📁 Analysis

Analyzing price charts of different stocks should start from a basic level. Before adding indicators and adjusting parameters it will be most instructive to add several price charts on top of one another. Take a stock, the primary commodity, and a larger producer of the same commodity. If you zoom out enough some patterns will emerge.

Commentary in the junior mining space devotes time to recent results, prices of metals, and the general market outlook. It will be useful to know what is being referred to and how it all relates.

Metals are divided into Base and Precious. Base metals are used for industrial applications and closely follow the health of the global economy. Precious metals respond to uncertainty in financial markets and perform best in periods of economic crisis. Individual stocks can follow the trajectory of metals closely over a long period of time and over shorter intervals they frequently diverge.

Where a stock trades matters. Not all exchanges move in tandem and can be biased toward the dominant industry, the health of the national economy and many other factors. Analysis must consider some of these to get a full picture of trends. Consumer sentiment, Bonds, Oil, Sugar, Real Estate ETFs, are some good starting points.

A typical chart will show price movements, volume, and where the price is relative to a peak and bottom over a year. These figures help with some limited sorting: a stock that is overly diluted will take more market activity to move, and a stock with low volume will be hard to trade. Recent financings, insider trading, shorting activity, and discussion of the company from various forums online provide additional insight.

Indicators are a major part of chart analysis. Some are favoured over others but much of their utility depends on fine tuning to individual circumstances.

Popular for junior mining analysis are Bollinger Bands, MACD Histogram, Stochastic Oscillators, and the RSI. Each of these offers useful information and can be used effectively in trading.

Taken together there is a useful toolbox to appraise mining stocks and narrow down a list for investment. There are a number of analysts exclusively devoted to the junior mining sector who produce quality content and I have done my best to give an exhaustive list in the following post.