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Monday
Apr202009

Yamana Gold Inc (AUY): Balanced on Support Line

Yamana Gold Incorporated (AUY) is precariously balanced on a support line at $7.50, and since the stock is not technically fully oversold yet, there is a good chance Yamana will break down through this support line and drop significantly.

Yamana Gold Inc (AUY): Balanced on Support Line 1

Therefore we would hold off buying AUY for now, but if you are looking to make a purchase the opportunity could be just around the corner.

Looking at the RSI for AUY we can see that it is declining, although it has not reached the buy zone under or on 30. It is at that level that we would be more comfortable with making a purchase. Similarly, we would like to see a positive bullish crossover on the MACD indicator before making a purchase or signaling a BUY on this stock. However the Full STO has entered the buy zone, but note that the red line stands at 8.14, above the black of 5.93. It would be prudent to wait for the black to rise up through the red before buying in our humble opinion.

Fundamental pressures are also weighing down on Yamana, in particularly the correction in gold prices which we do not think is over yet. More declines in gold prices will push gold stocks down, and most likely send AUY down through $7.50, breaking the support and causing a sharp drop. When we can be more confident that gold prices are near a bottom, we will look at using our opportunity cash to buy Yamana Gold and other gold stocks once again.

Until then, just sit tight.

Yamana Gold Incorporated trades as AUY on the New York Stock Exchange and as YRI on Toronto Stock Exchange and as YAU on the London Stock Exchange, giving it lots of exposure to investors.

Yamana Gold has a market capitalization of $5.47 billion, a P/E ratio of 12.15, with 732.92 shares outstanding and closed on Friday at $7.47.


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