Yamana Gold, Inc. (AUY) is still reeling from the beating it took from the Street and the financial press for its last Quarter/last year’s performance. AUY missed every meaningful benchmark (revenues, cost per ton, production volumes, etc…) and those misses are compounded by the stagnant gold prices recently. To say that AUY “missed” those benchmarks is not to say that the company is in any trouble. It is still profitable and has a strong balance sheet, but the market is looking for AUY to continue to be a low-cost producer and for growth.
BUT (and, that is a BIG but), AUY might be a great chart play. It is showing that it could bounce off of near-term support and deliver a short-term gain to savvy traders.
Here is the chart with my annotations:
“Is the bad news burned into the stock price” is the simple question that traders should ask themselves. I think that it might be. Historically, AUY has had great elasticity and bounced off of oversold levels and returned some nice gains. If you were to do a year chart on AUY, you would see what I am talking about.
AUY could be a nice short-term trade. Any breaks below support and the stock should be avoided until it can build a new base…or it can issue some better news.
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