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Todd Harrison: Are the Gold Miners Set to Shine?


Investors look for bounce candidates into year-end

Editor's Note: Todd posts his vibes in real time each day on our Buzz & Banter.

It's Turnaround Tuesday and on cue, the stock market is trading lower. After the 382-point rally in the S&P 500 (INDEXSP:.INX) this year, five handles is a rounding error, but for those gripping the handlebars of year-end performance anxiety, every tick counts.

Away from the stock universe, gold is trading $25 higher and above the $1,250 level, which is important through a technical lens. In the sometimes-backward world of technical analysis, gold is "better" higher (above $1,250) and "worse" lower (below) as the head & shoulders pattern that "works" to $1,065 will be negated if it can sustain this rally.

That bodes well for the gold miners (represented by the Market Vectors Gold Miners ETF (NYSEARCA:GDX)) bounce that we've been watching, which will presumably come to roost once funds purge the losers from the year-end sheets. Goldcorp (NYSE:GG), Barrick Gold (NYSE:ABX), Newmont Mining (NYSE:NEM), Randgold Resources (NASDAQ:GOLD) and Franco-Nevada (NYSE:FNV) are individual stocks to watch in that complex.

Putting one foot in front of the other, S&P 1800, 1775, and 1740ish (the uptrend from November 2012) are near-term levels of lore, while high-beta tech (acted great yesterday) and the financials (faded late; watch for their "regulatory reaction") remain our super-tell duopoly on a trading basis. Market internals will also provide guidance, if and when they reach a 2:1 posture either way.

Away from the normal noise and emotion associated with there being 15 days left in the trading year, a heavy slate of snow is blanketing the East Coast, which may play a hand in market liquidity (liquidity, by definition, is the other side of volatility). Proactive traders may look to put limits on their orders and reduce the size of their bets to offset the potentially thinner environment. The last thing we need after a year like this is to find a lump of coal in our performance.

Random Thoughts:
  • The recent market action has been characterized by a lack of sellers more than the demand of buyers.
  • Most everyone I speak with foresees a melt-up into year-end -- which could happen -- but that reward won't come without the risk of a downside "trapdoor."
  • Is Bitcoin the "other side" of fiat currencies or a modern-day tulip?
  • How do they keep the vegetables in canned soup fresh?
  • How is Kim Kardashian famou -- and why does she matter to this market?

Twitter: @todd_harrison

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