Gold has been volatile recently, and this up-and-down action has caused some gold mining issues to feel the pinch. One these outfits, Agnico-Eagle Mines Limited (AEM - 35.27), has retreated roughly 5.3% year-to-date, and has burned off 49% over the past 52 weeks. The stock has lagged the broader S&P 500 Index (SPX) by more than 13% over the past three months. Currently, the shares are challenging resistance at their 80-day moving average, and the $34-$36 region, which has been in place since mid-March.
Elsewhere on the Street, there seems to be plenty of negativity already priced into the shares. Short interest ballooned 45.1% during the past two reporting periods. However, the bearish bandwagon is nowhere near overcrowded, as it would take just over one day to buy back all of these pessimistic positions, at AEM's average pace of trading.
Pessimism also appears to be mounting in the options arena. During the past two weeks, speculators on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) have bought to open 0.34 put for every call. This ratio arrives in the 80th percentile of its annual range, signaling an increased appetite for puts over calls during the past couple of weeks.
And there could be a further shift to the bearish camp among the brokerages following AEM. There are five "strong buys" and one "buy" endorsement, versus eight middling "holds" and not a single sell suggestion. Additionally, the consensus 12-month price target rests at $43.24, which represents a 25.7% premium to Wednesday's close of $34.41.
On the fundamental front, Agnico-Eagle Mines is due to release its first-quarter results after the close tonight. AEM failed to meet analysts' profit expectations in three out of the last four earnings reports.
Considering AEM's already glum technical performance, downgrades and/or price-target cuts, or a continuation of the recent short-selling trend -- especially in the wake of another weak earnings showing this evening -- could create further selling pressure for the stock.
Mid-Caps Nearing a Triple of March 2009 Lows
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