Bulls Take A Hit: Barrick Gold Drops Below SMA(200)
Around two weeks ago, we painted quite a bullish picture for Barrick Gold/ABX, mainly driven by the recent strong earnings report which was delivered to investors and after news made rounds in August, that Warren Buffett's Berkshire Hathaway had built a position of a little greater than half a billion USD in the company.
What could possibly go wrong for bulls? Well, when looking at the ABX chart on a daily time-frame it seems as if the answer is "quite a bit"…
What's up Barrick? After solid earnings, drop to below the SMA(200)
We pointed out in our latest research piece on Barrick Gold that the stock gave back most of its post-earnings-release gains on Monday, the 09th after news hit the wire that Pfizer/BioNTech are on their way to a Covid-19 vaccine said to be effective in over 90% of cases. Today, the stock hasn't yet recovered, and has instead broken below its SMA(200) line – an overall negative sign for bulls
Technically speaking, the sustainable break below 26.00 USD is also price-action-wise a bearish sign, even though optimists will certainly argue that only a break below 22.15, the June lows, would negate the sequence of higher highs and higher lows.
Now, the big "BUT": there is a strong positive correlation from Gold and ABX over the last 500 trading days. The yellow metal is currently looking into the "abyss". With a break below 1,850 USD making further losses down to 1,750/760 USD a serious option, a quick and accelerated push down to 22.15 USD in ABX also becomes a serious option.
That said, we'd certainly want to become a little more defensive in painting a bullish picture for the Barrick Gold stock.
Still, the picture is not as dark as it may currently seem in our opinion:
- Last week, on Monday the 16th, Moderna announced that the phase 3 study met statistical criteria with a vaccine efficacy of 94.5% (P < 0.0001) and announced a longer shelf life for its COVID-19 vaccine candidate at refrigerated temperatures
- The yellow metal initially sold off (the stock market hadn't opened when the news hit the wire, so ABX was officially not affected by the bearish Gold price action)
- It quickly recovered its daily losses, closing the day nearly unchanged
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