The mining penny stock LBSR today moved into a consolidation stance and looks like it will finish with a doji indecision candlestick.  There was gain a semi large topping tail on the daily candlestick that somewhat mirrors the topping tail of yesterday as well.

Volume also dried up markedly today and is suggesting in the short term that momentum is starting to shift.

I am going to make a short term forecast for early next week but keep in mind that these short term forecasts can be very variable as far as specific timing.  I think we could go into a one or two day retracement early next week perhaps down to the .042 level as the low point and then some type of intra day reversal back topside again.

The reversal may be enough to get LBSR back up to .07 again which may then cause some new sellers to come in again.  If so, then it could cause a drift down back to .045 again for another retest and then an eventual new trend build higher.

The above forecast is very speculative.  But overall today I have to say that the action in LBSR is still very encouraging.  We have recently completed 3 white soldiers candlestick pattern which is a very strong indication of who is in control.  The fact that we sold off today should not be seen as extremely unusual.  In fact, given the fact that this is a mining penny stock it should be seen as a normal garden variety pull back today.

I am writing this update as of 2:48 PM eastern time on August 13, 2010 and so I cannot be sure exactly how we will close yet on LBSR.  If by some lucky chance LBSR closes near the top of the range today then it may hint that today’s doji candlestick was simply the half way point resting point.  If that is the case then we could trend higher very strongly early next week.  Still, the volume is lightening up today and so my bias is that we consolidate in the scenario I already outlined earlier in this post.

In our opinion, strength has to be the presumption with LBSR.  Any pullbacks should probably be seen as opportunities for accumulation, again in our opinion only.

I really do not have anything negative to say about LBSR as this point.  If the earlier scenario plays out then we should see .043 as the low sometime next week and then an upwards reaction from that level.  I am seeing signs that this penny stock is being accumulated consistently.

One thing I can almost guarantee you is the LBSR will once again move into another sideways type consolidation at a higher level.  This next consolidation will be the key for next price evolution.

I should say that it is also a definite positive for the mining sector in general to have the very seasonally strong month of September coming up.  That is about as good a scenario as one could ask for in terms of timing.  In addition the seasonally strong penny stock trading season also runs from September  to January time frame.  So in our view there should be plenty of room for more upside surprises in LBSR.

Lastly, you probably know by now that I rarely if ever discuss fundamentals here at penny stocks penny stocks dot com.  But I should say though that the fact that LBSR is working a deal with a more established mining company Northern Dynasty Minerals Ltd is an extremely positive sign from a fundamental standpoint.  Northern Dynasty Minerals Ltd current market cap is about 632 million dollars.  I do not ever recall since I began trading penny stocks, when a penny stock actually had a real tangible working relationship with a major mining company.  This fundamental fact makes this a unique situation.

There have been other penny stocks in the past that have had a lot of speculation of being associated with a much larger mining company, but that was only pipe dreams and speculation.   In this case it appears to be real and meaty enough that you can sink your teeth into it.

So yes, I focus on technical analysis of penny stocks here, but that does not mean that one should give some consideration to outside fundamental developments that may be ‘game changers’.  Most penny stocks don’t get good breaks like the one LBSR has right now.  Their potential massive resources in the ground, a rising gold and uranium price in September 2010, make for a possible perfect storm for this penny mining stock…

More developments to be posted as warranted…

The penny stock Stratton Holdings Inc may be once again coming near a reversal point.  I mentioned this penny stock before as one that seems to be fairly liquid and also constructive in that it seems to want to trade in a slow upward slanting trading range.

It has been a fascinating penny stock in that it has shown very clearly with reversal candlestick hammers its intention to trade back to the top of the wide swing trading range.

STHG appears to be forming a small reversal hammer again today and is trading in a downward slanting flag formation.  Volume is also contracting down within this formation.  I suspect that it may make a shot at the topside of this falling wedge and get another 1 to 3 day move topside before succumbing to overhead resistance again.

