Gold nuggets

November 24, 2015 12:00 PM

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).

About the Author

Rocco Pellegrinelli, Trendrating founder & CEO, began his career as a portfolio manager and investment banker and has since been a proven fintech entrepreneur for the past 20 years. He created Brainpower in 1996 and established it as one of the top portfolio management systems globally. After going public on the Frankfurt Stock Exchange in 2000, Brainpower was acquired by Bloomberg in 2006. @trendrating