Gold mining stock Newmont could finish the year strong
Since running into $2,700 in October, gold prices have cooled off, consolidating below this mark, though still elevated compared to the last 12 months. Gold traders have joined the the safe-haven asset in pulling back, but if past is precedent, one industry heavyweight could be ready to rally.
Newmont Corporation (NYSE:NEM) is one of the top stocks on the SPX to own in December going back a decade. Per Schaeffer’s Senior Quantitative Analyst Rocky White, the miner averages a 4.4% return in December, and has finished the month higher eight times in the last 10 years.
Last seen trading at $41.42, a move of similar magnitude would help NEM put some separation between its year-to-date breakeven level. The shares hit a more than two-year high of $58.72 on Oct. 22, but have since taken a 29% cut off that peak. The round-number $40 level has stepped up as support, while the 320-day moving average could be a pivot point going forward.
Options traders remain call skewed on NEM. On the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), 12,737 calls have changed hands in the last 10 days, compared to just 2,926 puts. However, this ratio ranks in the middling percentile of its annual range, suggesting the rate of bullish bets may be tapering off.
Premium is affordable though, per the equity’s Schaeffer’s Volatility Index (SVI) of 29% that now ranks in the 11th percentile of its annual range. The stock has also tended to outperform these expectations over the past year, per its Schaeffer’s Volatility Scorecard (SVS) of 97 out of 100.