In our Wall Street office yesterday Gregg Greenberg interviewed Mike Underhill, portfolio manager of the RidgeWorth Capital Innovations Global Resources and Infrastructure Fund. Underhill recommended four global resource plays - Barrick Gold ( (ABX) ) , U.S. Steel ( (X) ), Weyerhauser ( (WY) ) and KapStone Paper and Packaging Corp. ( (KS) ). Let's check the charts this active morning and see how we might position these names.
In this daily chart of ABX, above, we can see a bullish technical set up before an anticipated higher opening for precious metal mining names. Last month ABX broke the downtrend drawn from the early August high through mid-October. The 200-day simple moving average line was tested a number of times last month but the slope of this longer-term indicator has remained positive. The On-Balance-Volume (OBV) line also support the bull case going forward. The OBV line rises until early August signaling more aggressive buying as the volume of shares traded was heavier on days when ABX has closed higher. Since the August peak the OBV line has only lost a little ground while the price of ABX lost about 50% of its January to July advance! This tells us that ABX longs held onto their positions in large part even with a 50% retracement. In the lower panel is the trend-following Moving Average Convergence Divergence (MACD) oscillator which is above the zero line or in bullish territory.