With much turmoil in the economic and geopolitical space, it’s no surprise that the precious metals sector has been resurgent in recent years. One of the beneficiaries of this demand spike has Agnico-Eagle Mines (NYSE:AEM), a Canadian-based gold producer with operations in Finland, Australia, Mexico and its home nation. In the past 52 weeks, AEM stock has gained an impressive 78.54%.
Still, the market doesn’t move upward in a perfectly linear fashion, presenting potential opportunities for those willing to buy the occasional dips. On Friday, AEM stock lost 5.63% of equity value, bringing its five-day performance to a loss of 4.3%. Further, in the trailing month, AEM is down almost 2%, a sharp reversal from prior bullishness. Evidence indicates, though, that this could be a temporary malaise.
Notably, AEM stock represented one of the highlights of Barchart’s unusual stock options volume screener. Heading into last weekend, total options volume for AEM reached 14,428 contracts, representing a 66.82% lift over the trailing one-month average. Call volume hit 10,233 contracts, while put volume was 4,195 contracts, yielding a put/call ratio of 0.41.
On paper, this low ratio seems bullish and this reading can apparently be taken at face value, if options flow has anything to say about it. This metric focuses exclusively on big block transactions, likely placed by institutional investors. Notably, net trade sentiment stood at $143,500 above parity, favoring the bulls.
Further, the biggest transaction by dollar volume was for bought (debit) $90 calls expiring Nov. 21, 2025. Since debit-based transactions must meet the profitability threshold to be successful, the transaction can be viewed from a bullish lens.
Even more encouraging, a quantitative signal suggests that AEM stock could be due for upside soon. Now, it’s important to get definitions straight as the term “quant” gets thrown around. Quantitative analysis refers to the application of mathematical, statistical or computational techniques to measure, model and forecast outcomes. It is not a quantified version of technical analysis.
One of the key features of a genuine quant analysis is the emphasis on objectivity, testability and probabilistic interpretation. This is the main reason why I focus on market breadth or the sequences of accumulative and distributive sessions. Not only is market breadth a representation of demand (which is effectively binary in nature), it’s also a first-order principle, meaning that it cannot be mathematically reduced.
Essentially, market breadth cannot be deconstructed into a simpler form, which narrows the scope of interpretation. While this process requires a paradigm shift from the usual mechanisms of financial analysis, I would argue that quantitative analyses are far more useful.
In the past two months, the price action of AEM stock can be converted as a 4-6-D sequence: four up weeks, six down weeks, with a negative trajectory across the 10-week period. While this methodology compresses AEM’s magnitude dynamism, the benefit is that it allows for segregating demand profiles into distinct categories, thereby opening the door to conditional probabilities.
For example, with the framework above, we can calculate that when the 4-6-D sequence flashes, there’s a 59.62% chance that the price action in the following week (which corresponds to the business week beginning June 30) will result in upside, with a median return of 3.42%.
Should the bulls maintain control of the market for a second week, AEM stock may enjoy an additional 2.29% of performance. Thus, within short order, AEM could reach $122.84, perhaps up to $123.
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