Zak Mir on Mid Cap Miners: Kazakhmys, African Barrick Gold and Evraz

There is little in life (for a chartist) that provides much more excitement than looking at second line mining stocks. To say that there is never a dull moment for this asset class would be an understatement of mightily English proportions.

The right analogy for traders / investors is probably to suggest that the likes of Kazakhmys (KAZ), African Barrick Gold (ABG) and Evraz (EVR) represent the chance to take a financial bungee jump. But what has been interesting in the recent past for all these plays is that the relationship between the respective share prices, commodities prices, and geopolitics has arguably been even more of a moveable feast than it normally is.

Kazakhmys

On the charting front the above can be seen on the daily chart of Kazakhmys (KAZ) where the Cup & Handle formation from February delivered one of the biggest overnight jumps in the share price of any FTSE 350 stock this year, with or without takeover speculation. While the situation cooled over the course of March and April, the recovery of the 200 day moving average – currently at £2.45 – along with extended support at and above this feature gives the Kazakhmys technical position a significant positive glow.

This impression is added to by the way that so far this week we have seen a Bull flag breakout through the initial June resistance at £2.87. We can therefore conclude that at least while there is no end of day close back below this level the target here could be as high as the top of a November rising trend channel at £3.40 over the next 2 to 4 weeks.

African Barrick Gold

While it may be the case that the progress for shares of African Barrick Gold over the past year will have delighted many of its fans, it is evident on the daily chart that the bull run/recovery has been a three steps up/two steps down affair. The current position underlines this impression with the consolidation between the 200 day moving average at 209p and the 50 day moving average at 235p.

But at least the upside of this is that we have a likely positive consolidation ahead of a break of the 50 day line, and a new and significant leg to the upside. Such a move would be within an overall rising trend channel from this time last year, with the implied target as high as £3.40. While the suggestion is to wait for a break of the 50 day moving average it may be that aggressive traders are happy to buy on dips towards the 200 day line or alternatively use a break of RSI 50 versus 49 at the moment, as their momentum buy trigger.

Evraz

Finally, as if to prove that not everything in the metals space at the moment is as glittering, we take a look at steel play Evraz. Here the extended failure for the stock to sustain the 200 day moving average at 100p last month, combined with the latest loss of the 50 day moving average at 95p, gives the impression that a new leg to the downside could be on its way.

While to assume that such weakness could take the shares back towards March support under 60p looks to be overly negative, a retest of April support towards 75p could be on the cards even if the stock can rehabilitate itself after that. In fact, the easiest way forward here is probably to wait on a weekly close back above the 200 day moving average before even thinking of this situation as a credible recovery play.

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