A dip in technicals
Precious metals saw a marginal rise in prices on Thursday, September 28, and this led a few mining stocks to move higher, but some still dropped due to the negative sentiment over the past week.
Call implied volatility is a measurement tool for fluctuations in the price of a stock with respect to the changes in the price of its call option. On September 28, 2017, Alamos, Gold Fields, Pan American, and Barrick Gold had implied volatilities of 46.9%, 40.4%, 34%, and 29.1%, respectively. We must keep in mind that the volatilities of individual mining stocks are usually greater than the volatilities of precious metals.
RSI (relative strength index) measures whether a stock has been overbought or oversold. If a stock’s RSI is above 70, it could be overbought, and its price could fall. If a stock’s RSI is below 30, it could be oversold and might rise.
The RSI levels of Alamos, Gold Fields, Pan American, and Barrick Gold are now 22.6, 40.9, 27.5, and 18.7, respectively. The recent declines in these stock prices have led to a considerable fall in these RSIs.
In addition to reading the performances of mining stocks, it’s also crucial to understand mining funds like the VanEck Vectors Junior Gold Miners (GDXJ) and the Sprott Gold Miners (SGDM), which closely follow the price changes in metals and have seen year-to-date gains of 7.4% and 10.6%, respectively.