Agnico Eagle Mines Has Turned Up; Time to Go Long Again

 | Jan 10, 2017 | 12:04 PM EST
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It looks like gold has turned to the upside again and Agnico Eagle Mines (AEM) may be one of the stocks that could benefit the most. AEM doubled last year when gold bullion advanced around 40%.
 
AEM corrected from its August peak and looks poised for a new advance. Let's look at the position of the indicators.
 
In this one-year daily bar chart of AEM, below, we can see that prices have broken above the 50-day moving average line. The 50-day line is still pointed down, but is has begun to flatten. Prices are still below the rising, 200-day average line. Now look at the daily On-Balance-Volume (OBV) line. The OBV line rose with prices until early August, and it has slowly and gently declined until early December. Prices corrected way more than the OBV line, and this suggests that owners of AEM did not actively liquidate shares from August through November. As prices made lower lows in October, November and December, the momentum study made higher lows. This bullish divergence tells us that the pace of the decline slowed prior to the December rally.
 
 

In this three-year weekly chart of AEM, below, we can see a base or consolidation pattern in 2014 and 2015. Prices broke out on the upside in 2016 and then corrected back down to the top of that base pattern -- or $35. Prices are still below the rising, 40-week moving average line, but that could change in the weeks ahead.

The weekly OBV line has been rising the past three years, and this tells us that investors in AEM have been accumulating shares for a long time. The weekly MACD oscillator in the lower panel is turning up to a cover-shorts buy signal.

Bottom line: it looks like AEM has turned up and traders and investors can go long again. I am not sure how long or how high this current advance will carry, so we will find out together.

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