gold penny stock

I have recently been studying the gold, uranium and copper mining penny stock Liberty Star Uranium & Metals Corp again.  I had extensive coverage of LBSR many moons ago which you can view in the archives here.  At that time I had given LBSR a penny stocks penny stocks rating of 1, our highest rating.

Now I see that LBSR selling has dissipated and LBSR has formed a supportive range above .04.

I see now that LBSR will make a move back up to the old highs at .19 and now Liberty Star Uranium & Metals Corp is on high alert again as the trading pattern begins to emerge again.

This next leg up in price should be quite amazing because it would be an elliott wave 3 up which is usually the longest and strongest wave up in price.

The recent multi month decline showed a clear pattern of downward price losing its momentum and selling volume rapidly losing force.

I have some very long term charts (going back to the year 2000) of LBSR that more or less prove that we should be able to exceed .19 cents.  I will have those charts forthcoming in the days ahead.

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Supatcha Resources Inc or SAEI appears to be an outstanding gold mining penny stock candidate as we finish up the Thanksgiving week and head into December 2010.  The winter time frame and into new year is usually a good time for huge penny stock moves.

Supatcha Resources Inc  has a very low total authorized and outstanding share count and a low trading float as well.  The trading float is near 30 million which is extremely low for any penny stock trading under .20 cents.  The company has announced a recent share buy back as well.  The recent surge in the gold price certainly paints a backdrop that is favorable as well.  Certainly there is not a 1 to 1 correlation between the gold price movement and the share price of gold penny mining stocks, but it is still a helpful speculative back drop.

SAEI has gold mining properties in the Ukraine, has recently released some drill results there and apparently is due to release some proven and probable reserve numbers near the December 5, 2010 time frame.

If you have read previous posts here before then you will know that I tend to favor the technical outlook versus the fundamental outlook for any stock, whether it is a penny stock or a blue chip stock.  It does not matter to me.  The technical for me has always been the best compass in a sea of rogue waves and market manipulation.

In mid October 2010 SAEI went from a low of about .005 to a high of about .20 CENTS equating to roughly 40 TIMES ones trading capital assuming one had bought at the low and sold at the high.  It also accomplished this in a mere 10 trading days.

This type of massive percent advance combined with the minimum time frame seems to confirm the tight float SAEI works with.

One of the most basic lessons of stock market movement is the A —- B —- C up formation and conversely the A — B —- C  down formation.   The ABC up formation describes a very common market advancing mechanism that is similar to the first three waves of an elliott wave up move.

Essentially what you see is a large and fast impulse wave move UP on heavy volume.  THEN you see a natural retracement of that first leg up as there will always be sellers who want to take at least some profits.  But the real gold is in determining if the penny stock then has enough strong supply demand relationship to halt its decline after the B down leg move and then transfer into a follow on C leg up move which should exceed the peak of the A move up.

This ABC up move is in essence where most of the money is made in penny stocks and that astute observers who can catch them early enough.

Of course there are other patterns at work in penny stocks as well. The cup and handle is a very popular pattern in penny stocks just as it is in other big board stocks.  I am speculating right now that Supatcha Resources Inc is forming a cup and handle pattern and is in the process of finishing the formation of the handle of the cup which would be consistent with possible news in 1 weeks time.

The cup and handle simply describes a pattern where previous owners at the supply range of .20 cents wanted to get their money back and thus caused a selling wave.  But since this is a penny stock we are dealing with these selling waves can seem very large, but that just comes with the territory here.

I have studied the Level II market action on SAEI today the day after the Thanksgiving holiday and see that in the early part of the morning showed very strong bid support in the .125 range.  The big support was about 5 levels deep and there seems to be some small upticks now as well.

In the early part of the day today SAEI also showed a double inside day which basically means that the high of today and the low of today was successively lower than the high and low of the previous two range bars.  This describes a situation of the stock ‘coiling up’ and ready for a big move.

SAEI can move very fast in both directions.  But at this point I have to give SAEI a penny stocks penny stocks rating of 1 as long as it can show a confident close above the .145 range.  I don’t know whether that could happen today, but possibly by next week some time.

The recent 3 days action could be what is known as a ‘running correction’ where the stock is simply too strong to get a real meaningful pullback because the float is in such tight hands.  Still, the requirement is for a move and close above .145 preferably by early next week.

The medical device penny stock Viking Systems Inc is looking very strong today.  Penny stocks penny stocks dot come profiled VKNG some time ago and we gave it our highest rating of 1 because we feel it has all the ingredients for a superb penny stock run.

