Weekly Update: October 14, 2015

| 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.

You can follow me by searching for my twitter handle: @CommodityRes

See you in the Twittersphere!

Category: Commodity Trading