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Hecla Mining

06/03/04 11:34:19 AM
by Koos van der Merwe

On May 24th, 2004, I wrote an article about Newmont Mining that called for a possible increase in the gold price over the coming months. Hecla Mining is a company starting to show interesting patterns that could be profitable.

Security:   HL
Position:   Accumulate

The chart, as I have drawn it, looks busy, but I have tried to show a number of strategies that can be used to determine price movement.

Hecla Mining.
Graphic provided by: AdvancedGET.
1. The first strategy, and my favorite long-term strategy, is the JM internal band (light blue). The moving averages are 15 period, with a 2% spread (2% and -2%). The JM band shows that Hecla is in a buy mode.

2. The second pattern is the cup with handle pattern. A break above 6.64 would be a strong buy signal, and suggests a target of $8.28. (6.64 - 5.00 = 1.64 + 6.64 = 8.28).

3. Then of course there is a possible head and shoulder pattern, with the right shoulder possibly developing as gold prices consolidate before attacking and breaking above the $400 level. The target will be similar to that of the cup with handle pattern. The fact that a right shoulder could be developing is suggested by the stochastic (8:10:3) indicator which is at overbought levels, and could start turning down as the price falls.

4. Finally, I have shown the Lower Low (LL) strategy on the chart. This is where a low is formed followed by a lower low. The price then retraces and breaks above the 50% level of the retracement between the low and the high of the upward movement between the two lows. This is a short-term strategy, and would have given a trader a $0.42 profit if sold on June 1st on a rising stop-loss. Notice that the strategy gave a buy signal after the buy signal given by the JM internal band strategy. With the LL strategy, you would have sold, but with the JM strategy you may still be holding.

Whichever strategy you decide to use, Hecla Mining looks as though it is a share that should be watched. I suspect that it could pull back for the short-term, giving an opportunity to accumulate the share at lower prices before rising to meet its suggested target. Medium-term holders would have bought using the JM strategy and would still be holding. On any new buy however, indicators must be positive, and confirm a buy signal.

Koos van der Merwe

Has been a technical analyst since 1969, and has worked as a futures and options trader with First Financial Futures in Johannesburg, South Africa.

Address: 3256 West 24th Ave
Vancouver, BC
Phone # for sales: 6042634214
E-mail address:

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Date: 06/22/04Rank: 5Comment: 

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