Weekly Update: October 14, 2015
Weekly Update: October 14, 2015
Big Picture Outlook:
Things are finally looking up for gold…
The yellow metal is breaking strongly higher in today’s session as investors factor in continuing weakness in US economic data. As I write, gold is up $23 an ounce, trading at $1,189- just shy of very important technical resistance at $1,200.
Here’s the deal…
The $1,200 price area is the last major hurdle keeping gold in its multi-year downtrend. Should the metal surpass this key technical area, we may see a sudden burst to higher prices as short sellers cover their positions and new buyers flood the market.
But while it’s exciting to think gold’s gloomy multi-year downturn may be coming to an end, we have to be careful.
Gold bears will put up a very big fight at $1,200.
So much so that I’m wary of establishing a new long position in any gold related asset until we see a strong break over $1,200.
Speaking of gold related assets, let’s check in on our open positions…
Portfolio Highlights:
Editor’s Note: I won’t update every open position in every update. I focus on the positions with significant news or price movement.
. . . . Newmont Mining $NEM November 20, 2015 $18 calls
Not surprisingly, our $NEM calls are gaining value quickly as gold rockets higher. In fact, in today’s session, our $18 calls surged as high as $2.02 a contract, which is a 162% gain from our entry at $0.77 on October 2nd.
Remember, $NEM already surpassed our first profit target at $19 a few days ago. As a result, everyone should have taken a partial profit of around 100% in this trade.
If you’re aggressive, keep holding a portion of this call position for further gains! Our second profit target is at $21 in $NEM.
. . . . US Oil Fund $USO December 18, 2015 $15.50 calls
WTI crude is back below $50 a barrel as investors factor in a surprise OPEC output boost. The Middle Eastern oil cartel recently announced they pumped 31.57 million barrels a day in September.
That’s the largest monthly OPEC crude output in three years.
Clearly, OPEC is doing all it can to retain market share and drive a stake in the heart of the US shale industry.
While this latest crude pullback is a setback for our position in the $USO December $15.50 calls, we have plenty of time until expiration. Let’s keep holding our $USO $15.50 calls for an eventual rebound back above $50 a barrel in WTI.
. . . . Dominion Resources $D November 20, 2015 $72.50 calls
$D broke above $72 in today’s session- new multi-week highs. If you’re still in this call position, keep holding for additional gains and move your risk control line higher to $70.80 from $68.50.
Remember, our first profit target is at $74!
. . . . Southern Company $SO November 20, 2015 $45 calls
$SO came within 9 cents of our first price target at $46 in yesterday’s session. The upturn sent our November $45 calls up to $1.16 bid- a 54% gain from our entry.
If you managed to collect some gains off this trade, that’s great. If you haven’t yet hit the sell button on our calls, I suggest you do so. Given the price action today, there’s a good chance $SO turns lower soon.
At the very least, move your risk control line in $SO higher to $44.90.
Until next time,
Justin Bennett
***Editor’s Note*** I have recently joined the Twitter revolution! In case you’re unaware, Twitter is a remarkable tool for distributing timely market information. Throughout each trading day you’ll find me posting commodity related articles and information that will help you get a better handle on the markets.
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Category: Commodity Trading
