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Two Ways to Play: Newmont Digs Up Big Profits


Strengthen your portfolio in good times and bad.

Newmont's Profit Soars

Big beat by Newmont Mining (NEM) this morning. The largest US gold miner reported fourth-quarter earnings of $1.13, which was $0.34 better than consensus estimates of $0.79 a share. Revenues rose 90.0% year-over-year to $2.52 billion above estimates of $2.06 billion.

The company stated in the press release, "The combination of slightly higher production, lower costs, and gold price leverage generated cash flow from operations of $2.9 billion on record revenues of $7.7 billion, while our gold operating margin expanded to 57%."

The company also said gold reserves increased 8% annually in 2009 while copper reserves rose 17%.

From the Bull Pen: If you're bullish on gold, these miners should outperform the yellow metal. For NEM, a sell stop can be set below the recent low ($46). Also consider ASA Limited (ASA), which may be a good risk/reward setup. A sell stop can be set below the recent low ($66). But one caveat is that it's such a thinly traded stock so keep that in mind and adjust the position size accordingly.

From the Bear Cave: Bears might be thinking that there's more downside for commodities and commodity-related plays -- like the emerging markets ETF (EEM) -- especially if these sovereign debt issues are a sign of more trouble to come. For EEM, a buy stop can be set near $39-$40.

For more ways to play and other trading ideas from more than 30 top market pros, take a free trial to our Buzz & Banter.

A Quick Check Around the World

Asian trading closed with the Nikkei -0.95%, India -0.01%, Hang Seng -0.33%, Shanghai 1.27%, and Taiwan -1.36%.

Across the pond, we see the FTSE 0.01%, CAC -0.29%, DAX 0.18%

As of 8:30 AM EST, S&P Futures are trading -10.75 to 1093.00. Nasdaq futures are -10.00 to 1804.00.

A Look at Commodities

Over in commodities, crude oil is -1.35 to 78.65 while gold is -4.400 to 1093.20 this morning. Silver is -0.178 to 15.775 and copper -0.0530 to 3.2005.

The dollar Index is -0.0700 to 80.8400.

On the Radar


Initial Claims 496K vs 460K consensus, prior revised to 474K from 473K
January Durable Goods Orders +3.0% vs +1.5% consensus, prior revised to +1.9% from +0.3%
January Durable Goods ex-trans -0.6% vs +1.0% consensus, prior revised to +2.0% from +0.9%
Continuing Claims rises to 4.617mln from 4.611 mln

10:00 FHFA Housing Price Index

Click here for the full trading radar.

Good luck today!
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Position in NEM

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