High River: Gold mining stock potential breakout

I will be doing an update on the market before tuesday.


I was looking at Investor 500 magazine in the summer 2010 edition, there is a page entitled "Best Turnaround Stocks" From Dec 2009 to Apr 2010 High River gold (HRG on Tsx) stock price increased by 484%.

   Long term daily chart.


Fib levels: Stocks tend to have standard retracements. The levels are 23.6%, 38.2%, 50%, 61.8%.  Also 161.8% is the target of a break out of the 100% level.  On this stock that is 1.57.
As you can see the stock has behaved nicely, finding strong resistance at all these levels.

Moving averages are potential resistance and support, currently they are bullishly aligned since they are in order 20, 50 ,200.  When the prices moves down some of the moving averages cross over, these are significant occurrences that can have an effect on the subsequent price moves.

MACD: This is a momentum oscillator that shows how strong moves are.  the current bullish move was very strong, however it is currently pulled back but the MACD is in positive territory (bullish).

Slow Stoch
Also can show momentum but mainly used for determining oversold and overbought  conditions.  When the yellow line is above the 80 line the stock is overbought, conversely when the yellow line is below the 20 line the stock is oversold.  However, as the yellow line stays above the 80 for 2-3 days, the white line moves into the 80 and above area.  This could be viewed as a lock in of a trend.  many times that lock in can last for a few more days leading to strong positives moves.
The stock above is not overbought but it is getting close. however I view this as potential for a trend lock in.  The slow stoch has just turned back upward showing upward momentum.

So with the technical indicators and the fib levels looking quite positive lets see what has happened in the chart.  A triangle was formed withe the top at 100% retracement and the bottom above the 61.8% retracement.  August 16th, the stock broke the triangle bullishly on strong volume 4-5x more than average.

With the price so close the breakout level and the 1.57 mark the target.  The odds are quite in the favor of this stock moving quickly to the 161.8% after breaking of the 100% level. 0.99 is the breakout level.  so if you put a buy at the 1.00 to 1.02 point, with a stop loss at the .95 for a conservative or .90 if you want to stay in it a bit longer.

I am probably going to take some profits on a silver play, and take this trade.  However it does depend on gold / silver prices next week.  Since gold and silver could be breaking out but there is a potential pull back in the works.  We will see how the metal market acts over the next 2-3 weeks.


Important take away, if the stars align this stock could have a massive move.  The risk on a break of the 1.01 to 1.03 price will be quite low, and you have a tight stop loss that will reduce your downside potential .

I am thinking gold may have a temp pull back but i see it at 1300 relatively soon, next couple of months.  But if highs are taken out and more instability occurs in the economy, a perfect storm of buying will take place.  I want to find some high potential stock for next gold break out.