2011, inflation is going to die so suddenly you'd think it was vaxxed.

The top is now complete. The yellow horizontal added for the 2012 chart maps to the support broken today on GC. Last time, gold fell 14% in two days, including the break day. If the analog is strong, that suggests an extreme down move in gold is possible here.

Miners will follow if gold goes.

Newmont

Newmont dinged support last week. I've always believed that at some point, a dollar-positive currency crisis would benefit gold because at some point, people will assume what is happening to the euro, yen, yuan and so on will spread into the U.S. dollar. Or some fraction will prefer gold to the dollar.

If going with GDX or some other fund, use the 52-week low for a stop.

Note that gold has a very open chasm should it drop to the downside. But if I'm wrong about the downside, then miners are probably bottoming here on currency risk.

Salmon Jumping: Materials

Materials is a target rich environment if you buy into the deflation thesis or want to hedge it. Energy is the top pick, but some of these stocks are boring sleepers that aren't heavily traded. That makes for illiquid options, but also sometimes underpriced options. Some of the options in the materials sector are dirt cheap if you assume deflation. I skipped any chart that didn't look toppy, but the top-10 are almost all ugly. Newmont is included, even though I have calls, because it could be cut in half in a deflationary panic. Note that I expect Newmont would outperform most commodities stocks in this scenario. Purple line on IFF is a regression line for the whole chart. Individual targets after the jump.

Gold

If it wasn't for the gold and silver price rising, and having better looking charts, I'd say buying here is bottom-fishing and borderline knife catching. There's still risk that miners get pummeled in a sell-off. Gold, unlike silver, might have made a higher low compared to the March 2020 low.

 

Trade Time

I don't know if the rally will end with a burst of bullishness or if it will lose steam and end with a consolidation pattern, but as I've said in recent posts, now is the time to be window shopping as a bear. Have targets ready in case the bear swiftly resumes.

I come into today with long yen, short oil, long gold miners (in addition to shorter term GDX and GDXJ, I have been adding NEM Nov 55 calls) and short Apple, plus a lot of cash. I will be looking to either day trade the market or buy TLT/ZB on weakness.

For yen, I want to see if we start getting some deflationary signals in the market. I you click the yen tag, you can see the gap between the yen and the spread between US and Japanese long-term govt bonds. If there is deflation that drives interest rates lower, the yen can theoretically return to form as a deflation winner. If inflation will kill the market, then the yen's run could peter out this month. Additionally, this relationship need not hold longer-term because it wasn't this strong in the past. The relationship between the bond spread and yen was tight this year because the move in bonds dominated financial markets.

I've talked about the oil analog before. A strong analog would have seen oil drop last week. Instead, it popped to $101, and now WTI tagged a $93 handle. As I'm typing, CL has reversed $8.39 per barrel from Friday high to Monday low. The waterfall decline starts below $90 per barrel.

Apple was mainly a tactical play on a market pullback. I could be out of it this morning. I will likely take a short position for the next leg down in the bear market though. I have it because I'm mostly in cash with little equity exposure either way right now.

I'm out of most TLT calls, but I think gold miners offer similar exposure here. I expect gold will rally with ZB, though it probably won't be step-for-step on most days.

Gold Bugs, Inflationists Body Slammed

What caused the spike from March 2020 to August 2020 in GDX? What caused the implosion since April 2022?

Is the bottom in for gold yet? No. All the gold bugs and inflationists think inflation is roaring. In reality, the economy in plunging into a deflationary abyss. They will panic sell when the deflation comes into full bloom. The gold mining shares will implode like Newmont did today. Selling will be relentless. There will be total revulsion. Then if you are smart, you will be buying. Days to weeks later, the Fed will make its major pivot and restart the economy's inflationary engines.

Related: 

Walmart Plunges, Drags Down Market, After Slashing Profit Outlook, Blames Fuel Costs

The increasing levels of food and fuel inflation are affecting how customers spend, and while we’ve made good progress clearing hardline categories, apparel in Walmart U.S. is requiring more markdown dollars. We’re now anticipating more pressure on general merchandise in the back half; however, we’re encouraged by the start we’re seeing on school supplies in Walmart U.S.” said Doug McMillon, Walmart Inc. president and chief executive officer.

