Gary Tanashian submits: We have been following Gold Fields Limited (NYSE:GFI) for some time now. As you know, we have been watching for confirmation of a break of resistance of the $19 area on the chart. Check. The resistance level was broken soundly Wednesday with news of a potential bid for the company. (As a side note, this allowed me to wave goodbye to the October call options noted previously, but all shares remain in the fold.) By the end of the day, GFI had given up nearly all of its impressive gains and all original articles that contained the rumors of acquisition have been removed from the Yahoo news feed. All that is left are several pieces along these lines: Gold Fields Says It Hasn't Received Bid and S. Africa Watchdog to Probe Gold Fields Bid Report.
Obviously, I had no clue about big time stock operators planting stock pumping rumors. I just had my charts and a favorable fundamental view of this South African gold producer (a play on the Rand, valuation held down due to South Deep acquisition and a bullish view of its primary product, gold). The question now becomes "was it real or was it Memorex?".
Was the chart foretelling this hoax-like event or is that all noise as GFI surmounts this level on its way to a minimum of $22 in the near term? As mentioned previously, the calls were a trade (yielding a 90% gain in a 3.5 week hold period) that I was not interested in giving back. The shares are a different story in that I consider the stock a hold regardless of the outcome of the rumor noise and any damage it may or may not do to the chart. Speaking of which, I have marked up short term and long term charts once again for perspective.