In my last article, I discussed the vast amount of upside that gold has in the next few years. After further research, there is another gold-related sector that could experience some upside over the next few months: the gold miners.

Obviously there are many different companies in this space, so I’ve decided analyze two of the better looking ones within the industry. In no particular order, let’s start with Goldcorp (GG).

It’s been quite a while since my last contribution to Seeking Alpha, but amidst the vast economic turmoil, there is yet another bubble is brewing. Here’s how you can profit from it.

In order to understand the fundamentals of this trade, we need only to review the headlines of the last few months:

Recapping the events of last week:

• Texas Instruments (TXN) posted a lower than expected profit and cut their outlook for the year.
• American Express (AXP) blew out earnings. However, those estimates had already been lowered for the year.
• Yahoo (YHOO) matched estimates and announced plans to cut 10% of its workforce. Yahoo also reduced their revenue estimates for the year.
• DuPont (DD) beat and said they expected weakening demand in North American and Western markets for the remainder of the year.
• Fifth Third Bancorp (FITB) badly missed estimates and stated that they are considering taking part in the Treasury’s plan of buying Tier 1 securities from banks.
• US Bancorp’s (USB) profit disappointed as they stated that future performance could further suffer due to market conditions. They also mentioned that they were not fully convinced that the Emergency Economic Stabilization Act of 2008 would be able to completely stabilize the financial system or other economic conditions.
• Blackrock (BLK) profit fell prior to the previous year.
• Coach (COH) beat estimates by a penny citing strong demand in Asia. They also cut their sales outlook for the year, but kept the earnings outlook for the remainder of the year.
• Apple (AAPL) beat earnings, but gave a weak outlook for the year.
• Boeing (BA) profit fell sharply on concerns of the company's outlook going forward.
• AT&T (T) missed expectations despite gaining subscribers.
• McDonald's (MCD) beat expectations as consumers were looking for cheaper places to dine.
• Wachovia (WB) posted a $4.8 billion dollar loss.
• Kimberly Clark (KMB) posted a lower quarterly profit and cut their full-year profit forecast.
• ConocoPhillips (COP) beat earnings on higher oil prices.
• Lockheed Martin (LMT) beat estimates and raised its full forecast for the year.
• Amazon (AMZN) cut revenue and income forecasts for the year saying the holiday quarter would fall short of analyst expectations.
• Microsoft (MSFT) records a rise in profit, but lowered its full year earnings forecasts.

and finally..

Technical analysis often gets a lot of shtick from fundamental investors as something of a gimmick, a Wall Street fable that means nothing to the average investor as long as an that person holds the stock for long enough. However, I am here to show you the value of technical analysis even to the long-term investor and why Apple might actually be showing signs of a quality risk/reward entry point to the long side.

On July 25^th, I wrote an article concerning the short-term weakness that Apple’s (AAPL) stock (trading at $162) would experience over the coming months, and of course, I was absolutely lambasted.

On July 15th, 2008, Jim Cramer of CNBC’s Mad Money called a bottom in financials, saying that the July lows would not be tested again. Now let’s get it straight, I love Cramer. I think he’s a great guy and he’s doing a TV show for a great cause. But in this instance, he got completely and unbelievably wrong.

Let’s recap what has happened since then:

Quite a crazy couple of days last week. This market continues to search for some sort of direction. News from Merrill Lynch (MER) saying that they had liquidated the last of their mortgage linked securities for 22 cents on the dollar (yes, 1/5 of their actual value) sparked a flurry of buying in the financials. Jim Cramer even called the bottom in financials on one of his shows last week, leaving CNBC in nothing but party mode. We are much more cautious though.  

To start, let’s recap what Merrill Lynch’s CEO, John Thain, has had to say regarding their position in the markets over the past six months:  

Apple (AAPL), once a must have stock in any portfolio, is now the latest company to begin showing some sings of serious near-term weakness. Their latest quarter, all things considered, can only be considered lackluster at best. On the bottom line, the company earned $1.19/share, well above analyst expectations of $1.07/share. (See conference call transcript.)

