Vista Gold: A Chart View

NEW YORK ( TheStreet ) -- Gold and gold stocks have had a rough week. Many times, you can find the best stocks in such an environment. Take Vista Gold ( VGZ), for example. While others have languished, Vista has perked up as if a buyer is standing at the door. Having been a laggard for long, is this stock ready to lead now?

In the next page is the weekly chart showing the volume pick-up this week as the recent swing point high is attacked.

Yesterday, Vista burst higher on good volume. Weekly volume will swamp volume from early November once this week is said and done. Price pushed into the swing point high bar and I would be very surprised if the top of that bar isn't tested by the end of the week. In fact, it just might get taken out.

Normally, I look for retraces to buy but in this case, I jumped in yesterday just before things got crazy. The stock was already up a couple percent while it was another day of declines for most gold stocks. By the end of the day, Vista was hammering higher -- almost 16% higher. With volume expansion and wide price spread, you have to find a way to get long on intraday retraces now or simply stand aside and wait. Unfortunately, if this stock does what it looks like it's about to do, you may be waiting for quite a while.

Here's the monthly chart. Projected volume is huge for the month. Resistance on the long term is at the swing point highs and the prior swing point low from 2007. The previous attack of the swing point high from late 2009 didn't have enough volume to get over it. The small pullback is likely finished for now though and the surge to attack the recent highs is on in earnest. This stock looks strong. If it breaks through resistance in the coming days and weeks, the projections are much higher with this kind of volume. There's nothing out there to acts as a throttle on this time frame.

The small cap mining stocks are starting to look like takeover candidates. I would not be surprised at all to see bids for some of these companies in the coming weeks and months. That might be what's driving this one already. There is definitely something happening as big money is rushing in here. We'll find out soon enough I suspect as this is one of those cases where price appears to precede news.

Until next time, just keep trading the charts!

At the time of publication, Little was long VGZ, though positions can change at any time.

L.A. Little, author, professional trader and money manager, writes daily on www.tatoday.com, a free educational site for traders and investors. He has been featured in numerous publications and is the author of Trade Like The Little Guy.

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.

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