ChartWatch: Barrick is forming a Bottom


Barrick Gold ( ABX ) cannot seem to find any momentum. But that may change soon.

The shares of the world's biggest gold miner are down roughly 25% from a year ago. Meanwhile, the price of gold is up around 5% during the same period. More surprisingly, ABX has fallen by nearly 15% since 2010, whereas gold has climbed around 60%.

Presumably, Barrick - being a gold miner - would have benefited from higher gold prices. After all, higher gold should have allowed the miner to sell its "product" at a higher price, resulting in record profits and a higher stock price. However, neither has happened during the past three years.

As ChartWatch mentioned in a June article, the loss of $43 support (blue line) was a big deal. I warned that ABX needed to take back $43 in short order or risk falling below $35 (blue arrow). Buyers could not push Barrick above $43 in June and the stock proceeded to decline to new lows.

However, the $35 area has become a strong level of support. In fact, the shares have traded between $33 and $36 since November.
This chart shows the price of ABX shares along with an important resistance level to monitor.

Though ABX has been a terrible stock during the past three years, the increased buying activity near $35 is a positive development. I'd expect this accumulation activity to provide enough momentum to bring the stock back to $43. With any luck, Barrick will be able to overcome that resistance and more accurately represent its true value, which several analysts believe could be $64.

Equities mentioned in this article: ABX, gold

Positions held in companies mentioned above:

Don't Miss: ChartWatch: is Poised to Plummet

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Stocks

Referenced Stocks: ABX

Wyatt Investment Research

Wyatt Investment Research

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