by Houghton and Atkeson 09/17/08
With the world's major financial institutions coming apart, the market dropping and fear running high, option investors are buying gold.
Today, we are seeing unusual call volume in Harmony Gold Mining (HMY), SPDR Gold Trust (GLD) and AngloGold Ashanti Ltd (AU).
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Of the group, AU may be the most interesting, as we saw significant call activity on Sept. 4 and 10. On Sept. 10, option investors purchased roughly 7,800 of the AU Oct 22.50 Call (AUJX) contracts for $1.45.
These options have worked well in this difficult market. Gold appears to be regaining its luster as the prospects for the broader market dim.
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Sam Collins
Day after day, we've been besieged with how bad the economy really is and, yet, stocks keep plodding their way higher.
Let's not get caught up in bullish fever unless Dow 9,600 and S&P 1,010 are broken with gusto.
CAT has broken through the neckline of a major 'W' bottom and emerged with a new trading target.
The market may have enough strength to challenge huge resistance lines on the DJI and the SPX but not enough to change the intermediate trend from down to up.
Will Santa Stop at Wall Street?
Not likely. The stochastic of the major indices has issued a double sell signal, which could indicate a serious attack on the market's lows is about to occur.
