Many investors are familiar with gold, silver and platinum, but not everyone is up to date about palladium.
Palladium prices have been soaring since 2008, but the financial media has only paid attention the past few months as prices passed $1000 per oz. on their way to $1,600.
In this long-term chart of the cash price of palladium, below, we can see how prices have really "taken off" on the upside.
Palladium is an extremely rare, silver-white metal. More than half of the supply is used in automotive catalytic converters and the rest is used in electronics, dentistry, jewelry, groundwater treatment and chemical applications.
Not everyone is cut out for dealing in the esoteric world of precious metals, whether in the physical market or the futures market, so let's look at one equity play.
Before you jump in with a trade or investment, be sure to check out the fundamentals. I am only presenting a technical case and want to remind readers this stock is not all that liquid (not a lot of trading volume).
In this daily bar chart of North American Palladium Ltd. (PALDF) , below, we can see prices made a long base in the $7-$8 area before a spike up to around $20.
A quick and deep correction occurred earlier this month, and now prices are working higher again. PALDF is trading above the rising 50-day moving average line and the bullish 200-day line. The daily On-Balance-Volume (OB) line is positive and signals aggressive buying.
The Moving Average Convergence Divergence (MACD) oscillator is above the zero line in bullish territory and narrowing towards a possible outright go-long signal.
In this weekly bar chart of PALDF, below, we can see a long base around $4 and a second base around $8.
I would not be surprised to see PALDF rally to multiples of $8 -- $24 would be the next multiple of $8 after $16. Prices are above the rising 40-week moving average line.
The weekly OBV line is bullish and so is the MACD oscillator.
In this long-term Point and Figure chart of PALDF, below, we can see a potential long-term price target of $45.
Bottom-line strategy: Remembering the price of palladium can get extended on the upside and become vulnerable to a sharp correction (see the first chart above), seasoned traders could approach the long side of PALDF.
Risk a close below $11.
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