Newmont Stock Pullback Has Historically Bullish Implications

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Newmont Corporation (NYSE:NEM) has pulled back to its 250-day moving average, which has historically bullish implications, with the shares also trading 20% off its August record high. There is a large buildup of put open interest as well, at both the 110 area and below. Call deltas have been crushed, implying that any unwinding of long positions associated with the calls is now over.

Gold futures in the vicinity of psychological $4,000 per ounce level, which has been supportive in the past. This follows a 20% pullback from $5,000 per ounce as well. In this rotation environment, a pullback might invite buyers positioning for geopolitical, election and inflation uncertainties. Seasonality wise, NEM saw four of the past five Novembers post as much as 7-12% rallies.

Our recommended call option has a leverage ratio of 6.2 and will double in value with a 16.8% move in the underlying equity.