Chart courtesy of Stockcharts
Taking a quick look outside of the precious metals box we came across a couple of banks that look a tad overbought at the moment and just might be worthy of the purchase of a few PUT contracts. The Bank of America (BAC) and the US Bancorp (USB) have charts that suggest they are near to or have indeed peaked.
In the last month BAC has ran up from $12.00 to $17.00 for a gain of almost 50%. A terrific run by USB could now tempt the profit takers to take some of their cash off the table. In both cases the technical indicators suggest that these stocks are overbought and ripe for a pullback.
As fans of the precious metals sector this is not our neck of the woods and who knows just how much more money could be made available by Uncle Sam should they need it. However a pull back at this stage would be reasonable as these stocks take a breather.
This is not a trade we would hit hard but more of a short term punt as the upside appears limited and the downside looks more of a probable move at the moment.
We may buy a few contracts today but have yet to decide which series or indeed what strike price to use as vehicle for this trade.
Your thoughts are of course most welcome.
To stay updated on our market commentary, which gold stocks we are buying and why, please subscribe to The Gold Prices Newsletter, completely FREE of charge. Simply click here and enter your email address.
For those readers who are also interested in the silver bull market that is currently unfolding, you may want to subscribe to our Free Silver Prices Newsletter.
For those readers who are also interested in the nuclear power sector that is currently coming back to life, you may want to subscribe to our Free Uranium Stocks Newsletter, just click here.