Newmont Mining: With Overhang Removed, Will Shares Head Higher?

Yesterday, Newmont Mining (NEM) withdrew its arbitration claim against Indonesia. Sterne Agee’s Michael Dudas and Satyadeep Jain are encouraged by the news:

Bloomberg News

Newmont has withdrawn international arbitration filing following encouraging developments and discussions with the Government of Indonesia. Signing of the agreement should pave the way for ramp-up of copper concentrate production and exports from Batu Hijau. This encouraging news helps to remove an overhang for the shares…

Newmont’s shares underestimate where gold prices may trade, in our view. As longer-term plans emerge supportive to margins and returns, we believe Newmont’s valuation should regain support based on its assets, commitment to cash flow, and margin and balance sheet strength.

Dudas and Jain call Buy-rated Newmont their “favorite large-cap North American gold equity,” topping the likes of Hold-rated Barrick Gold (ABX) and Buy-rated Agnico-Eagle Mines (AEM).

Shares of Newmont Mining have dipped 0.1% to $26.48 at 10:32 a.m., while Barrick Gold has fallen 0.3% to $18.14 and Agnico-Eagle Mines has fallen 0.2% to $37.27.

Must-See Charts: 5 Big Stocks to Trade for Gains This Summer

BALTIMORE (Stockpickr) -- U.S. markets bobbed and weaved yesterday, responding to a pile of catalysts -- from Janet Yellen to earnings season to a barrage of M&A activity -- that are keeping investors on their toes this summer.

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But at the end of the day, the S&P 500 ended things 0.42% higher, coming within 3 measly points of all-time highs once again. Even though the big index is scraping up against the top of its long-term trading range, shares don't seem willing to back down. So even though "top-calling" is starting to run rampant again this summer, no one with skin in the game is taking gains.

And we're seeing that bullish stampede play out in the individual stocks this week. In a big way, we're seeing bullish technicals shaping up in more individual names in July than in quite some time.

That's why we're turning to the charts today, for a technical look at five big stocks to trade for gains.

>>5 Rocket Stocks to Buy for Summer Gains

If you're new to technical analysis, here's the executive summary.

Technicals are a study of the market itself. Since the market is ultimately the only mechanism that determines a stock's price, technical analysis is a valuable tool even in the roughest of trading conditions. Technical charts are used every day by proprietary trading floors, Wall Street's biggest financial firms, and individual investors to get an edge on the market. And research shows that skilled technical traders can bank gains as much as 90% of the time.

>>Beat the S&P With 5 Stocks Everyone Else Hates

Every week, I take an in-depth look at big names that are telling important technical stories. Here's this week's look at five high-volume stocks to trade this week.

Macy's

Up first is department store chain Macy's (M), a name that's more or less kept pace with the rest of the broad market in 2014. Even though this stock's performance hasn't been especially noteworthy, that's looking ready to change thanks to a bullish setup that started forming in shares this April. Here's how to trade it.

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Macy's is currently forming an ascending triangle pattern, a bullish setup that's formed by horizontal resistance above shares (in this case at $60) and uptrending support to the downside. Basically, as Macy's bounces in between those two technically important price levels, it's getting squeezed closer to a breakout above that $60 price ceiling. When that happens, we've got a buy signal in M.

Macy's most recent swing low at $56 is an important price level to keep in mind after the breakout happens; once you're long, that support level is a logical place for a protective stop in this $20.6 billion stock. Remember, Macy's doesn't become a high-probability trade until shares are able to catch a bid above $60.

Grana y Montero

Sliding down the market-cap scale brings us to Peruvian engineering and construction firm Grana y Montero (GRAM), a name that's gotten hammered lower for most of 2014. Since the calendar flipped to January, shares of GRAM have fallen by more than 14%. But that could be about to change; shares of the $2.5 billion firm are starting to look "bottomy" here.

>>5 Stocks Set to Soar on Bullish Earnings

That's because Grana y Montero is forming a double bottom, a bullish reversal pattern that's formed by a pair of swing lows that bottom out at approximately the same price level. The buy signal comes on a push through the resistance level that separates those two lows. For GRAM, that breakout level to watch is $18.25. Shares are testing out a move through level today.

Momentum, measured by 14-day RSI, adds some bullish confidence to a breakout in GRAM. While this stock's momentum gauge had been dropping for most of the last year, the downtrend in RSI broke at the start of June, and it's been making higher lows from there. Since momentum is a leading indicator of price, that bodes well for traders who buy the $18.25 breakout in GRAM.

Diebold

Diebold (DBD) is another breakout name to watch this week. After moving 15% higher this year, DBD is forming a cup and handle pattern, a classic bullish price setup that's formed by a cup-shaped rounding bottom in shares that's followed up by a short-duration channel down. The buy signal comes on a move through the pattern's price ceiling at $41.