This penny stock just fascinates me for the simple reason that it trades with robust volume and has nice big ranges.  It is like a blue chip stock with big trading ranges and interesting valleys along the way.

Next week STHG may make another run to break overhead resistance.

This is one to keep an eye on because of its large penny stock swing trading range and seemingly clear reversal signals.

Still, there is always the risk that this penny stock will break down from the up trend line support in force since 7/7/2010.  STHG is sitting right now along this support line and it does need to get a topside reaction soon otherwise it will risk spending too much time near the support line of this swing trading range.

KAT Exploration, Inc which we first starting talking about here at penny stocks penny stocks dot com way back on March 9th, 2010 when it was at about .05 cents has since had a tremendous run up to an intraday high of .252 cents or a 404% move.

KAT Exploration, Inc is probably one of the most amazing penny mining stock runs we have ever seen.  It is bigger than the run in Sarissa Resources or Goldspring Inc.

The question now is whether or not KATX  can get another run going from its recent long consolidation which has essentially been sideways.

The stock appears to be trading in another massive falling wedge formation that looks somewhat similar to the two previous falling wedges that got KATX to where it is trading at right now.

I cannot predict whether or not KATX has enough fuel to blast higher out of this wedge, but I would say that it is imperative that KATX hold .12 support otherwise the whole mini bull market run may be over.  It simply must hold .12 support, no ifs and or buts.  That is simply how this business works.  You allow penny stocks some breathing room, but if they violate key levels then in our opinion one must run for the exits fast.

At this time I cannot say whether or not a gold price super spike higher in September time frame will help KATX. It may.  The seasonal month of September is an extremely strong month for mining stocks and the gold price.  It will be very interesting to see if KATX can break above this falling wedge formation and get a strong bid again.

I would be completely remiss if I did not mention the June 14th, 2010 price down candlestick that was on almost 20 million shares.  This huge down spike in both price weakness and volume is a potential cause for concern and should not be ignored in our opinion.  Relative to the price rise up to .25 cents, the down spike on 6/14 was on much greater volume and could be a warning that the demand supply relationship of this penny mining stock has changed.

In our view it makes the .12 area all the much more important as a KEY LEVEL that must hold in the days and weeks ahead.

Think of the gold price as ‘big daddy’ and the penny mining stocks as the little children of ‘big daddy’.  If the big daddy breaks out to a new all time high and powers higher creating a speculative frenzy, then the little children of big daddy a lot of the time get really excited as well.

My point is that the gold price can sometimes be important to adding speculative fuel to the mining penny stock sector.  The same could probably also be said of the uranium price.  If the uranium price were to blast higher to new all time highs it could light a tremendous fire under certain uranium penny mining stocks.

I remember many years ago there were two penny mining stocks that shot dramatically higher during the gold price super spike into 2006.  They were Franklin Mining and Roanoke Mines.  Franklin mining shot higher from .0009 to .15 and Roanoke Mines shot higher from .0001 to .15 cents all within a few months.  The amazing fact about the Roanoke Mines move was that this stock was not even a functioning penny mining stock company and was just trading on the pink sheets lingering around with no real operations.  That my friends is what a speculative frenzy in the gold price can do.

Having said that, I do not mean to say that any penny mining stock cannot get a good run going if the gold price just stays flat, goes sideways or even moves down.  Sometimes specific mining company events take precedent over everything else.

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Liberty Star Uranium & Metals Corp once again traded higher today on increased volume.  The last three days have clearly been a confirmed breakout from the .03 resistance.  Today the stock did show some supply come in during the end of the day and this is evidenced by the medium sized topping tail in today’s price candlestick.

I mentioned yesterday about the ‘three white soldiers’ candlestick pattern and it with today’s bullish candlestick it appears to be a valid pattern.  So what now ?

