Gold Stocks Bounce Back Following Miserable Monday

Agnico Eagle Mines Ltd (USA) (NYSE:AEM) and Eldorado Gold Corp (USA) (NYSE:EGO) are both sitting on healthy gains in late-day trading

by Alex Eppstein

Published on Jul 21, 2015 at 3:35 PM
Updated on Jun 24, 2020 at 10:16 AM

While gold remains near five-year-low territory, a number of equities that specialize in the precious metal are coming back from Monday's rocky session. The Direxion Daily Gold Miners Bull 3X Shares (NYSEARCA:NUGT) provides a nice snapshot of the action, popping 5.3% to trade at $3.79. By contrast, the Direxion Daily Gold Miners Index Bears 3X Shares (NYSEARCA:DUST) -- which surged over 32% yesterday -- is down 7.5% at $32.75 this afternoon.

Among specific gold stocks sporting solid late-day gains are Agnico Eagle Mines Ltd (USA) (NYSE:AEM) and Eldorado Gold Corp (USA) (NYSE:EGO). AEM is currently 2.3% higher at $23.24, cutting its year-to-date deficit to roughly 7%. Despite these longer-term struggles, there's plenty of optimism surrounding the shares. Ten analysts rate AEM a "buy" or better, while just two have doled out "hold" opinions -- with not a single "sell" to be found.

Along similar lines, AEM's Schaeffer's put/call open interest ratio (SOIR) checks in at 0.48 -- with call open interest more than doubling put open interest among options expiring in the next three months. Significantly, this SOIR is lower than almost three-quarters of comparable readings taken in the previous year, indicating a pronounced call-bias among short-term speculators.

Meanwhile, EGO has rallied 2.3% to trade at $3.30, but sports a steep year-to-date loss of 45.7%. In fact, the shares are just a dime above their six-year low of $3.20, skimmed yesterday.

Option traders have been extremely bullish toward EGO's in recent sessions, per data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). During the last two weeks, speculators have bought to open more than 3,500 calls versus just three puts.

It should be noted, though, that both Agnico Eagle Mines Ltd (NYSE:AEM) and Eldorado Gold Corp (NYSE:EGO) were both deep in oversold territory heading into today's session, meaning a near-term bounce may have been in the cards. Specifically, AEM sported a 14-day Relative Strength Index (RSI) of 20, while EGO's RSI was docked at 24.

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