Shares of Barrick Gold (GOLD - Get Report) may be higher by just 0.75% to $18.30 in midday trading Monday, but bulls are cheering the action. The stock made new 52-week highs in the session at $18.66, despite the company's less-than-stellar quarterly results.
The company reported non-GAAP earnings of 9 cents per share, which was in-line with expectations, while revenue of $2.06 billion slightly missed analysts' expectations of $2.08 billion. However, management's commentary around full-year production and costs helped to lift investors' spirits.
They expect to produce between 5.1 and 5.6 million ounces of gold with an average cost between $870 to $920 per ounce. They added that there's a likelihood of production coming in at the higher end of the range and costs coming in at the lower end.
Throw in the fact that gold prices remain hot and it's a recipe for Barrick Gold stock to trade higher. Up 34.5% so far on the year -- double the 17.2% rally for the SPDR Gold ETF (GLD - Get Report) -- can it continue its move?
Trading Barrick Gold Stock
Above is a multi-year weekly chart of Barrick Gold stock. As gold moved higher this summer, so too has GOLD stock. Pushing through $14 helped thrust Barrick Gold stock into channel resistance, where it coiled beneath it for several weeks (blue circle).
It helped fuel the move to break Barrick out of the trading channel it's been in for a year now (blue lines).
Shares then rallied to $17, stalled for several weeks and pulled back. Importantly, though, prior channel resistance acted as channel support, as did the 10-week moving average.
This gives investors an excellent trade setup. Should shares pullback, different investors can pick out different entry positions on the long side. Despite the somewhat disappointing earnings report, the strong outlook may give aggressive bulls confidence to buy Barrick Gold on a pullback into the $17 to $17.50 area.
After seeing the significance of prior channel resistance, conservative bulls may consider buying on a pullback to what is now uptrend support (blue line).
Those who find themselves somewhere in the middle may consider buying on a pullback to the 10-week moving average, which continues to trend higher. With any luck, the 10-week may advance to near $17 when a pullback is occurring in Barrick Gold stock. Assuming the price of gold isn't getting obliterated at the time, this may offer buyers an excellent entry point.
The bottom line? Wait for a dip in Barrick Gold stock before pouncing.