Hello, fellow traders, and welcome back to the trading week. We hope you all had a great weekend. It's time to get back to business though, so let's just dig in, starting with a look at the broad market. Just to recap where we left off at the end of last week, (1) the market had some momentum after breaking past resistance and plowing into new-high territory, but (2) this isn't an environment where momentum has lasted long. Rather, we've been more apt to reverse - in either direction - sustaining the zig-zag action we've seen since March. Things didn't change today; the weight of the big gain early last week is proving to be a drag now. With that on the table, yes, the S&P 500 may have made a small gain today, but once again the volume behind the move was minimal. In fact, the last time the volume was as low as it was today was the Friday heading into the three-day Memorial Day weekend. Ditto for the Dow. And, ditto for the NASDAQ Composite, which actually lost a little ground on Monday after logging its second consecutive daily lower low. The point is, things are still so undecided here there's not even a reason to bother showing you an updated chart of the S&P 500 or the NASDAQ - neither is telling us anything we actually need to know. John Monroe summed up the current situation with absolute perfection today in the Elite Opportunity newsletter, saying: :...we've got to be careful entering or exiting any sort of leveraged ETF on either side of the trade until some sort of clear reversal signal reveals it itself. I would normally jump the gun here and suggest the strong possibility of at least a short-term directional trend but based on how these markets have been behaving for the last month now, I'd prefer to be a little late than too early." He's right, and brilliant. Sometimes the best trading choice to make is to not make a choice at all... at least not until the risk/reward scenario is clear and makes sense. While he and I both see more vulnerability ahead for the market than upside opportunity, he and I both agree stocks can occasionally do surprisingly-goofy things. In the meantime let's actually talk about the areas that are moving. Weak Gold is Even Worse for These Stocks Remember on Thursday when we talked about how much trouble gold was in? Well, nothing's changed in the meantime - we're starting to think like contrarian gold bulls (meaning we're getting bullish now that the rest of the market is so vocally bearish on gold), but the make-or-break level for us is the $1180/ounce mark. Here's the thing... while $1180 may or may not end up being a pivot point for the commodity, for gold miners, whether or not gold falls below or finds support at $1180 is a little irrelevant. See, many gold miners are already back underwater thanks to last week's implosion of gold prices. For those of you who've been trading gold miming stocks for, oh, more than a couple of years or so, you'll be plenty familiar with the term "cash costs" as it pertains to mining the world's most-sought commodity. Simply put, it's a measure of how much operational money it takes dig up an ounce of gold. Things like gasoline or diesel fuel to operate machinery, manpower, electricity all fall under the "cash cost" umbrella. A well-run gold-mining operation should be able to keep its cash costs around $400 to $600 per ounce, give or take. A funny thing happened about three years ago, however. Even when gold prices were soaring to their eventual peak of $1950 per ounce, a bunch of the biggest and supposedly best-run gold miners were barely turning a profit, IF they were turning a profit at all. It was odd, because theoretically it should have been ridiculously easy to make a buck in the business in the shadow of gold's meteoric rise. What happened? A couple of things. One of them was, a lot of the usual cash costs (like fuel and manpower) started to soar. The other - and I think bigger - hurdle that developed was burgeoning non-cash costs... mostly the costs to purchase new land to mine, and exploration costs, though permits and such fall into this category too. With gold prices skyrocketing, anybody who owned land that simply might have gold buried on it jacked up the price tag on those properties like you wouldn't believe. Between rising cash costs and rising non-cash costs, miners were pretty much forced by investors to start publishing their "all in costs", which simply describes everything the miner had to spend to dig up an ounce of gold. Ergo, for most gold miners, the difference between the price of gold and the "all in" cost end up being the much-sought free cash flow. Yes, I have a point to all of this. Here it is - the price of gold is once again below the total cost of digging the stuff up for many miners. That's right, some miners would now be better off by closing shop altogether and waiting for the price of gold to improve since they lose money every time they sell an ounce to a buyer. Just for perspective, while the numbers are set in stone, the latest word is that Citigroup believes Goldcorp (GG) will be spending about $1200 per ounce to mine gold by the end of this year. Barrick Gold (ABX) needs to see gold above $1300/ounce to maintain profitable operations. Newmont Mining (NEM) predicts it will need to spend about $1125 per ounce to remain viable this year. You get the idea. Now, none of this is exactly new. Gold miners have been struggling since the middle of last year when gold prices plummeted to $1180. Things didn't get much better later in the year, with gold staging a modest bounce in Q3 and then pulling back to $1180 in December. It really looked like gold was going to make a bigger-picture recovery in 2014 - and it looked like a lot of traders thought the same - with futures bouncing back to $1388 in March and snapping a downtrend in the process. Here we are again though, with the bears in control and with more and more professionals convinced things are going to get worse before they get better. It's the fear of gold that could be the most problematic for gold, and by extension, for gold miners. Bottom line: Even if gold bounces here, unless it gets and stays above $1300, things could remain miserable for gold miners. The result of weak gold prices could really start to show up in Q2's numbers too, as sales contracts expire and are replaced by weak ones based on the price of gold over the course of the past six months. If gold should slide all the way back to $1180 (or worse, below $1180), the miners are just going to get killed as they swing back into the red with no end in sight. It's just something to think about if your gold "play" was a miner rather than the commodity or an ETF. There are a lot more ways for the miners to lose here than there is for the commodity. No, Coal is Not Dead One quick thought on something I'm willing to bet most of you saw today - the EPA is apparently aiming to reduce carbon emissions by the nation's power plants to the tune of 30%. Of course, this puts coal squarely between the crosshairs, as (1) it's pretty darn dirty, and (2) coal creates about 40% of the nation's energy. If greenhouse gas reduction is the goal, the biggest and most effective (and simplest) way of getting to that goal is by legislating coal power into oblivion. My thoughts? It's not going to happen anywhere near to the degree the EPA wants, and it's not going to happen nearly as soon as the EPA would like. To think coal is obsolete just isn't realistic, because in the end, it's all about money. The money metrics simply support the continued use of coal more so than the continued or accelerated introduction of new energy sources. And, to the extent coal is crimped domestically, overseas buyers are getting interested. That's not to say coal and coal stocks won't take hits here and there as they continue the rebound started a couple months ago, but the market is never wrong, and the market didn't seem too concerned about the EPA announcement on Monday.... given the lack of weakness we saw from the coal sector. In fact, our Cloud Peak Energy (CLD) snapped back to near a breakeven for the day. It still looks like the V-shaped reversal at the 200-day moving average line (green) is intact. If CLD can pop back above the ceiling at $18.57 the party could really get started. In other words, we're coal contrarians here as well. Alright, that's enough soap-boxing for today. We'll be back at it tomorrow with an update on our portfolio's holdings and maybe even a new pick. There's something we need to show you with Hurco (HURC), especially if you're not in yet.