To be honest, it is getting tougher and tougher to find a miner that has not already taken off for the races. But I did find these three and have taken my position.
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What impressed me about Yamana Gold Inc (AUY) was a couple of things. First, it sells at a 2010 PE of 15 while its group of major gold miners sell at an average PE of 25. Second, the next chart kinda says it all.
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Click on the charts to ENLARGE
This chart is yesterday's put to call ratio for the mining stock of Yamana Gold Inc (AUY). It kinda look like the GLD put to call chart, doesn't it? Hummmm.....
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Well, I hope the downtrend is over, beginning today.
This final chart and purchase at $25.75 is Seabridge Gold Inc (SA). As I am posting this I see I over payed considerably as it is now only $25.25. Anyway, this is going to be one of those decisions that I just sit still with - and let the gold bull bring the price back to me for a profit.
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What I liked about SA is that it had not yet taken off to skies northward (but likely will). It has an excellent positive divergence in place and some postive money flow. Once it gets up above that 200 day moving average ceiling above, SA should do just fine.
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I have updated my TSI trading record with these purchases.
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John, I'm trying to figure out those put/call ratio charts you post sometimes, the 2 most recent being AUY and GLD. Looking at the chart of AUY, the put/call ratio jumped up substantially, so does that mean traders are buying more puts than calls and betting on a more bearish price for AUY? I don't think that would make sense, that's why I don't understand them. Mind you, those charts you posted say volume, not ratio??? Also, can you name the website where those charts are located? Thanks so much.
ReplyDeleteBruce
Volume
ReplyDeletehttp://www.schaeffersresearch.com/streetools/indicators/equity_volpcratio.aspx
Open Interest Configuration
http://www.schaeffersresearch.com/streetools/indicators/open_interest_configuration.aspx?ticker=
Just change the Symbol for the ticker (stock) you want
To answer your first question, I believe the answer is YES.
Bruce, I do not pretend to completely understand this either. All I really care about, sorry to admit, is what happens if the put/call ratio of volume is nose bleed high.
I am looking for cause and effect. If I see a habitual relationship - like if put/call is high, price is at a bottom - then I am happy to trade against the crowd.
My guess would be that if trading interest is unusually high in puts, it means that an unusually high number of people are just SURE price will drop. As the crowd is usually wrong that gives me a trading edge to know what they think.
Does that make sense?
Actually that does make sense, it's the contrarian play, the smart money versus the dumb money, the commercials versus the speculators which for one thing, is what the COT Report is all about. Thanks for your reply.
ReplyDeleteBruce