I think we are getting close to buying climax for the short term.  I am not quite sure if today was it.  We did see the supply come into the stock today near end of day and usually what you will see is an attempt to rally back up to near today’s high which is .069 and then see if the stock has enough energy to power higher.  If it stalls near .069 then we have likely seen the short term top for now and will move into a consolidation pattern that may last several weeks.

The steadily rising volume has supported the recent advance and so clearly the trend is up.  The long term weekly charts also continue to look very good.  Sometimes I have seen penny stocks make a mid range close like we have today and then go higher one more day in a massive blow off power candlestick. It would probably be too speculative for me to predict that right now.

Instead I will just stick with the fact that some supply showed itself into LBSR stock today and the onus on the bulls is to take us higher straight out of the gate tomorrow otherwise we will likely start to consolidate again somewhat similar perhaps to the mid July period.

Here is a list of Penny Stocks that fit the volume spike scan criteria.  They have had a 150% + volume spike above their average daily volume.  I am not cherry picking any of the stocks in this scan and I have not reviewed all of their charts nor given them any penny stocks penny stocks.com rating. 

They are here just for the purpose of ideas and to see what the penny stock market showed us today.

Volume spikes that are out of the ordinary can sometimes be good indications of new trends or changing trends but of course must always be taken within the context of the overall penny stock chart pattern.

There is a candlestick pattern known as three white soldiers which basically shows three strong bullish candlesticks in a row with the open of each candlestick into the previous days candlestick.

We don’t quite fit that pattern yet, but there seem to be some similarities.  The last two candlesticks look very similar in that they are full demand candlestick bars with very small bottoming tails if any and also no topping tails either.  This is about as bullish as the doctor can possibly order.

The icing on the cake for LBSR would be for another candlestick tomorrow that looks similar to the last two days.  It would be about as perfect a breakout in any penny stock I have ever seen.

The strength in LBSR seems to indicate that it will travel a bit higher before peaking and then establish a new base at higher levels.

I should mention that the .03 resistance is now strong support.  I should also mention that it is very common for any stock (does not just have to be penny stocks) to retest the breakout area which in this case is .03. In other words, if LBSR were to break down tomorrow and then get a big sell off going it would be perfectly normal for it to travel down to .03 again as a test of support.

In this case I do not believe we will do that because of the unusual indicated strength of recent days.  Instead I think LBSR will just form a higher base and leave .03 in the dust.

A move back down to .03 would however provide a good chance for accumulation again as long as it holds as support.  But again I do not expect us to go anywhere near .03 in the next days.

Clearly at some point LBSR is going to enter into a new consolidation again.  I really cannot predict at what price this may being from.  It could start from .06 or .07 or even higher.  It is just one of those things we have to let the stock tell us what it wants to do.  The signs will be obvious in the form of an intra day reversal or a double top on the intra day basis.

I think we have maybe another 1 or 2 days to go higher with the outside chance we gap up tomorrow in a one day blow off.  It is all about energy build up and release.  These penny stocks are no different than any other stocks.  They build cause, and then breakout, and then start the cycle all over again.

The long term weekly price chart of Liberty Star Uranium & Metals Corp LBSR looks very constructive and should probably be studied as the blue print for what to look for in terms of a sustainable penny stock trend.

The weekly penny stock chart of LBSR shows that since 10/10/2008 there exists a long basing formation that is not quite flat but close enough.  This long range represents a transfer in ownership from bearish to bullish that takes place over a long time frame.  The flatter the base, the more bullish the new potential bull run.

The base is close to 2 years long and should provide enough energy for a sustained move higher.  In the weeks of May 2009, LBSR attempted to get a rally going but it could not overcome the force of selling pressure and then fell back into trading into the base.

But now during the last 5 weeks LBSR has again attempted to break out through this level and was successful during the last two days on high volume.  This represents a break out from this long trading range and a transfer from an accumulation/ basing phase to a new bull market.

