Not every stock is in good field position to be shorted in a declining market, but I was thumbing through some stocks on OptionInvestor.com's play list and found shares of Gemstar-TV Guide (NASDAQ:GMST) that still look actionable with the broader market negatives.
Gemstar-TV Guide - last nine months
After recently reporting earning, shares of GMST "gapped" higher, but right into 50% retracement at $39.49 and sold off from there. The break of 38.2% retracement at $35.37 is hint that there may be some downside still to come for this stock. Traders looking to still play some of the broader market weakness might find this stock as an attractive short/put here at $34. A stop set just above the $35.50 level and a target of $28.71-$22 makes an attractive risk/reward trade.
Ballard Power Update for premierinvestor.net
Subscribers of premierinvestor.net that traded the Ballard Power Systems (NASDAQ:BLDP) bearish play near the $32 level form Wednesday morning are looking good here at $23.91. The stock has lost an additional 11% of its value today and we'd be lowering stops from $29 to the $24.50 level. A stop there would help the trader lock in a nice gain of 30% in a rather short amount of time should a short-covering rally take place later today. Should the stock continue to weaken, that stop shouldn't get hit.
Ballard Power Systems - last 8 months
Last night we discussed the point/figure chart of Ballard Power Systems (BLDP) and it was difficult to determine risk/reward in the trade. It was suggested that traders lower their stops to $29.50. A more aggressive trader could now lower his/her stop to $24.50 which would be just above the 80.9% retracement level.
Gold stocks are the only sector performing well today, and the Gold Index (XAU.X) is up another 1.64 percent.
December Gold Futures and September Euro Futures Daily Chart
Some of the buying in gold stocks can be attributed to a flight to safety during these times of stock market uncertainty, but mostly it is the result of a weakening dollar. As foreign currencies like the Euro continue to strengthen, more dollar- based gold can be purchased at a cheaper price. Looking at the above charts shows how the Euro and Gold futures have moved together in August. If the Euro continues to climb, so should gold futures, and gold stocks should go along for the ride. Further weakness in the stock market could also boost shares of gold stocks.
Newmont Mining Daily Chart
Newmont Mining (NEM), the second largest gold producer, is one of the gold stocks that has been benefiting from the recent gold craze. 5 years ago Newmont was mining about 2.25 million ounces of gold at a cost of $218 per ounce. As gold prices headed lower towards $250 and ounce, Newmont's bottom line suffered. Now the company is expected to produce 5.4 million ounces at a cost of $180 per ounce. If gold prices continue to climb above $280, Newmont could benefit nicely. Over the short-term, Newmont could run into resistance at $22, and the $23 area. Any pullbacks should find support around $20.50.