Tonight’s chart is a good example of how I proceed when I add a stock to my public list. To begin with I look for strong thrusting moves. Most of the time the initial move creates a gap which is accompanied by above average volume. The important thing to keep in mind here is the underlying psychology. Over the years I found that this chart pattern is somewhat counter-intuitive and difficult to grasp for most people. They wrongly assume that most of the move is over and there won’t be enough power to propel the stock higher.
Granted, there are lots of factors to consider. A good sign is a long basing pattern or if news come out that has the potential to be a game changer. Then chances are the entire move will last way longer and prices will go much higher than you initially expect. That’s what I like to call a ‘Shift In Sentiment’. If you follow my public list on a regular basis you probably know exactly what I am talking about.
BSK.V – Blue Sky Uranium is an exploration mining company doing business in Argentina. With this stock the game changing or company making aspect is obviously closely tied to Ross Beaty’s Lumina Capital buying shares in the recent private placement. Not much more due diligence I need to do as following the smart money is usually enough. The thing I need to assess though is price risk. Ross Beaty obviously paid much less and if the stock gets cut in half he will still be ahead. That being said these guys are not interested in small returns. VEN.TO – Ventana Gold is a good example for the kind of returns they look for. Right now Beaty’s focus is clearly on South America. His new brain child with great potential is MXY.V – Magma Energy which is part of my Geothermal Sector Overview Chart. Definitely a sector to keep an eye on. Like BSK.V, MXY.TO does business in South America.
Up-to-date BSK.V – Blue Sky Uranium Chart on my public list.
No matter how promising a chart or a story may be, not all stocks make it. That’s why I believe technical analysis is the best tool to protect yourself. I use it in order to help me cutting losses and in order to find timely entries into promising stocks. I waited patiently and tonight I drew in the first set of trend lines into the BSK.V chart. Nothing is written in stone. I am simply trying to get a grip on potential patterns that might develop. Over time I redraw the trend lines and adapt my thinking accordingly. It all depends on what the markets are telling me.
Stay calm and focused.
Buenas noches!
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