As I’ve mentioned KGC – Kinross Gold quite a few times in the past posts now is a good time to take a closer look at KGC’s chart formation. The daily chart shows a bullish flag pattern in the making with an obvious pivot point that could be used as the price level for a technical entry using a stop buy order. The weekly chart shows a potentially very bullish W-bottom formation. This clearly looks like KGC is trying to turn around. Kinross Gold has put in a much more pronounced higher low than most of its senior gold mining peers. Still, the problem with KGC is that it has built up massive overhead resistance. The stock will have to fight constant selling pressure for years to come as traders will unload stock on the grind higher in order to sell their under water positions for a break even trade. As a general rule a stock within the same sector without overhead resistance usually is the better choice as it offers blue sky potential. FNV – Franco Nevada is one such stock that comes to mind that fits that description. You can find FNV on my public list. That being said, KGC should be good for a 14 $ price target once it starts moving. Only then will it have to fight through the first serious resistance level.
Conclusion: Today’s move in gold and the gold miners was a good start but it was not convincing enough yet. Most mining stock charts look very sick to put it mildly. Do not trade your opinion. Instead, focus on finding good technical buy entries and above all stay disciplined. As I have preached numerous times in the past years the best insurance you can buy is to go for stocks without overhead resistance. The reason is simple. You are getting exposure to a situation where buyers are in control. It takes time until such a situation changes and control shifts to sellers. Therefore such a stock usually offers enough time to exit without getting crushed.
To follow the good principles and not fear, greed and hope is tough. You’re swimming upstream against human nature. – Richard Dennis
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