By Roberto Pedone
WINDERMERE, Fla. (
) -- There is an old Chinese proverb that says that "out of chaos comes opportunity." Well, if those words are true, right now there should be plenty of opportunities boiling to the surface of global stock markets. Just think about some of the chaos that has been occurring in the world during the last couple of weeks.
We have had everything from a major oil spill in the Gulf of Mexico to riots in Greece over an austerity package to fears of a larger European debt contagion to a one-day U.S. stock market crash that brought back fears of the bearish action we all witnessed in 2008. This is quite a bit of chaos! Just the Greek debt crisis alone was enough of a problem to keep investors on edge.
Now fast-forward to Monday, when we saw a monster rally, and you can quickly understand why investors get so confused with all of this crazy chaos. Stocks soared yesterday, with the
booking a 400-point gain, or 3.9% to 10,785, and the
surging 109 points, or 4.8%, to 2375.
This gigantic rally was sparked by the news of a $1 trillion European Union rescue plan to keep the Greek debt crisis from spreading to other troubled EU nations. The plan was also a major attempt by the pro-euro crowd to starve off the selling attack that has been bombarding that currency for months.
The euro traded as high as $1.2984 on Monday, up from the 14-month low of $1.2523 it hit last week. Stock markets across the globe also rallied as investors breathed a sigh of relief.
Now the two $64,000 questions are: Will the rescue plan really stop the Greek debt crisis from spreading, and will it ultimately save the euro? Those answers have yet to be determined, but you can bet that market participants are going to be looking for ways to game the markets now that Europe has joined the U.S. in cranking up their own printing presses.
With all of this in mind, how should investors be positioned on what could be some very profitable trends developing off of all of this chaos? Here's a look at
A major trend that could now be taking shape is the outright devaluing of world currencies as nations around the globe look to print their way out of mounting debt issues. These developments could spark a major bull market for gold and especially gold miner stocks.
It seems the trend that is taking over in the world has gold as the new world reserve currency. Even during the market crash on Thursday, when we saw just about everything get sold, gold was one of the few spots in the market that actually went up. This is a trend that could still be in the very early stages of development.
Just take a look at the chart for
Market Vectors Gold Miners
, an ETF that provides exposure to publicly traded companies worldwide involved in the mining for gold. The stock is in a very bullish uptrend channel and is trading at three-month highs at around $52 a share. The GDX has cleared some near-term resistance at $51, and it looks ready to make run at the next area of overhead resistance at around $55.25, which also marks the 52-week high.
If gold continues to climb higher, and if chaos continues to be the norm in the markets, the GDX could be a huge winner. In just the past three weeks, the GDX has outperformed the
by more than 10%. Some of the top gold miner holds in the GDX are
Barrick Gold Corporation
at 16% of assets,
at 5.9% and
Another name that looks very compelling is
, a gold producer engaged in the operating, exploration, development and acquisition of precious metal properties in Canada, the U.S., Mexico and Central and South America.
This stock is in a very nice uptrend, and it's approaching a test of the 52-week high at around $46.25 a share. Volume on Goldcorp is very strong as the stock trades up to that key level, which if taken out could lead to much higher prices. It's also worth noting that Goldcorp has been making higher lows after it tested some previous support at around $33 in February.
Higher lows are something that technicians look for as an indicator of strength. Basically, it means that every time the stock dropped, buyers were eager to buy the dips, and sellers lack the ability to take back control of the stock and push it lower. Keep this name on your radar.
One more name that is trending in the right direction if you're a bull is Canadian-based
. On last Friday, Eldorado reported its first-quarter 2010 financial and operating results, highlighted by record gold production that soared 168% and earnings per share that jumped 150%. The company also instituted a dividend for the first time in its history.
The fundamentals aren't the only thing looking bullish for Eldorado, the technicals also look great. The stock recently broke above some previous resistance at around $15.50 a share on very heavy volume. Eldorado is now trading at all-time highs, which means that anyone who has ever bought this stock is making money.
This is very good company be in if you're a shareholder of any stock. Eldorado is definitely worth keeping an eye on, but with the stock a bit extended at the moment, it might be worth waiting for a pullback if you're a bull on the name. To see some more plays that could be setting up to trade much higher off of chaos, check out the
on Stockpickr. Also, if you're interested in having a chart analysis done on a stock you own or are considering buying or selling, please
-- Written by Roberto Pedone in Windermere, Fla.
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