Gloomy Days Ahead for Gold and SPDR Gold Shares

[Previous post: Earnings Report Trade - Kreuz]


Gloomy Days Ahead for Gold and SPDR Gold Shares

Gold has been correcting sharply this week owing to two main reasons: first, the economic situation seems to have lifted tremendously from days of yesteryear. Europe is pretty much well contained, at least for now while USA is growing albeit slightly and China has rebounded strongly from its slump towards the end of last year. Political uncertainty worldwide has also decreased. Secondly, comments from the Fed yesterday indicated that the current unlimited stimulus could be withdrawn soon given how the outlook has improved again. What is still uncertain is that the Fed committee is still at odds with when is the appropriate time to remove it. Nonetheless, with lesser stimulus, expect commodity prices to fall on a whole and hence gold will not be spared too.

• Large back solid candlestick this week bringing prices down to a major support level at US$150.
• MACD - has turned negative and diverging downwards.
• RSI (25w) - has turned below 50% sharply
• Short TP - $140 (8% from current levels) expected in 3-5 weeks. With the current outlook, it seems like gold prices should break support and head further south on the jittery Fed minutes that was recently disclosed. With more market opportunities elsewhere, it is easy to understand why this out flow of money has just begun.

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Earnings Report Trade - Kreuz

[Previous post: Back in Focus - STXOSV]

Earnings Report Trade - Kreuz

1. Kreuz (Offshore services)

Kreuz had recently announced contract wins totally US$15.5 million in January resulting in a considerable surge in its share prices. Prices have already risen a whopping 100% since its 2 year low in May 2012. Traders have turned considerably bullish lately again on the nearing of its earnings report tomorrow 21 Feb 2013.

• Large white candlestick last week that has broken a 2 year major resistance line on some trading volume.
• MACD - is high in the positive with some wavering though.
• RSI (25w) - is recapturing 70% high since Oct 2012.
• Short term trade TP - $0.54 (11% from current levels) expected in 1-2 weeks. On the back of anticipated strong earnings, if reported tomorrow, will give the bulls more reason for higher prices. Of course, the risk here is that the company reports lower than expected earnings and prices fall through the support. If nothing drastic, prices could still be supported by $0.47 support levels and it does seem like a decent risk-reward trade.

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Back in Focus - STXOSV

[Previous post: Largest IPO in 2 Years - Mapletree Greater China Commercial Trust]

Back in Focus - STXOSV

1. STX OSV (Offshore support vehicles)

STXOSV shares slid in Nov after reporting dismal quarterly results. Share prices were then hit again by news of a buyout by Fincantieri mopping up their shares at $1.22/pc and will be making a cash offer for the rest of the shares. However, last week STXOSV reported securing 3 new contracts for OSCVs illustrating a  positive outlook for the OSV market in Europe.

• Large white candlestick last week that erased a 2 week-loss. Trade volumes was almost twice higher than the average for the last 3 weeks of trading.
• MACD - is recovering with decreasing negative divergence.
• RSI (25w) - is rebounding off ~45% and heading towards 50%. Note that the RSI is at a 1 year low.
• Long with TP - $1.50 (16% from current levels) expected in 4-5 weeks. Buying pressure seems to be coming back with the stock scheduled to also report their quarterly results on the 26 Feb. Seems like traders have been repositioning and accumulating for the last 2-3 weeks, stemming the stock price decline. On the back of good contract win news, this buying momentum should be good for this coming week and possibly after the next on good earnings.

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