The plung on the chart includes the 8 percent after hours drop. Whether it holds, we'll find out tomorrow.

A generalized rise in prices is a hallmark of inflation. A localized increase in food and energy that triggers collapsing spending on everything from gold to consumer items, is the hallmark of not-inflation. If your monthly bills are going up and you don't have more money coming in via inflated wages or inflated credit usage, then there is no generalized rise in prices. There is a giant "food and energy tax" on the economy. The Federal Reserve's answer is to tighten monetary conditions such that rising debt costs join fuel and food in soaking up spending. Eventually, the Fed will stop tightening, but will they ease? Not as long as oil prices remain high. The economy could well be on its own, at least until a deflationary collapse similar to 2008 causes an implosion in food and energy prices.

Newmont Hits 5pc Yield

The Bottom for Gold?

The chart of Newmont looks the same as the chart for gold. If Newmont doesn't break, it won't get to that 5 percent yield, but yields more than 4 percent yield at the current level.

NEW MOoN shoT

Newmont 5x and 10% Dividend

If there is a pullback in gold and miners, there's a good chance Newmont will become a high-yield stock assuming gold prices eventually rebound. Add in potential capital appreciation, and it could finally become a go-go growth stock in the coming decade.

Newmont to 200

Aztec had some nice drill hits. What I want to point out is that there are more than a few charts like this because the overall sector has a similar look. The stochastics (lower indicator) are in the oversold zone. Stocks can stay overbought/oversold for a long, long time on the montly time frame. By itself this isn't bullish. There is also falling volume. By itself, not bullish. However, the price has refused to drop. That says this is a firm base from which a new bullish advance can begin. A break of this price level would be very bearish given this backdrop.

Here's a short-term price chart.

A panic washout in gold mining remains possible. Investors think inflation will ignite the sector and there isn't really bearishness sentiment. It could be that the sector investors are right to be bullish and the mainstream are idiots for not buying dirt cheap stocks at historically depressed valuations. There is doubt though, and that could give way to panic selling if the broader stock market turns south and takes everything with it. There will be a generational buying opportunity if that happens.

Speaking of cheap miners, Nemont yields 3.80 percent. If gold prices rise to $2500 and $3000 the yield on today's price will rise above 5 and near 7 percent. The chart is interesting at this juncture with the inflation/disinflation arugment still going on at least in my head. If the economy is trapped in the post-2008 slowdown caused by the debt bubble, then Newmont might be stuck in the same 40-year channel.

Might, because I think the gold miners will do best in a deflationary environment, followed by stagflation. If a deflation or stagflation triggers a powerful new bull wave in gold miners, then Newmont looks like a gigantic basing pattern with the stock finding support at a former resistance area. The 2011 breakout was a false breakout and this one will be the real one. The measured move would take Nemont up about 50 percent to the $90 area, but really the move would probably be the first phase of what will eventually be a 350-percent rise to $200 per share, with dividends pushing the total return above 400 percent. If one of the large-caps in the gold sector rises 400 percent, finding 10-baggers among the juniors should be like shooting fish in a barrel——provided investors employ a modicum of research and avoid the hype and poorly run firms...no small task in this space.

Newmont for Income

I purchased Newmont Mining (NEM) at a bit higher level than where it trades today. They've made a great move this week, committing themselves to raising the dividend along with the price of gold. A New Day for Newmont: Gold Producer Makes Game-Changing Announcements

Yesterday, Newmont Mining (NEM) held its analyst day and made a couple of important announcements, one being that it expected production to grow from 5 million to 7 million ounces over the course of the next five years or so, and the other that it would boost its dividend 20 cents for every $100 increase in the price of gold. At today's gold price that means it will pay a divided of about a dollar, which is a yield of approximately 1.7%. But for those folks who are willing to own the stock over time, a $2,000 gold price would create about a 3.5% running yield on a purchase you made today.

You have to skate where the puck will be, not where it is. Miners will produce a lot of income if the price of gold continues to rise, while some other dividend payers of today may decline in the face of inflation. A stock such as NEM is a good balance to a conservative portfolio that lacks metals exposure. This won't be the best gold stock to own, but it's