Barrick Gold Shapes Proper Double Bottom

• Paul Whitfield
• On 6:35 pm EST, Thursday November 5, 2009

A handful of stocks in the gold-mining group have been forming double-bottom bases.

Some of the bases are flawed. Either the middle peak edged past the left-side high or the second low didn't quite undercut the first.

A proper double bottom is shaped like a W. The middle peak normally is in the upper half of the pattern, but it shouldn't be a new high. The second low should undercut the first low by a few points.

Iamgold (NYSE:IAG - News) and Barrick Gold (NYSE:ABX - News) are two mining stocks that did it right. We reviewed Iamgold in this space on Oct. 30. It broke out Wednesday in volume that was double its usual pace.

Barrick passed its 40.61 buy point 14traday Wednesday but couldn't hold above it. Sometimes a stock will spend time clearing its throat before it sends a clear message.

Barrick needed only a day of throat clearing. It passed and closed above the buy point 20hursday.

If you look at Barrick's weekly chart, there's more distribution than accumulation. But the daily chart shows more days of above-average up volume than above-average down volume.

The Accumulation/Distribution Rating is B, up from C four weeks ago. So there is accumulation.

One concern is Barrick's Relative Price Strength Rating, a so-so 68.

Buzz up!