In today’s stock chart we look at the price of Gold. Gold continues to trade in a range of roughly $2000 to $2100 after spiking above $2100 in early December 2023. If we look at the longer term price of gold we will see there is a definite resistance level in this 2100 area going all the way back to 2020. Therefore, this $2100 area represents near 4 year resistance. There is a term in technical analysis that the “longer the base the more the space” meaning the longer a commodity or stock bases the bigger the breakout will be once it breaks out.
If we look at the last 20 years in gold we will see two similar prior resistance levels . The first was from 2008-2009 when $1000 represented resistance. For almost a year Gold tired to break 1000 first in the summer of 2008 then the spring of 2009 then finally that summer it broke out. Gold eventually went to nearly $1900 an ounce which represented a near 90 percent gain from the resistance level and a near 150 percent gain from its intermediate low from its first failed breakout at $700 in October 2008.
The second time frame was 2016 to 2019 gold tried numerous times to break $1450 now $1400 was not an all time high level like $2100 is now and $1000 was in 2008 and 2009. However, it was a level that had held for years. Finally in 2019 gold broke out after numerous attempts over 4 years. Eventually gold went to $2100 a 50 percent gain over the breakout level and a 75 percent gain of its intermediate low of $1200 after one of the failed breakouts.l
Despite this I think the time period this is most similar to is 2003. In 2002 Gold was moving higher. The resistance level on Gold was the $425 level which had been resistance going all the way back to the mid nineties. In January of 2003 gold went to near this $425 level as the war in Iraq began. Gold then backed off until the spring of 2003 as again it was knocked off resistance. However, interest rates still had a bit to go on the downside and the reinflation trade (the market was completing a 3 year bear market) was about to start. This led to Gold breaking out in 2003 and 2004 and trading all the way to $600 by 2006 and $1000 by 2008! This means that gold was up nearly 140 percent after breaking out in 2003 by 2008.
From all three of these instances we can see that once gold broke its long term resistance it went anywhere from 50 percent to 140 percent above that prior high. This would mean that gold could go anywhere to the $3000 an ounce to $4700 an ounce range on the next breakout.
In today’s chart of the day we look at Newmont mining. In his recent quarterly portfolio update Stan Drunkenmiller said he sold some of his Alphabet stock (GOOGL NASDAQ) and added to positions in Barrick Gold AND Newmont Mining.
This could tell us that Drunkenmiller is starting to get bullish on precious metals as the federal reserve nears cutting rates this spring. As we pointed out in stockchartoftheday a few weeks ago gold stocks usually perform very well when rate cut cycles start. As we are a matter of months away from a new rate hike cycle someone like Drunkenmiller could be trying to anticipate the rate cut cycle knowing that gold and gold equities perform well.
As for the chart of Newmont I have enclosed a 5 years chart of Newmont. It has been on a wild roller coaster ride. Rallying from $30 to $80 then falling back to $33. What is interesting is Newmomth now is trading at the same price it was at in 2019 when gold was $1500 an ounce!!! Also Newmont’s revenues last year were about the same as they were in 2021 shen the stock was near $80 a share. It also pays a near 4.5 percent dividend.
Today Alphabet dropped 7.5 percent, its 3rd largest point drop in a day over the past 10 years? The reason being is Google on earnings stated that it would be spending more on developing AI as this is the big growth segment in technology right now.
If we look at the Alphabet chart we can have a huge rally from its fall lows (like most of the so-called magnificent 7 did) rising from just over $90 a share to $150. All and all google was up nearly 58 percent in 2023.
Alphabet’s Q4 earnings jumped 56% to $1.64 a share under generally accepted accounting principles, also known as GAAP. Gross revenue rose 13% to $86.31 billion.
Alphabet’s Q4 advertising revenue rose 11% to $65.52 billion, just below estimates of $65.82 billion.
Wall Street analysts polled by Factset now estimate Alphabet’s 2024 capital spending at $40 billion, up 25% from last year. Some estimates are higher. This represents the increase due to AI spending.
Finally, we can see that Alphabet had a similar gap down last quarter. However, the stock bottomed just above the 200 day moving average and moved higher in the 4th quarter. Will it happen again? Only time will tell.
Expedia Dropped on its earnings today. As the company warned in a slow down in travel. The stock gapped down after gapping up last quarter as the 4th quarter was estimated to be strong.
Global Travel has rebounded strongly after the Covid Shut down of 2020 and strict travel rules in most countries in 2021 and 2021. 2023 was about the first year that almost every country in the world lifted restrictions and led to a surge in travel, in most countries travel is now higher than its pre covid peaks. Most travel companies from booking companies such as Expedia and AirBNB to Hotels to Airlines saw double digit growth in 2023. However, now most are expecting slow down
Recently, Marriott suggested that growth would only be 3 to 5 percent in 2024 and Hilton 2 to 4 percent in 2024 . This is down from double digit growth in each company last year . Therefore, it does look like travel will see a slow down in 2024 from 2023’s high growth level!