What do you think of Barrick?
Thanks for the assignment. This will be the third time since 2013 that I examine the case for Barrick Gold Corporation (ABX TSX). The last was on February 21, 2014 when the shares were trading for $23.29. Brett wanted to know if the stock had gone up too far and too fast and if he could expect more from it. The patterns analyzed were pointing to further gains but by March of 2014 a double top formed calling an end to the advance. The lesson from that review is that investors need to take regular snapshots of their investments to see if there have been changes in market sentiment.
Since then ABX has been labouring under an established downtrend touching a 52-week low of $7.89 in September of 2015. Another check of the charts will inform my analysis of this stock.
The three- year chart highlights the downtrend that started in March of 2014 when the double top signalled the end of the advance that started in December of 2013 near $16.00. Since then the consistent pattern has been resistance along the moving averages which was overcome in early October of 2015 when ABX caught a bounce off the 52-week low.
The leg up that started in October has taken ABX up and through the 50 and 200-day moving averages. What is evident is the resistance that comes in at $14.00 and then again $16.00. Finally at this juncture the stock has broken above the downtrend line and a golden cross is on the verge of forming.
The MACD and the RSI on the six-month chart are indicating that the stock is moving out of an overbought situation and taking a breather as it nears resistance at $14.00. I would advise continued surveillance to ensure that the up leg that started in October of 2015 is sustainable. If you are going to be a buyer at these levels make sure to take a daily snapshot to pick up changes in the environment.
Next time I will report on the patterns present on the charts for crude oil.
Make it a profitable day and happy capitalism!