Gold Price Down – Printing a Lower Low

by Olivier on February 4, 2010

What a difference a few days make. Gold couldn’t take out the lower high and wasn’t able to hold above the recent lows. Technically speaking we are in a downtrend as gold printed lower lows. A look at the big picture still makes me believe we are experiencing an orderly correction. Thus, I would still label the last two months’ action as a consolidation or sideways pattern.

Gold Price Making Lower Low

Up-to-date USD$ Gold Price Chart on my public list.

That being said, especially the big cap mining stocks don’t look good and have way too much overhead resistance. Some mid tier stocks like LSG.TO – Lakeshore Gold (merger with WTM.TO – West Timminis Mining) just look plain ugly. This is the perfect time to be very conservative with your long exposure and to see which ones will be the outperforming stocks during the next up-move. As I’ve stated in the past, I believe this down move will separate the wheat from the chaff.

The stocks that are displaying great strength and ‘salmon like behaviour’ during down moves are the ones to keep an eye on. They offer the best odds to be the new leaders when the markets turn. Here are a few that come to mind:

  • CRK.TO – Crocodile Gold: Trading near its all time high and didn’t give back much today.
  • MRZ.V – Mirasol Resources: Holding up extremely well and not much selling pressure so far. Stock has almost no overhead resistance.
  • FIS.V – Fission Energy: One of the few that were actually up on a day everything got killed. One of the reasons I added an additional Uranium Sector Overview Chart to my public list. Although U.TO – Uranium Participation, which basically stands for the price of Uranium, is clearly not in an uptrend some stocks in that sector are moving up and bucking the trend.
  • KIV.V – Kivalliq Energy: Same story. Stock is bucking the trend and not following the price of Uranium. Lumina Capital, Ross Beaty, took part in the recent private placement. I will probably write more about KIV.V soon.
  • BGC.V – Brazilian Gold: Strong stock. Holding up extremely well.
  • RVS.V – Riverstone Resources: Great thrusting move. I am waiting for a consolidation. Stock looks promising.
  • MMR – McMoran Exploration: This one is building some nice pressure. The stock is very liquid and I believe it will offer great long entry opportunities in 2010. Especially for those who want to trade bigger US-listed stocks.
  • PL.V – Pan American Lithium: Holding up well. Right now technically one of the best charts in the Lithium Mining Stock Sector.

I may sound like a broken record but I am not advocating to go long aggressively. I am being very conservative with my overall market exposure. Do not trade because you crave the action. The goal is to make money. Not more not less.

Be patient and wait for great opportunities.

Have a great evening!

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