>>5 Toxic Stocks You Need to Sell in July

Why all of that significance at $41? It all comes down to buyers and sellers. Price patterns are a good quick way to identify what's going on in the price action, but they're not the actual reason a stock is tradable. Instead, the "why" comes down to basic supply and demand for Diebold's stock.

The $41 resistance level is a price where there has been an excess of supply of shares; in other words, it's a spot where sellers have previously been more eager to step in and take gains than buyers have been to buy. That's what makes a breakout above $41 so significant -- the move means that buyers are finally strong enough to absorb all of the excess supply above that price level. When it happens, I'd recommend keeping a stop just below the 50-day moving average.

That level has been a good proxy for support in the last several sessions.

Wells Fargo

The good news is that you don't need to be an expert technical analyst to figure out what's going on in shares of big bank Wells Fargo (WFC). Instead, a quick look at the chart tells you just about everything you need to know: WFC is bouncing its way higher in a well-defined uptrending channel. That makes Wells a "buy the dips stock" this summer -- and right now, we're in the middle of a dip.

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Wells Fargo's price channel has been intact since last October. Put simply, every correction down to trend line support has given buyers an optimal entry opportunity for buying shares, so, as WFC tests support for a fifth time over the course of its price channel, it makes sense to buy the next bounce higher.

For WFC, the side indicator to watch is relative strength, the lower subchart on the chart above. Wells' relative strength line has kept its uptrend intact as well, which means that this stock isn't just moving higher -- it's also outperforming the S&P 500 along the way. As long as relative strength keeps making higher lows, this stock should keep beating the rest of the market.

Chevron

Up last is oil and gas supermajor Chevron (CVX), a name that's showing us a price channel nearly identical to the one in Wells Fargo. The big difference between the two charts is the fact that Chevron's uptrend hasn't been intact for nearly as long as the one in WFC. But that doesn't change how you trade it: Buy the dips.

More specifically, you don't just want to buy shares of Chevron when they get near support -- you want to buy the bounce off of trend line support. Actually waiting for a bounce is important for two key reasons: It's the spot where shares have the furthest to move up before they hit resistance, and it's the spot where the risk is the least (because shares have the least room to move lower before you know you're wrong). Remember, all trend lines do eventually break, but by actually waiting for the bounce to happen first, you're ensuring CVX can actually still catch a bid along that line before you put your money on shares.

The 50-day moving average has been a solid proxy for support since the middle of April, making it a perfect place to keep a stop below. After all, if the 50-day gets violated, then you don't want to own Chevron anymore.

To see this week's trades in action, check out the Must-See Charts portfolio on Stockpickr.

-- Written by Jonas Elmerraji in Baltimore.

RELATED LINKS:

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Follow Stockpickr on Twitter and become a fan on Facebook.

At the time of publication, author had no positions in the names mentioned.

Jonas Elmerraji, CMT, is a senior market analyst at Agora Financial in Baltimore and a contributor to

TheStreet. Before that, he managed a portfolio of stocks for an investment advisory returned 15% in 2008. He has been featured in Forbes , Investor's Business Daily, and on CNBC.com. Jonas holds a degree in financial economics from UMBC and the Chartered Market Technician designation.

Follow Jonas on Twitter @JonasElmerraji

Mortgage Rates Slip to Near Lows for the Year

Mike Kane/Bloomberg via Getty Images WASHINGTON -- Average long-term U.S. mortgage rates declined this week, approaching their lows for the year. Mortgage company Freddie Mac said Thursday the nationwide average for a 30-year loan slipped to 4.12 percent from 4.14 percent last week. The average for a 15-year mortgage, a popular choice for people who are refinancing, fell to 3.24 percent from 3.27 percent last week. Mortgage rates are below the levels of a year ago. They have fallen in recent weeks after climbing last summer when the Federal Reserve began talking about reducing the monthly bond purchases it was making to keep long-term borrowing rates low. Mortgage rates often follow the yield on the 10-year Treasury note. The 10-year note traded at 2.42 percent Wednesday, brushing its low for the year of 2.41 percent and down from 2.47 percent a week earlier. It fell to 2.38 percent in trading Thursday morning. At 4.12 percent, the rate on a 30-year mortgage is down from 4.53 percent at the start of the year. Rates have fallen even though the Fed has been trimming its monthly bond purchases, which are intended to keep long-term borrowing rates low. The purchases are set to end in October.

How Advisors Can Go From ‘Good to Great’: Jim Collins

Bestselling “Good to Great” author Jim Collins crystalized a key aspect of greatness when he recounted a life-changing encounter with management guru Peter Drucker.

