In June we highlighted 10 stocks that were at the top of our list as potential takeover candidates and which in our estimation had plenty of upside still available to them. So we thought we would update this post with a rundown of how each of these stocks have fared since we highlighted them in June, which ones we like the most now, and our overall market take after an August correction in the gold mining sector:
Detour Gold (DGC.TO) – Unchanged since our June post after being higher by more than 15% higher a couple weeks after our post. DGC now finds itself down five straight sessions and solidly below a flattening 50-day moving average:
Major support/resistance exists about 3.5% lower near the C$30.00 level.
Pretium Resources (PVG) – Up 14% since our June post after being up 33.4% at its July peak. Ugly high volume breakdown below rising 50-day moving average today:
Minor support near ~$10.50 is next downside reference point, then a full round trip to mid-June levels in the low $9s.
Sabina Gold & Silver (SBB.TO) – Down 29.5% since our June post which is almost entirely a result of the gap lower on the morning of our post (June 16th). The SBB story hinges upon The Nunavut Impact Review Board (NIRB) recommending SBB’s Back River Gold Project move forward to the next stage of permitting.
Continental Gold (CNL.TO) – Up 25.9% since our June post after being nearly 50% higher in early July.
CNL.TO remains above rising 50-day moving average as price coils in a tightening range.
Red Eagle Mining (RD.V) – Up 18.3% since our June post as price coils in a range between C$.80 and C$.90:
Series of higher lows remain intact, however, resistance near C$.90 continues to loom large.
Torex Gold (TXG.TO) – Torex has undoubtedly been one of the strongest stocks of summer 2016 with a ~45% gain since our June post. While TXG’s relative strength and ability to continue to make new highs even as many of its peers began pulling back has been impressive, yesterday’s bearish engulfing candlestick from ~20% above its 50-day moving average does offer some cause for concern:
Newcastle Gold (NCA.V) – Up ~33% from our June post and easily one of the strongest gold explorers in our universe of gold stocks:
Even after the recent correction NCA shares remain well above a rising 50-day moving average. If the correction worsens over the coming days/weeks the C$.85 level should offer strong support.
Belo Sun Mining (BSX.TO) – Belo Sun shares are up ~18% since our June post, however, a double-top may have been put in place recently at C$1.10:
Firm support exists down near C$.90 and despite the apparent double-top at C$1.10 a series of higher lows remains intact.
Sandspring Resources (SSP.V) – Up 30% from our June post after being up nearly 60% just a few weeks ago:
Look for the rising 50-day moving average to continue to attract eager buyers during corrections.
Roxgold (ROG.V) – 18% higher from our June post. ROG shares have continued a steady climb higher with each shallow dip quickly finding aggressive buying:
In summary the results during the last ten weeks are quite strong: 8 out of 10 stocks highlighted are solidly higher with many having been 50%+ just a few weeks ago before the August correction took place. One stock was unchanged (Detour Gold) and one stock is lower (Sabina with all of the losses taking place on the gap lower the morning of our June post).
I have two key takeways:
No takeovers have taken place among the ten highlighted companies, however, one has to wonder if the recent dip combined with the calendar shift into the fall (which has historically seen more acquisition activity) will lead to some buyout offers.
Technically speaking we are seeing more yellow flag warning signs in the form of double-tops, breaks below the 50-day moving average, and large bearish engulfing candlesticks. The trend is still clearly higher, however, there is some cause for concern.
CNL, NCA, SSP, and ROG are my current favorites among this batch and investors should look to pick up shares in these names at the support levels mentioned in this post.
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