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The dollar finally bounced today, and in a big way. As mentioned in my last post, the longer term dollar trend line held at just below $77.00 on the $DX-Y Index. Gold and silver also bounced today after being somewhat bludgeoned the day prior. Certainly this drama prattles on in more curious and curiouser fashion.
Like my friends Gary and Le Monsieur, I want to believe the precious metal bull is done consolidating and is ready to take off. However, today’s considerable bounce in the dollar and certain things I’m seeing in the $HUI Goldbugs chart continue to give me pause.
Luckily, I think the question will resolve itself soon, as the $HUI is approaching serious resistance on the daily charts. This resistance, if broken, will give me all the assurance I need to jump back in the market long and strong:
Now, I’m not one for advocating dandruff-shampoo formations, but the combination of approaching resistance, and the 50-day EMA give me enough pause to wait one or two more days to see how this all shakes out. Again, if this is the C-wave finale, we’ll have plenty of room to banque large coin before it’s run its course. The good news is the 200-day remains a rock solid buy-point, as it has throughout most of this long bull run for the miners.
On a happier note, today one of loyal reader Teahouse’s favourite stocks — FRG — got swallowed up by a hungry major, again illustrating why we like to buy and hold (even in diminished capacity) the junior miners in this bull instead of the larger miners.
In an increasingly active M&A market, you want to be holding buyout upside, not acquisition upside for the simple reason that,with the days of Cisco and Fifth Third Bank’s long acquiring sprees behind us, there’s just not much upside to owning an acquiror. And in owning the juniors, you know there’s always a chance of even a crappy company waking up to a 25-50% price pop. Play the odds that lie in your favor, I say.
In honor of Teahouse’s alert (I owned FRG but had never blogged about it until Employee 8 brought it up here), I will also feature another of his favourites tonight, MVG — a nice little silver miner. He gave me some crap for selling the $12.50 February calls a couple of weeks back when I was hedging the portfolio, but that trade has worked out, and I still own all the MVG I had purchased down in the $6-$7 range as a result (I’ve since covered the calls at short pennies).
I thing MVG is not far from a bottom on this pullback, if it has not bottomed already. Moreover, it’s a relatively low risk play from this point on:
Congrats to Teahouse and all my other fellow FRG holders, and let’s get out and get the next one. They’re coming for sure.
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