The new bull market advance should be able to advance for at least 6 months given that we have a 2 year base.  Certainly the advance could go on longer than that but of course we will need more data and price candlesticks to see how things develop over time.

Most people do not trade off of the weekly charts but the weekly penny stock charts have the definite ability to provide calm and perspective in the face of wild day to day swings and emotionalism in the trading space.

Perhaps the main point to be made about the LBSR weekly penny stock chart above is that there is a very large tradable void that exists between .03 cents and .85 cents.

A tradable void is basically like a big air pocket of price movement where there is not that much major resistance for a stock to stumble on.  This is exactly what LBSR has between .03 to .85.  Many stocks have long messy trading ranges that go back YEARS and can interfere with a price advance or make it a lot slower.

The fact that LBSR has this large tradable void is very constructive indeed.  While it certainly does not guarantee or indicate that LBSR will zoom to .85 cents, it at least tells us that there will be fewer obstacles to moving higher than most other penny stocks.

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TRANS GLOBAL GRP (Public, PINK:TGGI) has a reasonably good looking penny stock chart.  TGGI is a sub penny stock trading at .0009 right now and has robust volume recently and a nice saucer type bottom formation.

I am not giving this penny stock the highest rating of 1 on the penny stock rating system but it is still worth a mention as a possible mover in the next few days or weeks.

Trans Global Group positions itself as a green penny stock with a few interesting products and also recently acquired Full Spectrum Media which has a catchy type product called ‘sexlets gum’.

So it seems to have at least a little bit of ‘buzz factor’ that penny stocks tend to need sometimes to keep a good trend going.

Anyway, the most important thing is the stock chart.  The chart seems to be saying that TGGI wants to continue in a slow and steady uptrend.  But in order for it to do so it will have to break and close above .001 in the days ahead.

If you look at the chart below you can see that TGGI has traded high off of a small flat base and formed a series of falling flag patterns.  Each time it has managed to break out above them with breakout type volume.

This is what one would want to see again in the days ahead to confirm that another new mini up leg is about to start.  This green penny stock does not tend to get a break out move going for more than 2  to 3 days at most and this is a very important consideration.  Assuming it does get a breakout north from the recent consolidation, it will need to overcome the August 4th and August 5th swing highs which were both on extremely heavy volume.  This is not easy to do.

There is always the risk that TGGI can continue to trade down deeper into this declining wedge flag formation and never get a breakout going.

The two horizontal green dotted lines I have drawn in the chart show that the price of TGGI recently was halted at .0011 resistance and has now consolidated.  This is a very common occurrence when a penny stock hits overhead resistance.  The KEY to watch for is how it REACTS to this important overhead resistance and to SEE if buyers can come in.  If the too many sellers exist then the penny stock will fail and fall down much DEEPER and even back to the all time lows.  This would show the penny stock is not ready for a new uptrend.

However if TGGI can maintain composure here and get a break out into the green shaded area then it could make a run for .0018 range which is next topside resistance.

The heavy volume is a good sign, it is supporting this penny stock, but a breakout from the recent falling wedge is not a breakout until it actually happens, so caution is still advised on this green penny stock near term.

Liberty Star Uranium & Metals Corp LBSR is trading like a blue chip stock lately even though it is a tried and true penny stock.  A couple days ago we indicated that we are going to be providing ongoing coverage of LBSR because we recently gave it the highest rating of 1 here at penny stocks penny stocks.com and because of our confidence in the price structure.

I cannot say for sure whether or not we will provide daily coverage on LBSR but we will make commentary when it is appropriate to do so.  We do technical analysis here but we do realize that the LBSR is also a fundamental one.

Penny mining stocks are unique in that they can move in a leveraged aspect relative to the size or value of what they have in the ground.  Perhaps they are a bit similar to biotech penny stocks in that the stocks trade on the potential and milestones which would eventually lead to a big cash inflow.

