In trading on Wednesday, shares of Primero Mining Corp (NYSE:PPP) entered into overbought territory, changing hands as high as $3.48 per share. We define overbought territory using the Relative Strength Index, or RSI, which is a technical analysis indicator used to measure momentum on a scale of zero to 100. A stock is considered to be overbought if the RSI reading rises above 70.
In the case of Primero Mining Corp, the RSI reading has hit 70.7 — by comparison, the universe of metals and mining stocks covered by Metals Channel currently has an average RSI of 54.7, the RSI of Spot Gold is at 59.3, and the RSI of Spot Silver is presently 55.4.
A bearish investor could look at PPP's 70.7 reading as a sign that the recent heavy buying is in the process of exhausting itself, and shares are due for a pullback.
Looking at a chart of one year performance (below), PPP's low point in its 52 week range is $2.22 per share, with $4.62 as the 52 week high point — that compares with a last trade of $3.48. Primero Mining Corp shares are currently trading up about 1.5% on the day.
PPP operates in the Precious Metals sector, among companies like North American Palladium Ltd. (AMEX:PAL) which is down about 0.1% today, and Great Basin Gold Ltd (GBG) trading lower by about 4.2%. Below is a three month price history chart comparing the stock performance of PPP, versus PAL and GBG.
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