Speaking to some 5,000 advisors and their guests at LPL’s annual conference in San Diego, Collins — near the end of a tour de force lecture framing greatness in terms of 13 key lessons about leadership — recounted a personal experience that was to change his life.

In 1984, at age 30, he thought it was time to leave his job teaching entrepreneurship at Stanford, thinking it inherently contradictory to be a salaried professor instructing students in risk-taking.

A little anxious about the risk he was taking in seeking to become a freelance “entrepreneurial professor,” he rented a car and drove out to Claremont, California, to meet with the management legend Drucker.

The then 86-year-old management thinker graciously spent the day with Collins (“What’s a day with Peter Drucker worth? That’s a debt I can never repay,” he commented), whereupon Collins asked Drucker “which of your 26 books are you most proud of?”

Without missing a beat, Drucker replied “my next one.”

And indeed, Collins pointed out, even at that ripe old age, Drucker went on to write another 10 books. “Imagine what it is like to think of yourself as still so useful,” Collins said.

At the end of their time together, Drucker identified the elephant standing in the room, namely the young Collins’ nervousness about going out on his own.

Addressing Collins’ worries about survival, Drucker said “don’t worry, you’ll survive;” to his worries about success, he said “don’t worry, you’ll succeed.” Drucker’s simple advice: “Why don’t you think more about how to be useful?”

Those 30 seconds changed his life, Collins said. The secret to business and life is to be of use. And he spent an hour and a half instructing the LPL advisors in the mechanics of usefulness through a series of key questions that separate great leaders from the merely good or mediocre.

Collins illustrated much of that story through a comparison of the behavior of two explorers who set out to reach the South Pole — the Norwegian explorer Roald Amundsen and the British explorer Robert Falcon Scott.

The two teams left just days apart, but Amundsen’s team got there 34 days earlier and Scott’s team didn’t make it back, dying within 11 miles of reaching their supply depot.

Collins credits Amundsen’s “fanatic discipline, empirical creativity and productive paranoia” as critical to his team’s success (and but three out of 13 qualities of leadership he discussed). Among the key determinants of success earlier outlined was involving the right people. Amundsen unceremoniously dumped people — even those with close personal ties — whom he thought would not be an asset to the team.

In contrast, “Scott allowed sentiment to override discipline” by allowing on the team a colleague who ended up undermining the expedition. Another example of his lack of discipline: Scott stopped at one point to collect rocks that were geologically interesting but not germane to the mission.

The two expedition leaders also handled adversity differently.

Scott had his men hunker down in the face of a fierce blizzard, while Amundsen’s attitude was that his men would march 15 to 20 miles a day no matter what the conditions were.

A frostbite-inducing blizzard he called “an unpleasant day” in his diary. And when weather conditions were uniquely favorable such that they could reach their destination, in theory, more quickly, Amundsen stopped his team if they met their 20-mile limit, concerned about over-reaching and depleting the team’s energy.

“What’s your 20-mile march?” Collins asked the LPL advisors.

The bestselling business author frequently sprinkled in his talk events in corporate history that illustrated his point, such as Southwest Airlines' 30-year unbroken record of profit, including even in the disastrous year for airlines, 2001, when 9/11 halted traffic.

Like Amundsen, Southwest exhibited the “discipline of consistency.” When 100 airports wanted the airline to open in their cities, the airline chose four new cities that year, not wanting to overreach and expose themselves to the risk of a potential reversal the firm might lack the wherewithal to survive.

Collins said that advisors, too, can display this “rudder effect by remaining consistent when everyone around them [i.e., clients] says ‘I want to abandon the march.’”

An indispensable aid in keeping on keeping on is what Collins termed “productive paranoia,” whose importance Amundsen and Scott again illustrated in their different approaches.

“Both Amundsen and Scott calculated supplies, but Amundsen multiplied [his calculation] by three,” thinking his team might need an extra buffer when conditions were at their worst.

Scott’s team, alas, ran out of supplies, tragically, when they were already on their way back.

That may be why astute advisors make sure their clients always have enough cash on hand to handle the extremes of market volatility, the author suggested.

Ultimately, Amundsen’s and Scott’s different fates were the result not of luck — they were dealt very similar hands — but rather the consequence of the different choices they made.

Whether for explorers or advisors, Collins said that “greatness is not a function of circumstance; first and foremost it is a matter of the choices we make and disciplined leadership.”

He bid advisors think about how they can increase their “return on luck.”

“Luck favors the persistent,” he advised. “Stay in game, keep playing, don’t give up; what really matter is cumulative effect; no great career ever comes by one hand or event.”

Returning to the lesson he learned from Drucker, Collins challenged advisors:

“The greatest leaders I’ve known and studied found a way to be useful to real-life flesh-and-blood people," he said. "How will you change the lives of others? How will some people’s lives be better and different because you were here?” 