These stocks can make extraordinary vertical moves that would in some cases seemingly invalidate the technical analysis.  But it is our view that technical analysis is never really invalidated, but instead sometimes pushed to the limits.  For example, the long term uranium price chart showed us that uranium went into a mega bubble that pushed the relative strength index to seemingly impossible high levels (greater than 90 for a long time).  A typical technical analyst would probably have seen the 90 RSI level and then said it is extremely overbought and cannot go any higher.  Well it did go higher, much much higher into a blow off super spike.

So keep in mind that our technical analysis of LBSR will try to mainly focus on whether or not LBSR is maintaining its trend strength.  But we may be rough around the edges on the daily moves and if/when LBSR goes into a blow off type upside run.

Today’s Technical Analysis of LBSR

The purpose of this post is to look at the near term technical analysis of LBSR on the daily price chart to see what we can observe about the near term picture.

First, before I start to discuss the chart below I do want to apologize for not showing today’s price candlestick at the correct closing value.  It is still 15 minutes before the close and LBSR will probably close near the top of the range today.  So when you look at this chart below keep in mind that the latest price candlestick is at a closing value of .038 .

The daily chart of LBSR is very interesting because if you were to put this chart in front of my face not showing me the stock symbol and not showing me the current price it is trading at, I would probably assume it is just a nasdaq small cap stock with a very nice ascending triangle chart pattern.

The key observation in this chart is clearly the enormous sign of strength moves with the big marubozu candlestick price bar on about 46 million shares.  That candlestick was basically the lighthouse signal that LBSR is ready to start something big.  We must respect the signal that candlestick bar is telling us.  The signal it tells me (especially after trading in a long 1 to 2 year base) is new bull market.

After the mega spike to .03 on very heavy volume LBSR then transitioned into a consolidation which is perfectly normal and to be expected.  I suspect this pattern will repeat itself over the next few weeks, months or even 1 year time frame.  It is the nature of stocks to breathe in and exhale just like people do.  Small cap penny stocks in long term uptrends tend to do spike moves up and then transition into choppy trading ranges building cause for the next move.

Since the consolidation started in early July 2010 there have been a series of key reversal hammer candlesticks that have marked reversals in the short term consolidation phases.

The most recent one was a doji reversal hammer and led to today’s big breakout from this medium size ascending triangle.

The breakout from the ascending triangle looks valid to me today.  It showed wide price spread and zero supply coming into the stock by the end of the trading day.  The candlestick looks somewhat close to a maribozu type candlestick (where the open is equal to the low and the high is equal to the close). 

The closing volume today was about 6.8 million shares.  This is good but it still falls far short of the peak breakout volume of 37 million shares.  But the key today was that we closed higher well above the resistance level and above all the previous swing highs, a bullish sign.

Since the volume was dramatically lower I see at least the possibility that we pull back tomorrow to test the .0338 level or slightly lower before resuming higher.  Sometimes they initiate an early shakeout to test and touch new support.  It is actually quite common.

Finally I want to get to one last important point about today’s chart structure and that is that in terms of the RSI (Relative Strength Index) we have just entered what is known as the bullish power zone for the second time.  This level resides above the 70 level on the RSI portion of the chart above and is an indication that the bull are in control.  In fact they live and breathe up in that level.

So I suspect we will see follow on strength during the rest of this week until price blows itself out and reaches another intermediate term peak.  This peak could coincide with another RSI daily chart reading near the 94 level.  After the next intermediate term peak I would expect price to enter another consolidation to define a new range.

It is guesswork to predict how many days the RSI can stay above the 70 range.  The last time price peaked out in about 4 or 5 days as shown in the chart.

It will be interesting to see the follow through action tomorrow and the volume as well.  There will be pullbacks for sure, but for now the trend is strongly higher from the looks of the chart.

I will have some future technical analysis posts coming on the penny stock LBSR that talk about the weekly chart and the important dynamics that are going on there.