Market Overview

Metal Stocks Getting Washed Out

Metal Stocks Getting Washed Out
Related NEM
Todd Gordon's Newmont Mining Corp Trade
Exclusive: Leading Latin American Economist Shares Insights On Politics, Bonds, Mining & Stocks
Silver Wheaton: Looks Like We Were Wrong (Seeking Alpha)

The futures markets for gold and silver have been brutal for the metals bulls recently and have taken the stocks of the mining companies along for the ride down south.

A quick scan of the charts of some of the more familiar names in the metals arena does nothing to build the confidence of prospective buyers.

However, a technical look at gold futures hints that a short-term low may be made at or near current levels (1,132-1,140) soon. From there, technicians are calling for a fourth wave upside correction, very mild in nature, up to the 1,185-1,218 range in all likelihood. An "extreme" correction would take gold up to 1,243-1,245.

Any close below 1,132, they note, would be a stop-out trigger on the long futures trade and would likely spell even more downside for the miners.

That being noted, here's a look at four mining stocks and the technical set-ups there.

Newmont Mining Corp (NYSE: NEM)

Newmont shares are trading just above some long-term horizontal line resistance at $17.97. That line of support goes all the way back to the 2001-2002 time frame, just to give some perspective of how bad things are for the miners. The stock could bounce up to the previous monthly support at $21.17 on a bounce in gold.

Barrick Gold Corporation (NYSE: ABX)

Barrick is trading right along with gold futures in terms of direction. As noted above, if gold bounces short-term, Barrick could rally from current levels around $11.41 to the $12-$13 range; $11.23 is closing support for Barrick Gold on a daily chart. Any close below that should trigger stop losses on speculative long positions.

The stock was last trading down 3.2 percent at $11.11 at time of publication.

Yamana Gold Inc. (NYSE: AUY)

Yamana shares have been battered to sub-$5 levels over the last several months. Yamana may bounce from Wednesday morning's level near $3.66 up to $4.04 on the anticipated bounce in gold futures. However, when gold resumes its downside trading once again -- which may happen once the resistance laid out above is tested -- Yamana might plummet to $3.30.

The stock was last trading down 7.1 percent at $3.50.

Pan American Silver Corp. (NASDAQ: PAAS)

Pan American Silver has been trading as part of the short-metals trade for months now. It is in the same broken technical condition as the futures and the other metals stocks. However, they too are oversold and may be ready for a modest bounce in the very short-term. Support for PAAS comes in at $9.10 and the first two resistance levels on any bounce come in at $9.63 and $9.95. Buying near $9.10 offers traders an interesting risk/reward play for the very short-term.

The stock was last trading down 2.7 percent at $8.89.

A word of caution for all would-be metals bulls: Don't overstay if and when the bounce occurs. Lower prices for the futures and for the mining stocks are still a likelihood by the looks of the charts.

Stock chart: 
Stock chart

Posted-In: Long Ideas Short Ideas Futures Technicals Commodities Markets Movers Trading Ideas Best of Benzinga


Related Articles (ABX + AUY)

View Comments and Join the Discussion!