Gold has been front page news recently and it remains a hot topic. Although I personally feel we'll probably see gold chop around while it builds the next floor to get higher, there are some individual gold stocks that continue to do very well.
Some of these stocks have considerable strength and most likely won't retrace significantly. Here I highlight one name (there are several), and over the next few weeks I'll work some more in.
Northern Dynasty Minerals
is an exploration company with operations in the Pebble Project, a copper-gold-molybdenum mineral project in Alaska. That represents two large positives -- the copper deposits represent an industrial metal that is currently in a
, and geopolitical stability since the project is located in the U.S. The charts also are quite positive.
Starting with the long-term time frame, we see a chart working back toward highs.
Between the current price level and those highs, however, there is an identifiable supply line that prices are pushing into as I pen this piece. It ranges from the high $8 range and extends into the mid-to-high $10 range. The supply line is heavy and will take a while to be consumed. What that means to a trader is that it should give you some forward- and backward-trading that allows you to build a position before it takes off. No guarantees, of course, but that's what supply lines usually provide.
On an intermediate-term basis, we see an interesting development. The swing point high from May is being challenged this week.
The swing high was made on roughly 2.28 million shares, and if you project the volume for Friday it appears that it will be sufficient to take it out. That's the good news and the bad. From a positive perspective, that tells us we have a confirmed bullish uptrend if prices close above $8.89 and if volume does confirm. The negative is that it is just barely bullish confirmed if it makes it.
When you combine that thought with the previous supply line considerations, you can see where my thoughts are headed, which brings me to the daily chart.
In this chart, we can see that we are confirmed bullish and have stepped off this floor that has ranged from about $7.50 to $8.75. With the notion that there is a lot of supply up above combined with an intermediate-term time frame bullish push that is a close call, I am expecting that we will at least see prices dip back down into the gray shaded area and allow some cheaper purchases in the coming days and weeks. At a minimum, I expect to see at least the $8.75 area once more.
When I look at this chart, I want to be buying small retraces or adding positions. I wouldn't be worried about this stock unless it traded all the way back into the $7.50 range. If it did that and volume expanded in conjunction with that larger retrace, something would be awry and I would probably be looking for some place else to put my money. Unless that happens, you'll see me both adding to and looking to hold these shares for a few more months or years, and I would suggest you consider the same.
Until next time, keep trading the charts!
At the time of publication, Little was long Northern Dynasty Minerals, though positions can change at any time.
L.A. Little, author, professional trader and money manager, writes daily on
, a free educational site for traders and investors. He has been featured in numerous publications and is the author of
His background includes degrees in philosophy, computer science, computer information systems and telecommunications. With a trading philosophy centered on capital protection first and the accumulation of consistent gains over time, L.A. espouses a simplistic technical approach to trading the markets that is a throwback to the days of past. With a focus on swing points and the qualification of trends, L.A. provides a breath of fresh air to an otherwise crowded room of derivative indicators with the emphasis on technical minutiae.