Mining Stocks

The sp500 is sitting right under the medium term resistance line that has marked the downtrend since end of April 2010.

Today was pretty much a non event day in terms of price movement and the sp500 printed another doji candlestick with a modest range.  It was also an inside day in that we did not exceed the high or the low of yesterdays price action.

Again, we are sitting right under the medium term resistance line that has basically defined the bearish move since April 2010.  The fact that we did not show a strong reversal type candlestick today is encouraging for more upside action.  It is also good that we did not exceed yesterday’s high.  It allows the market to build a small amount of energy for a possible ‘jump of the creek’ , the creek in this case being the blue dotted down trendline.

Based on the shorter term momentum, and the market still feeding off of this positive divergence I am thinking right now that the market will be able to jump over this blue dotted resistance line this week and then make an attempt at one of the three other topside resistance lines that have defined the inverted triangle.

If I am wrong, then the market should tell us this tomorrow and reverse down immediately telling us that it still wants to respect this bearish downtrending force.

We are certainly at a very interesting juncture here.

I continue to see bullish tendencies on the weekly chart plotted against the MACD histogram.  All we need to do this week to confirm the weekly upward histogram buy signal is to get a weekly close above 1078.16 on the sp500.  So far so good but the week is not over yet.

GSS Golden Star Resources may be setting up for a breakout soon.  Amazingly GSS has been in a consolidation since December 2003 !  I don’t know about you but that is a LONG time in both regular time and trading time!  GSS is now slowly approaching its long term down trendline and I think it has got a good shot at getting some sort of breakout going.

I believe earnings are coming out on August 11th.  Not sure if that is going to be the catalyst or not, it could be.  So far GSS has touched its long term down trendline 3 times previously, so this resistance line is definitely significant.

When you combine this price structure with my previous alert on the gold price, you have the makings of a high probability trade.

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Polymet Mining Corp may be getting ready for some sort of uptrend here pretty soon.  If you look at the chart I can conclude a few things already.

• It has held support on its uptrend line since mid March with 2 tests.
• It has completed a consolidation of about 2 months duration.
• It has broken through the resistance as defined by the white downtrend line.

So I think we might see a trickle of an uptrend on this one.  But I have to add that these mining stocks are not for the faint of heart.  In my experience they tend to trade with heavy retracements and cumbersome up trends.  And it makes sense that they trade that way because they are in the mining industry which in generally requires large equipment and investment costs and slow to market type products, especially when they are in the exploration stage.

Apparently Polymet wants to mine copper, nickel and other precious metals precipitate according to their website.  You know, I really wish all mining companies right on their homepage would say in very large text exactly what they are mining for, what their proven and probably reserves are, and when they plan to start production (or if they are producing right now how much).  That way it give the entire investment community an quick 1-2-3 idea of what they are dealing with.  Perhaps I am a bit lazy to dig through all their information myself but it just makes sense to me to provide that right up front especially for mining companies since it is one of the most important factors in their valuation.

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