Today’s Big Stock: AuRico Gold (NYSE: AUQ)

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AuRico Gold is a mining company, which also engages in the exploration for, and development of, gold and silver deposits in Mexico. Through its subsidiaries, Aurico owns and operates the Ocampo gold-silver mine in Chihuahua State, Mexico, and the El Cubo gold-silver mine in Guanajuato State, Mexico, both of which are producing gold and silver. Through its subsidiaries, Aurico also owns the Guadalupe y Calvo gold-silver exploration project in Chihuahua State, Mexico, and leases the Las Torres gold-silver mine in Guanajuato State, Mexico, which is also producing gold and silver.

Before discussing potential trading opportunities, please take a look at the 1-year chart of AUQ (Aurico Gold, Inc.) below with my added notations:

First, AUQ was holding a very important level of support in the area of $9 (navy) from April until December. In December, AUQ broke below that $9 support level and fell lower as one would expect.  After bottoming close to $7, AUQ rallied back up to resist that $9 (red) level January. Finally, AUQ broke back above $9 towards the end of January.

The Tale of the Tape: AUQ has had a very important level at $9 since April. If the stock were to approach that level again, a trader could enter a long position with a stop under that level. If AUQ were to break that support, a short position could be made with a stop above the $9 level.

Before making any trading decision, decide which side of the trade you believe gives you the highest probability of success. Do you prefer the short side of the market, long side, or do you want to be in the market at all? If you haven’t thought about it, review the overall indices themselves. For example, take a look at the S&P 500. Is it trending higher or lower? Has it recently broken through a key resistance or support level? Making these decisions ahead of time will help you decide which side of the trade you believe gives you the best opportunities.

No matter what your strategy or when you decide to enter, always remember to use protective stops and you’ll be around for the next trade.  Capital preservation is always key!

Good luck!
Christian Tharp, CMT