It is hard to find anything negative about the performance of AEM so far. It’s been a leader of the pack. Just look at this performance chart of AEM against the gold digger ETF (GDX) and some other heavy weight goldies.
It is also hard to find a blemish on Market Time’s handling of AEM. We have been shepherding this stock really well so far. In a post on December 15, I said:AEM is finally registering some overbought readings on the daily chart, and daily MACD has climbed above zero. So, technically it’s been laying the grounds to go higher.
Since then, AEM has cleared the 45 resistance area which has now been acting as support. Stock has gone 6+% higher.
Things are really congested in the 45-50 area. And stock is overbought. And it’s been trending nicely. I can imagine a lot of short positions against the confluence of resistance in the 45-50 area. Nothing helps the long side of a trade better than scared shorts who have piled on top of each other late in the game for a quick buck. AEM really has a chance of pushing through the resistance and set the current levels as a strong support for later pullbacks. This is not a recommendation to buy at this point, only me letting my imagination lose.
Volume has been low these past few sessions.
Sometimes a leader gets near its perceived potential, active money manager take some money off the leader and reallocate that to the laggards of the group, and the sector usually peak soon after.
I am not saying that this happening, but the action on Friday was rather peculiar. Late in the day, Gold and gold stocks suddenly woke from their Friday afternoon siesta and started running very hard.
This is what happened on Friday
NEM +4.2%
GG +5.9%
KGC +5.3%
GDX + 5.4%
ABX +4.5%
And this is what AEM did
AEM +1.7%
All on below average volume.
Again, I am not saying that things have peaked, just something to be aware of. Maybe the laggards are catching up and all of them together will go to the moon in unison, who knows?
Looking closer,
The advance since December 18 looks a bit cagey.I leave it as an exercise to you to compare this with the same period chart of the other gold diggers discussed above.
AEM is at a point where it soon needs to prove itself deserving of being an investment as opposed to being just another delightful trade.
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2 comments:
Piazzi,
For info on "Golden Cross" stocks, check out my Early-Stage Momentum Stocks of October 17.
I first wrote about the MTI on February 6, early in the 2008 Bear Market. It's kept me mostly out of the market since. A Google search of this Stock Chartist blog will indicate the various other references to the MTI.
Guru
StockChartist
Thanks, Guru
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