The Options Trader’s Guide to Technical Analysis
- As we enter 2010, metal commodities like platinum and palladium are hitting new 52-week highs and breaking out of new chart patterns. Oddly enough,
gold is one metal that hasn’t reached new 52-week highs in the new year, but if you’re familiar with me, you know I think gold is the No.
1 sector to invest in for 2010. And many of the best
gold stocks are making new highs even though the actual metal currently is not.In short, this is going to be a huge year for metal commodities and metal stocks. Now I can’t cover all the metal sectors in this update, but I
want to highlight a few of the main ones for you, namely platinum, palladium and copper. What’s more, after I review these sectors, I’m going to give
you three of my top metal stocks. These are the names I think the big money is going to go after first — and you want to get in before they do!
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Platinum
The Options Trader’s Guide to Technical Analysis
Platinum suffered a vicious correction in the first part of 2008 when the commodity bubble burst. But thanks to exceptionally low interest rates
and money flowing back into commodities, especially precious metals, this higher-risk commodity trade has been back on for some time.Platinum’s run isn’t even close to over yet. It looks like the metal will break out to new all-time highs later this year or next.
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Copper
The Options Trader’s Guide to Technical Analysis
With the exception of gold, no metal tells the story of the 2008 commodity collapse better than copper.
Copper sold off around 70% in 2008, from a high above $400. But it then turned around and rallied on heavy volume back up toward the $350 level.
I believe this metal will challenge its all-time highs later this year.
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Palladium
The Options Trader’s Guide to Technical Analysis
If palladium is able to break the downtrend line shown in the chart above, this rare metal will become the momentum play of 2010, and the stocks
in this sector will explode higher.Palladium appears to be in a rare bullish descending
triangle. If it can break through the point marked #3, chances are we will see a swift upward move. Such a strong advance is unusual, but when
it happens, the it is one of the most violent upside moves you will ever encounter. And that is what palladium’s chart is suggesting will happen.Now that we’ve covered three hot metal sectors, let’s move to three of the best metal stocks to trade.
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Top Metal Stock #1: North American Palladium Ltd. (PAL)
The Options Trader’s Guide to Technical Analysis
Canadian-based North American Palladium Ltd. (PAL) mines palladium,
platinum, gold, nickel and copper.The stock is already up almost 20% in 2010 alone after breaking out of a falling wedge reversal. It looks like investors and traders are trying
to get in at relatively cheap levels and valuation while they still can.Now, I don’t believe in chasing stocks, so for all the stocks in the sectors I’m covering today, look to use pullbacks as entry points. For PAL,
the $4 area around the monthly pivot is ideal for an initial position. My target for the stock is in the $7.75 area later this year.
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Top Metal Stock #2: Jaguar Mining Inc. (JAG)
The Options Trader’s Guide to Technical Analysis
Gold producer Jaguar Mining Inc. (JAG) engages in the acquisition,
exploration, development and operation of gold mineral properties in Brazil.We didn’t cover gold specifically here, but I have written about it recently, calling it the No.
1 sector to invest in for 2010.JAG looks poised to break out of an ascending triangle,
and my target for the stock is in the low to mid-$20s by the end of 2010, roughly a double from current levels.Get 5 other top
gold stocks set to double in 2010.
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Top Metal Stock #3: Vale (VALE)
The Options Trader’s Guide to Technical Analysis
Diversified metals and mining company Vale (VALE) produces iron
ore, nickel, aluminum, copper, coal, platinum-group metals, gold and silver, to name a few. The company also operates logistics systems in Brazil,
including railroads, maritime terminals, and a port, and engages in hydroelectric power generation and steel production.The stock is in the process of forming what should be a very large bullish ascending
triangle leading to a breakout to new all-time highs. VALE will likely be one of the hottest plays of the next two years. Currently trading around
$30, I think the stock will easily see $55 in 2010, and could go as high as $70 in 2011.Related Articles:
The Options Trader’s Guide to Technical Analysis
In his latest report, John Lansing reveals how to leverage the power of technical analysis to identify the short window when a
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