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Close-up of a stack of gold bars (Stockbyte/Getty Images)
Close-up of a stack of gold bars (Stockbyte/Getty Images)


Is Iamgold making a comeback? Add to ...

Hey Lou: What do you think of Iamgold Corp.? I put a few dollars into it at $5.22 and its slid since then, but it seems to be making a comeback. Thanks, Kevin

Thanks for the assignment. This will be the fourth time that I examine the case for Iamgold Corp. The first study was published on April 5, 2010, when the shares were trading at $14.46. It was identified that the stock was in a downtrend and that selling pressure had taken the shares down $8 from their highs. The most recent analysis was conducted on June 3, 2013, on a request from Nick who had bought shares at $11 and then again at $8.50. The stock was trading at $5.43 and Nick wanted my thoughts on the company.

The research undertaken on his behalf just seven weeks ago indicated there was still a downtrend in place and the stock was meeting resistance along the 50-day moving average and at $6. The conclusion offered at the time was that there were no indications the stock was a buy or that a rapid recovery of his losses could be expected. It was also noted that the period of seasonal strength for gold stocks that runs approximately from July to September could offer a trading opportunity.

Retrospectively, the analysis was correct as the stock retreated to its 52-week low of $4 on June 26, 2013, and began a recovery in July. Another run at the charts will provide greater depth to our understanding of how best to manage your investment in IMG.

The three-year chart offers a number of patterns worth mentioning including the gap down in November, 2012, as the market responded to selling pressure on gold itself. In addition, a death cross surfaced in January, 2013, indicating that sellers were in control of the market and lower prices were in the offing.

The MACD and the RSI on six-month chart generated sell signals in June after the last study was published. Also take notice of the resistance along the 50-day moving average through mid-June as that stock continued to retreat. The momentum indicators generated buy signals in July as we entered the period of strength for gold stocks.

At the moment it appears there is more to come with this advance. However you will have to monitor your investment closely to ensure that you take full advantage of this window of opportunity.

Make it a profitable day and happy capitalism!

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Follow on Twitter: @louschizas

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