Belo Sun Mining Corp suffering with all the gold miners

Aug 7th, 2013 – Comment

Until there is some firming in the price of gold I would say that BSX is only for experienced traders who are comfortable trading in an aggressive decline.


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Lou Schizas is an equities analyst, investor, entrepreneur, professor and television and radio personality – and a true believer in the happiness-inspiring powers of capitalism.


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BSX LOGO

Hello Lou:

Could you give me your opinion on Belo Mining. Just wondering if this is oversold.
Thanks

Rick

P.S. Yes, as a matter of fact, I do have a retirement plan -FISHING

 

Hey Rick,

Thanks for the assignment. When it comes to fishing I am always reminded of this great quote. “Give a man a fish and he will eat for a day. Teach a man to fish and he will spend the day drinking beer and swapping tall tales with other fishermen and bring nothing home but a sunburn. ”  Belo Sun Mining Corp. (BSX TSX) is a Canadian mining company with operations in Brazil. The main focus of enterprise is developing the Volta Grande project which has a resource estimate of  4.7 million ounces of gold.

The research conducted on your behalf indicates that BSX has been in a steep selloff since the beginning of 2013 and as a results has given up over 65% of its value. An study of the charts will form the basis of my analysis.

 

 

 

BSX

The three-year chart is one ugly picture for those that have held onto BSX since January. Although a grizzly drop it wasn’t an overnight case of panic selling. The retreat has transpired over an eight month period providing lots of opportunities to hit the silk and preserve capital. The breach of support at $1.60 and the 50-day moving average in January of 2013 were the first signs that there was trouble in River City. By February 2013 the stock melted through the 200- day moving average and support at $1.30.

A death cross surfaced in March and from there it was a case of resistance along the downtrend line, the 50-day moving average, and a series of lower highs and lower lows. All of these indicators in concert are screaming SELL!!!!

 

 

 

 

 

 

 

BSX2

The six-month chart provides a close up of the resistance along the 50-day moving average that has dominated trading since March. In addition the chart illustrates opportunities to trade for profit in a sell off. You asked about the stock being oversold and if you examine the RSI it signalled an oversold posture in mid May when the stock was trading at $0.46. Buyers came in and took the stock to $0.79 by mid June but thats when BSX hit resistance along the 50-day moving average and pulled back to a 52-week low of $0.395 on July 10, 2013.  Once again the RSI signalled an oversold situation which enticed buyers to drive the stock to $0.55 by late July where once again it met resistance and began a retreat.

 

 

BSX has had its target price cut by a number of analyst since the beginning of the year but the fundamental problem is that the price of gold has been weak and that will always drive the miners lower. Until there is some firming in the price of gold I would say that BSX is only for experienced traders who are comfortable trading in an aggressive decline.

 

Make it a profitable day and happy capitalism!

 

 

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