West Timmins Mining WTM (TSX) – Gap Down Probably A 'Hole In The Wall'

by Olivier on August 25, 2009

Today I sold WTM.TO – West Timmins Mining my biggest position and my best performing stock for the year. The market reacted very badly to the news they announced. Actually I sold without even checking the news. As I’ve written quite often in the past: If a chart tells you to get out – get out and ask questions later. That’s exactly what I did. I did my best to stick with this winner as long as possible. The position almost tripled since I entered. Today the chart told me to get out. I listened. No hard feelings. I can always reenter at some later point in time.

As I wrote in today’s newsletter I sent out this gap down is what Alan Farley the author of the book : ‘The Master Swing Trader’ calls a ‘hole in the wall‘.
Here is his definition:

Hole in the Wall:

Sharp, downward gap following the conclusion of a rally. The Hole ends the preceding trend and may trigger profitable trading conditions:

  • Breakaway gap signaling the start of a dynamic trend in the opposite direction.
  • Counter trend move flagging sideways swing trade opportunities.

This price shock occurs in all time frames and can be used for both day trading and position trading. In either case, seek short sales and brief long side swing entries until the Gap is closed.

A few comments and a short review of my portfolio positions:

  • ANI.V – Animas Resources: Chart could move to the upside anytime. I’ll write a more in-depth posting in the near future.
  • AVL.TO – Avalon Rare Metals: Excellent technical action today. Looks like a quick move to 3$ is about to unfold. I bought a bit more today.
  • BOW.V – Bowmore Exploration: The stock is now consolidating around the 1$ level. I added a few today. Extremely tight share structure. If a fund discovers this one or if a high profile newsletter recommends it there simply will be no shares to buy. Very bullish situation.
  • BXI.V – Bio Extraction: You guessed it. I completely missed buying back a few shares on the pullback. Now I am just waiting and watching. Once immediate pattern pressure builds again I will try to buy more.
  • CWSI – China Wind Systems: So far the stock hasn’t moved. The story is compelling. Chinese stocks have corrected and seem to be moving up again. This one could move anytime. Let’s see what happens.
  • RES.V – Rare Element Resources: Stock didn’t do much today. But as it has proven itself and outperformed AVL.TO. I am not saying it will stay that way but so far nothing tells me to get out. So I stick with it as long as I possibly can.
  • VEN.TO – Ventana Gold: Excellent consolidation. Everybody is waiting for the next results. As I’ve outlined in the past odds are high they will deliver. Let’s see what happens.

Have great evening!

Previous post:

Next post: