Mining Stock Could See Big Returns Next Month

The stock touched a record high last Thursday

Deputy Editor
Sep 17, 2020 at 11:01 AM
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The shares of mining name Sibanye Stillwater Ltd (NYSE:SBSW) have taken a step back this week, pulling away from last Thursday's all-time high of $13.89. While the equity is heading for its biggest weekly loss since March -- off 7.6% so far -- there is evidence that this pullback could be short lived, making now an opportune time to get in on the stock before another potential bounce. 

Though SBSW just breached recent support at its 20-day moving average, another recently supportive trendline at the historically bullish 40-day moving average still sits just below. According to Schaeffer's Senior Quantitative Analyst Rocky White, there have been five similar pullbacks over the past three years. The security saw positive one-month returns after these signals 75% of the time, averaging a 9.1% pop. A similar move, from the stock's current perch would place it at $15.15, marking a fresh high on the charts. 

SBSW Chart sept 17

The sentiment surrounding SBSW is quite optimistic at the moment. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the equity sports a 10-day call/put volume of 45.19, which stands higher than 86% of all readings from the past year. Plus, all three analysts in coverage consider the security to be a "buy" or better. 

Now looks like a good time to get in on SBSW's next move with options, too. The equity's Schaeffer's Volatility Scorecard (SVS) stands at 89 out of 100. This means the security has tended to exceed volatility expectations during the past year -- a boon for option buyers. 


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