This is the comment regarding KGC that will appear in my newsletter today:
KGC had a reversal week having made a new 8-week high but then closing in the red and near the lows of the week. The stock has a gap between 5.83 and 5.97, as well as the 50-day MA being at 6.00 at this time. In addition, the stock shows a previous high of some consequence at 5.98 which was the most recent breakout level. It is likely the traders will be testing that area this week to see just how much strength is behind this recent breakout. If the gap is not closed and the 50-day MA is tested successfully, the buying will increase in strength. Any rally above this past week’s high at 6.65 would now be an additional buy signal. If the gap is closed and the stock generates a daily close below 5.97, it will likely mean this recent rally was mostly short-covering and that the recent lows at $5 will be tested again. As such, the finger should be on the trigger to liquidate the long positions should that scenario occur.
I am going to add positions in KGC this morning between 5.97 and 6.00, which is where the stock is due to open. Nonetheless, on these positions I will be using a very sensitive stop loss at 5.87, which means I will be risking no more than about $13 per 100 shares on the trade.
In addition, I have raised my stop loss on the other positions I own to 5.46.
Lucky, Since KGC, like the gold miners in general, is a proxy to gold itself. Wouldn't it make more sense to include an analysis of the support and resistance points of the metal itself? If gold tanks down or explodes up, that is going to be the overriding factor in KGC price action. So why not give the inflection points for gold?
That makes sense but then again KGC was heading down when Gold was heading up to the $1800 level. In addition, there was a time that Gold was under $1000 and yet KGC was at $21.
Because of these factors, it is evident that KGC does not always move in conjunction with Gold and tying it "totally" to the price of Gold is not the best thing that can be done, though I fully understand the relationship between them.
KGC will react to things such as the economy so watching the stock indexes also makes sense.