Stillwater: A platinum/palladium play
Cliff DrokeThe market for gold shares is still out of synch. Some golds are trying to find bottom and turn around. Others are toppy and need correcting. Trying to find a gold stock with the dominant short-term moving averages (30/60/90-day MAs) still in their proper alignment is like trying to find a needle in a haystack. So where is a trader to look?
Among the precious metals, there are two stand outs at this time: platinum and palladium. The former has been on a white hot rip-and-tear this year and is challenging its 1980 high. The other, palladium, is quite the opposite and is near multi-year lows. It is this metal in particular that holds out the most upside potential in coming months since palladium is clearly a turnaround play. The task at hand is to find companies with actively traded stocks involved with some facet of palladium production. Better yet, how about companies that are involved in both platinum and palladium? As it turns out, there is at least one such mining concern that fits this description -- Stillwater Mining.
Stillwater (SWC:NYSE) is striking to me because it's one of the few metals stocks still above its rising 30/60/90-day moving averages; moreover, all three averages are in their proper alignment. This shows good upside momentum and overall technical strength.
In the weekly chart, this technical strength and upside momentum is still evident even though Stillwater has risen for almost one year with no major correction yet. In the long-term monthly chart SWC is shown tracing out a reverse head-and-shoulders pattern. This shows that not only is SWC a momentum play but can also be considered a long-term turnaround candidate from the perspective of the monthly chart, which shows greater upside potential in the months and years ahead.
March 26, 2004
Clif Droke is the editor of the Durban Deep/XAU Report, a daily forecast and analysis of DROOY, GLG, KGC, XAU, HUI, and GOX written especially for day traders. He is also the author of numerous books on finance and investing, including the top-selling "Moving Averages Simplified." Visit his web site for free samples of his analysis at www.clifdroke.com
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