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Slide in Kinross shares may not be over yet

Lou,

Do you see any chance of a reversal in this beaten down stock? They are getting close to 2,000,000 ozs. of gold production. The market seems to care less.

Thanks

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Tom



Hey Tom,

This will be the fourth time I have examined the case for Kinross Gold Corp. since July 12, 2010. What has been consistent with the stock is that it has been in a long decline since November of 2009 when it traded at close to $24.00. Over the last two years the shares have offered some opportunities to trade for profit but a buy and hold strategy has proven a disappointment.

The last time I ran the charts was on April 25, 2011 on an assignment for Allan. The stock was trading at $14.63 and it was advised that investors needed to proceed with caution. Sadly the shares were not able to hold on to those levels. Even as the company reported better than expected third-quarter results on Nov. 2, 2011 it did not stop the retreat.

Another look under the hood will provide a better understanding as to why this gold producer has failed to reverse the selling on a sustained basis.

The three-year chart clearly illustrates the down channel the stock has been in over the last two years. When I see a chart like this it reminds me of the two rails of ladder suspended from the upper left to the lower right. In this scenario the bottom rail of the ladder provides support while the upper rail resists the advance. Great for traders, not so great for less active investors.

The MACD and the RSI are both signalling that there is more selling yet to come. The 50-day moving average has once again crossed below the 200-day moving average putting another caution flag on the track. At this point it appears we may have to retest $12.00 where long term support comes in.

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You asked if it is possible to reverse this trend and the answer is yes, it is possible but we will have to see if $12.00 is the rock bottom.



Make it a profitable day and happy capitalism!

Have your own question for Lou? Send it in to lschizas@globeandmail.com.

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About the Author
Lou Schizas

Lou Schizas is an equities analyst, investor, entrepreneur, professor and television and radio personality - and a true believer in the happiness-inspiring powers of capitalism. More

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