IFC Markets - Analytics

    IFC Markets

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    Technical Analysis #S-GG : 2015-10-23

    Gold mining stocks lagged behind gold

    Gold price has fallen by 2% since the beginning of the year, while shares of Canadian gold mining company Goldcorp - by 17%. It is also much worse than the Canada Stock Market S&P/TSX 60, which from the beginning of the year fell by 5%. In recent months gold price rises. Will it contribute to the growth of Goldcorp quotes? The company's shares are traded on the New York Stock Exchange.

    In 2014/13 the Company recorded net operating losses and its shares felt by 2.5 times from $30 to $12. This year the company plans to increase gold production to 3.3-3.6 million ounces from last year's level of 2.87 million and reduce the capital costs up to $1.2-1.4 billion from $2.2 billion. In the 2nd quarter of 2015 gold sales amounted to 903 thousand ounces (production - 908 thousand), compared with 827.5 thousand ounces in the 1st quarter and 639.5 thousand - in the 2nd quarter of 2014. This allowed Goldcorp to increase two-fold in net income from operations compared to the 2nd quarter of 2014. Publishing of third-quarter financial results will be held on October 29, 2015. During this period there was a gold prices decline in the world. However, in our opinion, it is already included in the current stock prices. We do not exclude that the planned increase in production and a reduction in capital costs can have a positive impact on financial performance.


    On the daily timeframe, GG:D1 shares switched from a downtrend to neutral. The MACD and Parabolic show buy signals. RSI formed upward divergence. He came out from the overbought zone. Bollinger Lines widened, which could mean an increase in volatility. They have an upward slope. We do not exclude the development of a bullish trend, if Goldcorp shares overcome the upper border (16) of the neutral trend. This level can be used as an entry point. The initial stop loss is possible below the approximate middle of the neutral range - the level 14. After opening of a pending order, move stop loss after Bollinger and Parabolic signals to the next fractal minimum. Thus, we change the ratio of potential profit/loss in our favor. The most cautious traders after making the deal can switch to a four-hour timeframe and set the stop-loss, moving it in the direction of price movement. If the price overcomes the stop level (14) without activating the order (16), we recommend that you close the position: the market has the internal changes that have not been taken into account.


    Position Buy
    Buy stop above 16
    Stop loss below 14

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