The Trendrating Momentum Model is designed to capture medium- to long-term trends lasting a few months to a few years. The model filters out noise using 357 indicators based on price, arriving at eight that work together. A self-adapting algorithm adjusts the time duration of the indicators on the basis of short-term volatility. We provide a rating scale (A,B,C and D) based on the strength of the indicators where “A” signifies a strong bull trend and “D” an established bear trend. A security with six positive indicators receives a “B” rating, indicating the beginning of a bull trend. When all eight indicators are positive, the security is rated “A,” signifying an established bull trend.
As of Sept. 30, the Trendrating model was generating 76% bearish ratings (C & D) on the 37 gold-related stocks currently rated. Since April 1, 2015 almost half of the gold stocks rated were downgraded to a “D.” Of those 18 stocks, all have shown negative price performance since being downgraded with an average loss of 28% (see “Golden karats”).
When we dug for rare nuggets of “A” rated gold securities, we uncovered three Canadian stocks, which demonstrate a strong statistical probability of a continued upward trend (second table in “Golden karats”): Alacer Gold Corp. (ASR), Torex Gold Resources (TXG) and Detour Gold Corp. (DGC). Based on the average characteristics of trend duration/strength that our model has calculated on 50,000 “A” rated stocks during the past 10 years, Alacer possesses the highest Upside Potential Indicator (UPI).