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Check out Sales Paradox: The Way to Get Is to Give on ThinkAdvisor.

Transocean: At Least It’s Not Getting Worse?

One day after Transocean (RIG) reported solid earnings, offshore drillers like Atwood Oceanics (ATW), Noble (NE) and Seadrill (SDRL) continue to show resilience.

AFP/Getty Images

Shares of Transocean have gained 0.6% to $38.44 at 11:55 a.m., while Atwood Oceanics has risen 1% to $48.35, Noble has advanced 2.1% to $26.45 and Seadrill is up 1.3% at $36.20.

The question now: Can the strength last? Jefferies’ Brad Handler and team are just thankful that “the tone doesn’t sound worse” from Transocean. They explain:

While outlook commentary from peers this earnings cycle felt incrementally worse vs. earlier, Transocean’s tone was laced with optimism relative to its own prior views and peers’. That said, this relative positive view still felt more vague (hopeful) than grounded in reliable pending developments. For now, we still see challenges, in particular for Transocean’s 5th G fleet as rigs scramble down market/incur idle time. On this point, we note the backlog swap from midwater semi GSF Rig 135 onto UDW 5th G semi Sedco Energy given a pending job on the former highlights that there was an incremental low-spec midwater job, but not a UDW one. Further, the potential for prolonged weakness in the N. Sea (possibly in the early stages of a downturn today), leads us to lower ’16E. Nonetheless, since Transocean called the downturn well ahead of peers in mid-’13, we walk away modestly more comfortable that a broader ’16 recovery could still be in play.

UBS analyst Angie Sedita and team think Transocean has a tough decision ahead:

[Raise] short-term debt or reduce the dividend? On our current estimates the company will need to tap into the full $3 bil revolver in 2015-2016 and will still be drawing down cash. In 2015, we believe Transocean will have to make the decision to either reduce the dividend or increase its debt. Our earnings forecasts are not worst case scenario and assume most of the currently idle rigs return to work in 2015 and that the currently stacked rigs remain stacked. However, we believe dayrate pressure will persist given limited rig tenders (demand) and fierce competition, with dayrates already down 25%-40% from peak levels. Regular dropdown proceeds from the MLP should help bolster Transocean's FCF; however it will not be enough, in our view. We believe investors should patiently wait on the sidelines and miss any mini rally versus risk a sustained slowdown and tough capital allocation decisions ahead.

Zynga (ZNGA) Stock Falls Ahead of Second-Quarter Earnings Report

NEW YORK (TheStreet) -- Zynga  (ZNGA) fell Wednesday ahead of its second-quarter earnings report on Thursday.

Analysts expect the social game company to report flat earnings on revenue of $191.21 million. Zynga reported a loss of a penny a share in the first quarter, in line with the consensus estimate.

The stock was down 1.75% to $2.80 at 3:44 p.m. Zynga nearly hit its 52-week low of $2.72 during Thursday trading.

Must Read: Warren Buffett's 25 Favorite Stocks STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more. Separately, TheStreet Ratings team rates ZYNGA INC as a "sell" with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation: "We rate ZYNGA INC (ZNGA) a SELL. This is driven by several weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its unimpressive growth in net income, weak operating cash flow and generally disappointing historical performance in the stock itself." Highlights from the analysis by TheStreet Ratings Team goes as follows: The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Software industry. The net income has significantly decreased by 1580.3% when compared to the same quarter one year ago, falling from $4.13 million to -$61.18 million. Net operating cash flow has significantly decreased to -$24.25 million or 191.68% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower. This stock has managed to decline in share value by 2.02% over the past twelve months. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time. The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Software industry and the overall market, ZYNGA INC's return on equity significantly trails that of both the industry average and the S&P 500. The gross profit margin for ZYNGA INC is currently very high, coming in at 83.95%. Regardless of ZNGA's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, ZNGA's net profit margin of -36.41% significantly underperformed when compared to the industry average. You can view the full analysis from the report here: ZNGA Ratings Report STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

Hotchkis & Wiley Q2 Manager Commentary

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MARKET COMMENTARY Despite several bouts of geopolitical unrest, the S&P 500 Index gained +5.23% during the second quarter and has returned +7.14% since the beginning of the year. Equity investors appeared to largely dismiss both the Russia/Ukraine and Iraq/ISIS conflicts as economically inconsequential. In fact, the VIX Index, often used as a proxy for overall investor apprehension, reached a seven-year low in mid-June. Economic activity over the past quarter was positive and seems to have invigorated investor confidence. The unemployment rate fell to a post-financial crisis low, and now stands at 6.1% compared to 10.0% in late 2009. The housing market demonstrated signs of improvement, with new home