Signal Says Gold Stock Could Keep Shining

KGC hit a seven-year high earlier today, but more upside could be imminent

Managing Editor
Jul 17, 2020 at 2:46 PM
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As gold prices eye a sixth straight weekly win, Kinross Gold Corporation (NYSE:KGC) has been there every step of the way, nabbing a seven-year high of $7.88 earlier today. But the fun for KGC could be just beginning, as the gold stock recently flashed a historically bullish signal on the charts. 

Kinross Gold stock's recent peak comes amid historically low implied volatility (IV) -- a combination that has been a bull signal in the past. Specifically, according to data from Schaeffer's Senior Quantitative Analyst Rocky White, there was one other time in the past five years when the stock was trading within 2% of its 52-week high, while its Schaeffer's Volatility Index (SVI) sat in the 20th annual range or lower -- as is the case with KGC's current SVI of 62%, which sits in the 7th percentile of its 12-month range.

The data shows that one month after this signal, the mining name was higher by 10.9%. From its current perch at $7.85, a move of similar magnitude would put the stock a chip-shot from $9 -- for the first time since early 2013. Year-to-date, KGC is up 66%, with the shares' 80-day moving average emerging as support during a June pullback.

Daily Stock Chart KGC

An unwinding of bearish bets among options traders could also fuel an additional tailwinds. KGC's Schaeffer's put/call open interest ratio (SOIR) of 0.48 stands higher than 93% of readings from the past year, implying short-term options traders have been more put-biased than usual.

 

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