Skip to main content

Hi Lou,

What do you think of Barrick?

Thanks,

Lo

---------------

Hey Lo,

Thanks for the assignment. This will be the third time since 2013 that I examine the case for Barrick Gold Corporation (ABX-T). The last was on Feb. 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.

Desktop users click on image to enlarge

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. 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 and then again $16. At this juncture, the stock has broken above the downtrend line and a golden cross is on the verge of forming.

Desktop users click on image to enlarge

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. 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 in the charts for crude oil.

Make it a profitable day and happy capitalism!

Have your own question for Lou? Send it in to lou@happycapitalism.com.

Report an error Editorial code of conduct
Comments

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • All comments will be reviewed by one or more moderators before being posted to the site. This should only take a few moments.
  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

Comments that violate our community guidelines will be removed. Commenters who repeatedly violate community guidelines may be suspended, causing them to temporarily lose their ability to engage with comments.

Read our community guidelines here

Discussion loading ...

Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.