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Gold Stocks at New Lows
09/16/2015 9:00 am EST
Gold’s negative price action has spread throughout the sector, explains Karee Venema, technical and fundamental analyst with Schaeffer Investment Research.
Barrick, for example, tagged $6.23 earlier—its lowest mark since October 1989—but was last seen down 3.4% at $6.26.
Longer-term, the shares have surrendered roughly two-thirds of their value over the past 52 weeks and have encountered increased pressure from their 32-day moving average since mid-May.
Option traders have kept the faith, though. Barrick's 10-day call/put volume ratio of 19.77 ranks in the 96th annual percentile, meaning calls have been bought to open over puts at a near-annual-high clip. An unwinding of these bullish bets could pressure the shares even lower.
Yamana, meanwhile, is down 2.1% at $1.67 and fresh off an 11-year low of $1.66. This is just more of the same for a stock that's down 58.5% year-to-date.
Its most recent rally attempt was swiftly rejected by its descending 10-week moving average.
There are pockets of optimism levied toward this chronic underperformer, as well, which could translate into additional headwinds down the road.
Specifically, 60% of analysts maintain a buy or strong buy recommendation toward Yamana Gold, while the average 12-month price target of $5.10 rests in territory not seen since last October.
Simply stated, the door is wide open for a round of downgrades and/or price-target cuts.
Eldorado notched a new six-year low of $2.70 earlier, but was more recently trading 2% lower at $2.71. The stock has been struggling for some time, though, and is currently staring at a 55% year-to-date deficit.
What's more, a mid-August rebound was contained by the equity's 80-day moving average, a trend line that's ushered EGO lower for most of the year.
Short sellers have recently started upping the bearish ante on this broad-market laggard.
Specifically, short interest jumped 16.4% in the last two reporting periods, but still only accounts for less than 1% of Eldorado Gold Corp's available float.
The stock could face a fresh wave of selling pressure, should shorts continue to increase their exposure.
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