Mining Stock Could Soon Move Lower

The stock's technical setup as well as surrounding sentiment paint a bearish picture

Deputy Editor
Sep 25, 2023 at 2:37 PM
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Agnico Eagle Mines Ltd (NYSE:AEM) has been chopping higher since its recent mid-August five-month lows. However, the stock has just run into two historically bearish trendlines that could cut its comeback short. 

According to Schaeffer's Senior Quantitative Analyst Rocky White, AEM came within one standard deviation of its 100-day moving average six times in the past three years, after which the stock was lower one month later 83% of time, averaging a 4.1% loss. Walt Disney stock's 100-day trendline has seen seven similar signals, and was lower after the ensuing month 71% of the time to average a 2.7% drop.  

An unwinding of optimism amongst options traders and analysts cut create headwinds as well. Of the 14 analysts in coverage, 13 carry a "buy" or better rating, while AEM's 50-day call/put volume ratio at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) ranks in the 93rd percentile of its annual range. 

When speculating on AEM, now looks like a good time to weigh in with puts. The security's Schaeffer's Volatility Index (SVI) of 29% ranks in the low 10th percentile of its annual range, meaning options traders are pricing in low volatility expectations at the moment. 

 

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