Finding Nemo? Here’s your trade on Newmont Mining (NEM). (February 18, 2016)
I want to look at Newmont Mining ( NYSE:NEM ). Here’s why: Gold is really screaming again. It pulled back for a few days, but today it’s back with a vengeance. Newmont Mining ( NYSE:NEM ) is one of the big dogs. What I want you to do is look at this; first zoom out. This has been really volatile but it has basically been forming a base, depending on how you want to look at this, for the last couple years. I would prefer to look at it this way: This thing has been basing for about half a year. Now it’s broken out, and this red line is the 40-week or 200-day moving average. These stocks that are forming bases, I want to see them trade above the 200-day moving average, and trade consistently, and then I want to buy them on pullbacks. Now, what we got here with Newmont Mining ( NYSE:NEM ), this looks like just about all the pullback we’re going to get.
So here’s what I would suggest: Buy some stock here, $25.00. Take a small position and then require this stock to breakout above 26.00, it’s not that much higher. But REQUIRE it to breakout above 26.00 before you add to that position. And then FINALLY, take an even bigger position if and when the stock breaks out at 28.00. So you’re taking a little bit at 25.00, a little bit more in 26.00, and finally at 28.00. You can say, “Well if I’m going to be doing that why don’t I just take it all at 25.00?” And I will tell you this: If we know for sure that Newmont ( NYSE:NEM ) is going to go up, and up, and up, and up, and up, well then sure, do just that. But we don’t know that. So what we’re doing is, we’re managing risk. We’re managing risk and the way we’re doing that is gradually raising our cost basis in the stock as it moves higher. I would rather raise my cost basis in the stock as it moves higher because then I’m kind of chasing the stock. I would rather do that than LOWER my cost basis as it moves lower, because then all that means is I’m losing more and more money on the way down.
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