Looking to mine a little gold? Check out this trade idea on Kirkland (KL) (March 26, 2019)
KL
Today I want to look at Kirkland Lake Gold ( NYSE: KL), here’s why: This stock has just been on a tear for the last several months, a really, really nice move. But over the past month or so the stock has been trickling down, lower lows, lower highs. If you look at the 200-day moving average, this stock could fall another 20-25 percent and there would still be nothing wrong with the long-term uptrend in the stock as measured by the 200-day moving average. The 50 is quite a bit tighter but the 50-day moving average is also the one that has really been more operative.
Gold has generally been doing really well these days. And Kirkland ( NYSE: KL), I think, is at a point where you can really start looking at buying this. Now, here’s the issue, this is just kind like of get out the scalpel and dig into this chart a little bit. These are like 4 days in a row, down days, average volume over the last 2, prior to that kind of lower volume. The selling picked up; a lot of selling pressure here and then you get kind of a weak bounce.
When you see this kind of move down, a real steep move down, it is unreasonable to expect a big takeoff; it’s just not the way stocks trade. Typically on this kind of thing, you are going to get some sideways trading here. What you want to see is gradually the Bollinger Bands tighten up. You want to see the stock get narrow and the trading range gets really, really small. So now the stock has done what you would just kind of expect, a few days rebound but nothing even remotely resembling this last high. Now it is up a few days and then down big yesterday on volume, but the 50-day moving average held and now the stock is up slightly today.
Here’s how I would look at this stock: I would not buy this right now. I would use this level here, this last tag of the 50-day moving average at about $32.00, whatever it was. Let’s not say whatever it was, let’s say what it is, 32.04, how’s that? If the stock pulls back to $32.00 or so and then holds firm that would actually be an okay time to buy the stock. You are kind of cheating, you are getting in a little bit early but even then you can’t expect the stock just to rally higher.
What I am talking about here is how you can kind of start gradually building a position slowly ONLY if the stock is confirming your theory that this stock is going to hold at the 50 and ultimately it is going to start breaking out here. So you are looking at these pullbacks, you don’t just pile in because it is unreasonable to expect that kind of move. It is reasonable to expect this, just like I would say it would be reasonable to expect, over the next couple of days, a move up to 35.00 or so. I think, if you are expecting this kind of thing, you are wishing and that’s okay, wish upon a star, but it doesn’t mean that this is going to happen.
I think you can expect it to be in this kind of range. You would keep a stop a little bit below 32.00 and then you are riding this thing as it gradually builds a base from which it can ultimately spring higher. This is a stock you can kind of accumulate a little bit but don’t take a big position because, again, this could fall clear back to $25.00 and you don’t want to be there if that happens. So if you are buying this here on this little pullback make sure you have a risk control plan in place and that is, holding above this last tag of the 50-day moving average.
Free Chart