MLR - A Ride in the Time Machine to the 1980's - American Barrick (ABX) and its Pocket Pivot Buy Points in 1987

Published : September 25 2010 at 17:48 ET

With the gold stocks doing so well lately, we recall those heady days of the late 1980's leading up to Black Monday in October 1987 when gold stocks were finishing up their big price runs. Stocks like Newmont Mining Corp. (NEM) and American Barrick (ABX), an upstart 1983 IPO on the Toronto Stock Exchange that listed on the NYSE in 1985, had huge price runs in the 1986 to 1987 time frame. As a recent IPO, ABX had the most notable run during that time. The weekly chart below from that period shows the price move that ABX had, and gives you some food for thought with respect to the potential of any possible move in gold stocks in 2010.

Not a bad move for ABX there in 1986-1987, but let's take a close look at that cup-with-handle base it built from August 1985 to April 1986 on a daily chart from that period, below. It's probably no surprise, that just as we might have surmised on the weekly chart, above, in our annotations, ABX did in fact flash a number of pocket pivot moves in that base, proving that the pocket pivot concept is quite valid, or at least it was back then before ABX launched out of this cup-with-handle base and went off on a seven-fold price move. In the daily chart below we are using a red 10-day moving average and a green 50-day moving average to illustrate where the pocket pivots are. There are probably a few more than we've identified in this base, so see if you can find them!

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