Investors Intelligence Contribution
CHART - International Consolidated Airlines
Investors Intelligence Top Sells However, not all stocks are a buy. Some stocks look dire and so should be avoided at all costs. The primary technical evidence that we look for in this group is: 1) new 52-week lows and 2) poor relative strength. The former shows that investors are dumping the stock (in technical parlance: Distribution) while the latter implies the stock is underperforming the market. Currently, the sector to sell is the precious metal mining industry. Why? For one, gold and silver prices are weak, which is dampening investor sentiment towards this sector. Second, many precious metals miners have completed top formations. Some even broke down to new all-time lows. Look at African Barrick Gold (ABG LN) below. In just seven weeks, the stock plunged twice, as it shocked investors with results. Worst, the stock breached the major level at 300p recently and slumped to new all-time lows. Its relative strength against FTSE100 is notably poor. Undoubtedly, the stock is a clear sell. Other candidates to short are Randgold Resources (RRS LN), the gold miner, or Fresnillo (FRES LN), the major silver miner. In both, top formations are developing. The risk is to the downside.
March 2013
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