ABX has struggled to break above the $13.50 level
Shares of Barrick Gold Corp (NYSE:ABX) are 2.5% higher at $13.02 in afternoon trading, the stock continuing to climb its way out of a recent pullback below $12.50. The shares of ABX have struggled to maintain positive momentum this calendar year, but if history is any indicator, now may be the time to bet on the mining stock's next leg higher.
Longer-term, ABX has been stymied by the $13.50 level of resistance, but of late has found support at the 40-day moving average. And while the security has shed 10% year-to-date, it has made significant improvement from its mid-September lows.
According to Schaeffer's Senior Quantitative Analyst Rocky White, ABX is now within one standard deviation of the 40-day trendline, after a lengthy stretch above it. There have been six similar signals of this kind in the past three years, after which Barrick Gold stock went on to average a one-month gain of 5.12%, with a 67% positive return rate.
Looking toward options, data from the the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) shows ABX with a 10-day put/call volume ratio of 1.56, which ranks in the highest percentile of its annual range. This indicates that during the past two weeks of trading, puts have been purchased over calls at a much faster-than-usual clip.
Lastly, the mining concern has been a strong target for premium buyers over the past year, based on its Schaeffer's Volatility Scorecard (SVS) of 89 out of 100. This lofty rating shows the stock has had a tendency to make bigger-than-expected moves during the past 12 months, relative to the volatility premiums priced into its options.