Monday, August 31, 2015

Gold Rally Marked by Short Covering

If there was ever any doubt that the majority of buying by the hedge fund category in the gold market over the past 3-4 weeks has been of the nature of short covering, this week’s COT should put that theory to rest.
Since the third week of July, the hedge fund category alone has covered or lifted 40,000 short positions. That against the addition of only 16,000 or so new long positions over the same time span. By a better than 2:1 margin, hedge funds have been covering shorts, not instituting fresh purchases of gold.
In the following chart, I have combined the speculative category ( hedge funds, large reportables and small specs) outright long and short positions and overlaid them upon a chart showing the price of gold. (more)

Chart of the Day - Sarepta Therapeutics (SRPT)

The Chart of the Day belongs to Serepta Therapeutics (SRPT).  I found the stock by using Barchart to sort the Russell 3000 Index stocks first for the highest technical buy signals then for a positive Weighted Alpha.  The Trend Spotter signaled another buy signal just yesterday.

Sarepta Therapeutics, Inc. focuses on the discovery and development of RNA-based therapeutics for the treatment of rare and infectious diseases. The Company's diverse pipeline includes its lead program eteplirsen, for Duchenne muscular dystrophy. Sarepta Therapeutics, Inc., formerly known as AVI BioPharma, Inc., is headquartered in Bothell, Washington.

Technical Indicators:

  • 100% Barchart technical buy signals
  • 61.60+ Weighted Alpha
  • Trend Spotter buy signal
  • Above its 20, 50 and 100 day moving averages
  • 8 new highs and up 14.55% in the last month
  • Relative Strength Index 63.22%
  • Barchart computes a technical support level at 33.22
  • Recently traded at 36.69 with a 50 day moving average of 32.51
Fundamental factors:
  • Market Cap $1.52 billion
  • The Revenue and earnings estimated are not reliable because they are all over the place
  • Wall Street analysts issued 6 strong buy, 2 buy and 6 hold recommendations on the stock
The 100 day moving avnlerages vs price has been a reliable technical trading strategy for this stock

Seabridge Gold's Stock $SA Could Hit $14, Another Deposit Site Extended

In a report published Friday, Singular Research analyst Jeffrey Briggs reiterated a Buy rating and $14.00 price target on shares of Seabridge Gold, Inc. (USA) , after the company announced positive drilling results in relation to the Deep Kerr deposit, which includes a considerable extension to the current boundary.
Same as in the case of the recently-announced extension of the Mitchell deposit, the expansion of the Deep Kerr deposit represents an “opportunity for continued increase in mineral resource at KSM,” the firm explained.
Given that removing selenium from water would be a potential issue in processing ore at the KSM Project, British Columbia required Seabridge to test a pilot plant before providing it with environmental clearance. The company recently completed the pilot successfully, aided by a Canadian environmental firm.

Deep Kerr

The aforementioned drill hole at Deep Kerr was extended 400 meters below the “previous hole that was near the lower end of the resource as currently defined. This means the new drill hole will provide information that will likely lead to an upgrade of the Deep Kerr resource estimate,” the report concluded.
Shares of Seabridge Gold are up more than 10 percent on Friday trading.

Hexcel Corporation (NYSE: HXL)

Hexcel Corporation develops, manufactures, and markets structural materials for use in commercial aerospace, space and defense, and industrial markets in the United States and internationally. The company operates through two segments, Composite Materials and Engineered Products. The Composite Materials segment manufactures and markets carbon fibers, fabrics and specialty reinforcements, prepregs and other fiber-reinforced matrix materials, structural adhesives, honeycombs, molding compounds, tooling materials, polyurethane systems, and laminates. The Engineered Products segment manufactures and markets aircraft structures and finished aircraft components, including wing to body fairings, wing panels, flight deck panels, door liners, helicopter blades, spars, and tip caps and fittings as well as for certain industrial applications.
Take a look at the 1-year chart of Hexcel (NYSE: HXL) below with added notations:
1-year chart of Hexcel (NYSE: HXL)
After rallying nicely into 2015, HXL started trading sideways over the following 4 months. While in the sideways move, the stock formed a common pattern known as a rectangle. A minimum of (2) successful tests of the support and (2) successful tests of the resistance will give you the pattern.
HXL’s rectangle pattern formed a resistance at $52 (red) and a $48 support (green). After Monday’s drop, the stock is now back inside that range.

The Tale of the Tape: HXL is trading back inside its trading range. The possible long positions on the stock would be either on a pullback to $48 or on a breakout above $52. The ideal short opportunity would be on a break below $48.

US Weekly Economic Calendar

time (et) report period ACTUAL forecast previous
9:45 am Chicago PMI Aug.   -- 54.7
9:45 am Markit PMI Aug.   -- 52.9
10 am ISM Aug.   52.0% 52.7%
10 am Construction spending July   0.9% 0.1%
TBA Motor vehicle sales Aug.
17.3 mln 17.5 mln
8:15 am ADP employment Aug.   -- 185,000
8:30 am Productivity Q2
3.0% 1.3%
8:30 am Unit labor costs Q2   -1.4% 0.5%
10 am Factory orders July   1.0% 1.8%
2 pm Beige Book        
8:30 am Weekly jobless claims Aug. 29   275,000 271,000
8:30 am Trade deficit July   -$41.8 bln -$43.8 bln
10 am ISM nonmanufacturing Aug.   57.9% 60.3%
8:30 am Nonfarm payrolls Aug.
223,000 215,000
8:30 am Unemployment rate Aug.   5.2% 5.3%
8:30 am Average hourly earnings Aug.   0.2% 0.2%