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« Even New Yorkers Say No To USD | Main | Sub-Prime Crisis: What If? »

Agnico-Eagle: Turning South?

As you know we are of the opinion that gold and gold stocks are in for a near term correction and took some profits off the table including a reduction in our holdings of Agnico-Eagle Mines Limited.

Agnico-Eagle closed at $60.41 today, off $2.86 from the price we sold at of $63.27 recently, so far so good.

Taking a quick look at Agnico's chart we can detect a slight change in direction for this stock.
Firstly the stock price is off its recent high and is heading south.
Secondly the RSI was close to '70' and is now heading towards '50', or closer to the middle of the range.
Thirdly, the black line on the MACD looks set to cross the red line in a downwards direction which is usually a negative indicator.
Fourthly the Stockastics were well above the '80' level but they too have also turned south.
Finally it is the distance between the stock price and the 200dma that gives us cause for concern.

Agnico chart 05 Feb 08

As we have said before, one swallow does not make a summer, so it is too early to jump to any conclusions about one gold producer in a sector where there are many variables to consider. However we believe that it is worth while to watch the charts, albeit at a simplistic level, in order to educate ourselves in the art of detection. There are clues here and its the job of all investors to recognise and use those indicators to improve the performance of your portfolio.

On the other side of this debate is the fact that one major event could put gold into rapid ascendancy mode dragging the gold stocks with it and thus reversing the trend of the technical indicators. Or an unexpected announcement by the company gives the stock a boost. These are risks that we have to take into consideration before making a purchase or instigating a sale.

Well we have made our decision and took some profits from Agnico-Eagle so all we can do now is watch the action.

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Footnote: Well done to the New York Giants, we really enjoyed the game and commiserations to the New England Patriots.

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