Yamana Gold Inc. (AUY) has made an attractive base pattern on the daily chart but some work (read: accumulation) may be needed on the weekly chart to start AUY on a path to sustained recovery and higher prices. Let's check out the charts and indicators for Stocks Under $10 portfolio holding AUY and see where things start to get interesting from a technical perspective. (AUY also received an upgrade today from TheStreet's Quant Ratings service.)
In this daily bar chart of AUY, below, we can see that prices have been in a neutral or sideways trend for the past 12 months. Declines below $2.50 have been shallow and not long sustained. This tells me that buyers have been active below $2.50. We can also see that rallies toward $3.25 have run out of steam.
Now let's look at the price action and indicators in the past two months on the daily chart, above. In early December AUY made a slight new low but it did not start a fresh decline. Prices rebounded quickly to close above both the rising 50-day moving average line and the now rising 200-day line. The 50-day line is poised now to close above the 200-day line for what technical analysts called a (bullish) golden cross.
The On-Balance-Volume (OBV) made a low in early July and improved to early September to support and confirm that rally. The OBV line made another (minor) low in early December and has moved up to a new high well above the September peak. The trend-following Moving Average Convergence Divergence (MACD) oscillator gave us two signals last month -- a cover shorts buy signal and then an outright go long signal.
In this weekly bar chart of AUY, below, we can see that prices have rallied above the flat 40-week moving average line. The weekly OBV line is improving and the weekly MACD oscillator is close to crossing above the zero line for an outright go long signal.
In this Point and Figure chart of AUY, below, we can see a higher low in July (look for the "7" on the chart). A rally to $3.50 on this chart should be a breakout and could be the start of a more durable rally.
Bottom line: AUY has made a strong rally in the past few weeks. Prices might consolidate in the $3.00 to $3.25 area before further sustained gains. Aggressive traders could try to buy AUY just below $3.00 and add on a trade above $3.50. My intermediate-term price target is $5.00.