The problems, however, began with Apple’s forecasts into the next year. Apple stated that margins would fall from the current 34.8% to 31.5% in the next quarter. As if that wasn’t enough, the company said it would see gross margins of about 30% in 2009. These figures are all well below what analysts had been predicting into the next few years and the stock has reacted appropriately. Steve Jobs’ current health is an entirely separate matter.

This market continues to be headed lower over the course of the next few months. Here’s why:

The financial sector continues to struggle

 On April 9^th, I published an article concerning the inevitable downside that was to be found in US auto stocks, more specifically Ford (F) and GM (GM) (Why Auto Stocks Are an Easy Short). This article drew a fair amount of criticism, with comments ranging from my “high school writing” to my “novice investment style.” However, the fact of the matter is that the tape doesn’t lie, as both Ford and GM are trading at -15% and -33% respectively than they were just two months ago. Now, I’m sorry, but that’s what I like to call a quality short play.

So what can we expect from Ford and GM in the next few months? Well, expect more of the same. Nothing has changed at Ford and GM over the past couple of months, except for the slight possibility that the management at these companies may FINALLY be realizing that SUVs and trucks are going to be a fairly poor gamelan for the foreseeable future. Oil is only going to get more expensive and anyone who actually believes that oil will retreat back to the levels of six months ago is not only unrealistic, but just plain ridiculous. It’s not rocket science, just simple economics: the BRIC countries are developing exponentially, causing the demand of oil to outstrip supply and right now, it’s a losing battle.

We’ve seen a decent rally over these past few weeks, but I have a feeling that poor earnings, along with poor economic data will lead the markets lower. First, however, let’s recap some of the most recent fundamental occurrences within the markets:

• The economy lost 80K jobs in March, bringing unemployment to 5.1%.
• Frontier Airlines (FRNT) just filed for chapter-eleven bankruptcy protection.
• General Electric (GE) posted their first quarterly drop in profit for five years.
• Oil prices traded at a record high of $112.21 a barrel last Wednesday.
• The University of Michigan Consumer Confidence recorded a 25-year low for the month of April.
• The National Association of Realtors' index of pending home sales dropped 1.9 percent during February to 84.6, the lowest reading since 2001.

Plainly, this is all very bearish news, leading me to believe that this recent upside move across the indexes is unwarranted. The technical picture doesn’t look any better. Let’s take a look at the S&P 500:

As this economy continues to sputter, the US auto companies, including Ford (F) and General Motors (GM), will likely to decline. Here’s why:

It wasn’t a question of whether or not a rally was coming, but when that rally would finally come. What we saw on Tuesday was a classic bear-market bounce as indexes soared across the board. These markets have been oversold for quite some time and news of the Federal Reserve injecting $200 billion of extra liquidity into the markets was all investors needed to start covering short positions and locking in gains. Will we see a follow-through to this rally in the coming weeks? Only time will tell, but history tells us that this rally will be short lived.

Fundamentally, we’re still a long way from setting a definite long-term bottom in this market. The pathetically weak dollar (no doubt induced by those rate cuts) is causing the price of commodities to American consumer to skyrocket. Even as I am writing this, gold is crossing the $1000 mark. Oil is hitting new records every day, touching $110.20 a barrel intraday on Wednesday, and if you don’t think that is hurting consumer spending in any way then think again. It comes down to simple macroeconomics: the more money people spend filling up their cars, heating their homes, etc., the less these people have to spend on “stuff.”

While it may be a bit too early to call at the moment, I am going to go out on a limb and say that the current bloodbath in the financials is far from over. Here's why:

First of all, just look at the indexes. Technically, every single one is now firmly in a down-trend. So why bother fighting that? For every new high that was was made last week, there were 9 new lows made. The point is that most stocks tend to follow the direction of its underlying index. Thus, it can be said with some certainty that the financials will continue lower, especially since they are at the pinnacle billion-dollar credit crisis.