Gold stocks bubbled Tuesday and there were some great trend lines broken. So let's work through a collection of the Gold stocks. Here is the XGD.TO Miners ETF in Canada. The SCTR is going ballastic and is still a little below my trigger line of 75. However, this is for the gold stocks average. On the price panel, the trend line finally broke Tuesday and the MACD is moving above zero. The Relative Strength in purple is still weak. We would like to see this move to three month highs. At this point it is just moving to one month highs. Patience should kick in here, but the other improvements suggest to pay attention now.
Here are some of the SCTR tables from Tuesday's close. The SCTR ranking is the column starting with 99.6. This means based on our calculations for the strength of the price movement, Taseko currently is better than almost every other stock on the Canadian market. I like to look at SCTR's above 75. In this picture, almost the whole list is included.
Some of the chart patterns are very nice right now. Premier Gold had an SCTR of 78 on Tuesday. It's a little lighter today at 74.2 but we can see how important this level is for the stock.
Franco Nevada (FNV.TO) is looking pretty good here. The SCTR is trying to demonstrate some top performance at 75 and the RS is poking out to new 5-month highs. The price is breaking out to new 6-month highs and the highest volume in a couple of weeks on the breakout. Obviously a place of interest to technicians.
Here is OceanaGold Corp (OGC.TO). The SCTR is at 75, but the RS line has not been broken yet. Rising lows are evident on the chart but this is where the breakouts matter to technicians. Keep checking this chart.
Guyana Goldfields (GUY.TO).
Endeavour Mining (EDV.TO).
Barrick Gold (ABX.TO) is the big one in this group. The RS has not quite broken out to six month highs. As soon as it does, that will bring more attention to Barrick as other investors look for relative outperformance. We can all see how every chart is at important levels.
IAMGold (IMG.TO) looks to have had a failed breakout in February. Now it is back trying to break through the breakout level again, shown as the green line.
Lastly, here is Kirkland Lake Gold (KL.TO).
Looking through a big cross section of these stocks, they are at levels where technicians recognize the importance of support/resistance. Any further positive momentum from gold and the miners will probably tilt institutional investors towards these stocks. All that to say, the list of gold stocks is long and there are some beautiful chart setups. Take some time this week to find potential setups you like. Being prepared for large industry moves either way can be the most rewarding feeling in trading when you develop a theme and it follows through.
While there is no crystal ball towards tomorrow, this is emerging as a nice setup. We'll know in the fullness of time!
For the educational segment:
The market is putting in a few troublesome days in a row here. Opening higher only to close flat. Opening lower and spending the whole day trying to rally back to where we started. This zero sum trading action wears out traders. I feel the tone of the market has changed and even some of the TV commentators are starting to notice banks down 10% through the rose coloured glasses.
Canadian telecoms like BCE.TO and grocers like George Weston (WN.TO) are showing very positive price action recently while the leading groups like Canadian banks and insurers have been slowing in their performance. Seeing these defensive setups in the market suggests more caution at hand. Looking at the Perf Charts can help us see those changes but not very clearly as the timelines change. The Perf Chart below is for the last month. Financials are one of the worst performers. Utilities are the second best and Consumer Staples are improving but they still look weak on the Perf Chart. The Energy and Materials stocks have been swinging wildly over the past few months. Defensive groups like Utilities starting to outperform is a big cautionary flag for me. Materials stocks include Gold stocks so these are the big movers right now.
Recently, on the top SCTR list (above 75) we now have 12 Utilities stocks behaving better(>75) than the majority of stocks. In December we had zero. We now have about 25 Utilities stocks above 50 or the average. Being aware of how many stocks within a sector are performing well can be one of the strongest clues to market rotation. The SCTR rankings can help with that.
Keep an eye on the SCTR rotation to see if it can help you see the market rotation as it seems to help me separate the wheat from the chaff. The Gold stocks seem to be perking up, Utilities are perking up and others like Banks and Financials are unwinding.
Good trading,
Greg Schnell, CMT, MFTA.
