Newmont Mining Corp (NYSE: NEM)

Newmont Mining Corporation, together with its subsidiaries, engages in the acquisition, exploration, and production of gold and copper properties. The company’s assets or operations are located in the United States, Australia, Peru, Indonesia, Ghana, New Zealand, and Mexico. As of December 31, 2011, it had proven and probable gold reserves of approximately 98.8 million ounces and an aggregate land position of approximately 31,500 square miles. The company was founded in 1916 and is headquartered in Greenwood Village, Colorado.

Before discussing potential trading opportunities, please take a look at the 1-year chart of NEM (Newmont Mining Corporation) below with my added notations:

1-year chart of NEM (Newmont Mining Corporation)

Over the last (9) months NEM has commonly found support at the $43 level (red). The stock has also been trending lower since September even though the overall market has moved to new highs during that period of time. This down trend would seem to imply that NEM is gearing up for a break of support, which the stock appears to have done yesterday.

The Tale of the Tape: NEM may be breaking its level of support at $43 and the stock could be moving lower. A short position could be entered on a more convincing break of $43 with a stop placed above that level. If the stock holds $43 a long trade could be made with a stop below the level of entry.

Before making any trading decision, decide which side of the trade you believe gives you the highest probability of success. Do you prefer the short side of the market, long side, or do you want to be in the market at all? If you haven’t thought about it, review the overall indices themselves. For example, take a look at the S&P 500. Is it trending higher or lower? Has it recently broken through a key resistance or support level? Making these decisions ahead of time will help you decide which side of the trade you believe gives you the best opportunities.

No matter what your strategy or when you decide to enter, always remember to use protective stops and you’ll be around for the next trade. Capital preservation is always key!

Good luck!

Christian Tharp, CMT