Technical Analysis: Star miners looking vulnerable

9th Jul 2009 16:57

Since the end of 2008 the star performers currently in the FTSE100 are Randgold Resources and Fresnillo. Randgold has gone from lows of 1,390p in October last year, to hit highs of 4,636p at the end of May. Fresnillo has enjoyed similar gains, from lows of 93p in November last year it peaked at the beginning of June at 741p. Not surprisingly they have both slipped back by some margin especially in view of the fact that both gold and silver have also slipped back from their highs. Be that as it may the PHLX Gold/Silver Index is now approaching support around 125.60 and a break of this level could herald a further sell-off in this precious metals stocks. The Philadelphia Gold and Silver Index is an index of eleven precious metal mining companies that is traded on the Philadelphia Stock Exchange. Randgold Resources is one of the constituents of this index, and a break of this support in the PHLX would no doubt prompt further losses in the stock price.Randgold is also approaching possible trend line support around 3,400p. If this support level is broken, there is another key support around the 50% Fibonacci retracement level of the move from the October lows to the June highs, at 3,000p. The 200 day moving average coincidentally also comes in just above this level. A break of support levels in the PHLX Index will no doubt take Randgold lower but it will also drag Fresnillo lower along with it. The key 50% retracement support on Fresnillo lies around the 417p area, just below this week's low price of 438p. Gold has support around $900/$905 and below that around $880. It will be an interesting summer for the yellow metal and the mining companies that rely on it as they approach key support levels.For periodic TA updates follow me on TwitterAlso read my Investors Guide to Technical Analysis and Level 2