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This miner’s stock requires an investor’s full attention
schizas’ mailbag
Lou Schizas
Special to The Globe and Mail

This article was published more than 11 years ago. Some information may no longer be current.

Hey Lou,

Can you comment on McEwen Mining? I bought some at $1.40

Thanks,

Jules

Hey Jules,

Thanks for the assignment.

This will be the second time that I investigate the potential of McEwen Mining Inc. (MUX) for you. The last time was on Jan. 7, 2013, when the shares were trading for $3.71. The research indicated that the stock was meeting resistance along the 50-day moving average and that there were no strong signals to provide better visibility as to direction. It was advised that MUX was best suited to investors who were comfortable trading the stock for profits. Over the last two years the volatility in the price of gold hasn't been of much help in sustaining appreciation of shares in the precious metals mining sector.

An examination of the charts will help identify how to proceed with your investment in MUX.

Click on image to enlarge

The three-year chart outlines a stock that has offered multiple opportunities to trade since the last time an analysis was conducted. Unfortunately the selling that has gripped the shares since August of 2014 has seen them breach support near $2.00 and retest support at $1.35. The MACD and the RSI generated sell signals in July ahead of the steep decline in September providing investors with the opportunity to review their position and make a decision on how best to manage their holdings. Although severe the two month retreat did provide multiple opportunities to get off the ride and preserve capital.

Click on image to enlarge

The six-month chart highlights the retreat that started in August as the stock broke below the 50-day moving average near $3.00. By early September MUX breached the 200-day moving average and a death cross surfaced in October alerting investors to expect increased selling pressure. The stock caught a bounce off of $1.35 in November and ran to resistance along the 50-day moving average near $$1.90 where it began another leg down.

The MACD and the RSI are not indicating that investors can expect a trend reversal at this moment.

MUX is a trading stock and as such demands a lot of attention to facilitate the capturing of profits and the mitigation of losses.

Make it a profitable day and happy capitalism!

Have your own question for Lou? Send it in to lou@happycapitalism.com.