Friday, January 25, 2013

Newmont Mining NEM shares analysis next week

Newmont Mining NEM shares analysis next week january 28 2013 : What's happening: Over the past year, Newmont Mining (NEM -1.48%) has been in a downward trend. Despite record-low interest rates, gold has not rallied to the extent that one would have imagined. On January 28, the Federal Reserve will release the minutes of its latest meeting, and we expect to see the Fed continue on its current path of near zero interest rates in hopes of keeping the overall economy in recovery mode. Nations across the globe are in the midst of stimulating their economies, with Japan being the latest nation to announce plans to devalue its currency in order to make its exports more attractive. If the Fed announces that it will continue to keep the same policy we do not expect to see much upside to gold.

Technical analysis: NEM was recently trading at $44.76, down $19.67 from its 12-month high and $1.81 above its 12-month low. Technical indicators for NEM are bullish with the stock in a weak downward trend. The stock has support above $44.25 and resistance under $45.70. Of the 18 analysts who cover the stock eight rate it a "strong buy," one rates it a "buy" and nine rate it a "hold." The stock receives Standard & Poor's 3 STARS "Hold" ranking.

Analysts' thoughts:
We expect the Fed to maintain its current policy, at least through the end of 2014. Gold prices remain high, but have been stuck in a tight trading pattern since the middle of 2011, and we do not believe that that is going to change any time soon. Gold typically rises when investors believe that the global economy is in serious jeopardy of disaster, but we did not see much movement during the recent fiscal cliff drama in Washington. Now that a temporary deal has been reached to raise the U.S. debt limit to cover expenses for the next four months, it seems unlikely that investors are going to flock to gold any time soon.

Stock-only trade: If you're looking to establish a long stock position in NEM, we like the stock under $44.50. We would sell the stock if it falls under $40.50 or 10% under your purchase price, and take profits off the table should the stock jump above $49.

Option trade:
If you are looking for a hedged options trade on NEM, consider a March 37/42 bull-put credit spread for a 60-cent credit. That's a potential 13.6% return (97.6% annualized*) and the stock would have to fall 4.8% to cause a problem.

Speculative call-only trade: For those of you with an appetite for higher risk and bigger returns, consider buying the September $45 call. If NEM rises just 8.7% you can pull in a 20% or better profit on the option. However, if the stock moves lower, this kind of trade could lose a significant amount. For the latest updates PRESS CTR + D or visit Stock Market news Today

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