We have also been providing detailed coverage of LBSR.  We must say that the penny stock game is not easy.  While we feel that LBSR has some potential to continue to build a sideways trading range in the days and weeks ahead we are still overall somewhat concerned at how the gold penny stock LBSR initiated its decline.  It was with a big gap down on lifetime high volume. 

We recently stated that LBSR is likely near a buy spot at current levels but we would also say that if LBSR does not catch a strong bid again very soon, there is a risk of a broken pattern and more downside.  I am a bit concerned that LBSR is not catching a strong bid today.  The volume is still light but I would rather not see much more price weakness after today to keep a stronger trading range intact.

On the other hand VKNG or Viking Systems Inc. looks extremely strong and we believe that the 1 dollar range will be tested in coming weeks.

Sometimes in penny stock land one has to have the ability to cut loose out of previously profitable trades and then just jump on a new lily pad.

In this case we believe that lily pad is VKNG Viking Systems Inc. this company has a killer product slated for release in early October for the medical device industry.  We are talking about a high priced product in a sector and industry that has very deep pockets if you know what I mean.

In my opinion their product could be a possible game changer as it allows surgeons to do minimally invasive surgery ( a type of surgery that is growing by leaps and bounds due to cost savings) with a 3d HD view (whereas the vast majority of current procedures are now done in 2D) and just by basically wearing a pair of glasses instead of a heavy head set.  That would allow surgeons to have more ergonomic comfort and ease of movement, better vision.  I mean why would any hospital or medical industry want to stay with 2D when they see their neighbor and buddy surgeons are doing minimally invasive surgery with 3d HD ?  Why compromise on clarity and depth perception when it comes to peoples lives and important medical procedures ?

I feel very strongly that VKNG will rally towards the 1 Dollar range and then have some type of pull back as there will be previous sellers looking to get out at those previous spike highs.

But after that VKNG could easily move to 3 to 5 dollars over time.  How long that would take I am not quite sure.  But if VKNG can do 100 million in sales then 3 to 5 dollars should be the absolute minimum price to be expected in my opinion.

Surgeons switching to 3d HD seems like a no brainer.  And this company is a first mover pure play on this high demand trend.

The primary difference between VKNG and other penny stocks and pink sheet stocks is that VKNG actually has a real shot at making real money which should help to sustain share price in years to come.  Most other penny stocks barely make any topline revenues.  LBSR for example is a very very long way from making any kind of cold hard cash.

The penny stocks that can actually make some cash and have high value products are worth watching very closely in our opinion.

In penny stocks pennystocks dot com opinion Liberty Star Uranium Corp is a buy today for a swing trade higher.  The stock has done almost exactly what I predicted here.  I am still quite astonished how accurate my read on LBSR has been. 

LBSR has some down in the other ‘half way move’ as predicted in my previous post on LBSR and has now come down to the uptrend line in force since this penny stock started moving from .03

I suspect that today’s higher low will hold and that LBSR will continue to trade higher from here in the week ahead or at least the next several days.

My prediction is that part of what will help the move along is a surging gold price to new all time life time highs.  Gold at new life time highs just has a way of creating speculative frenzy even in gold and uranium penny stocks.  The mining sector as a whole gets lifted up.

The chart above shows clearly that LBSR is printing a reversal candlestick right near the uptrend line.  It is my speculation that we will print a higher low instead of doing a full retest of .063 level which was the previous high volume swing low.  There is always the chance we still go down to test that level, but if the internal strength of LBSR is strong enough, then this penny stock should be off to the races after tomorrow.

Today the volume shrunk once again on the penny stock Liberty Star Uranium & Metals Corp.  Today does not show any indication of upside reversal.  As indicated in previous posts penny stocks penny stocks dot come expects LBSR to drift down for a retest after having previously filled its opening gap which we predicted earlier.

So today looks like a resting point and half way move pause before the rest of the half way move is completed in the days ahead.  The uptrend line looks better defined now and is likely a target area for support to come in.  It looks like .07 to .08 cents may be the upcoming low point.  It will be very important for this level to hold in the days ahead to keep the trading swing rang intact.

We could see as low as .062 again, but I would rather see Liberty Star Uranium & Metals Corp hold ground at .07 to .08 for a more bullish picture to develop.  Still, as long as the up trend line holds then LBSR should be on fertile ground for a new move higher after that.

We also indicated in previous posts that volatility would decline and that volume would also shrink which is exactly what is happening.

There is still the outside concern that the super high gap down very high volume down day that started this correction was too severe and may have permanently damaged the uptrend.  This is still unknown at this time.  KAT Exploration had a similar very severe high volume down day and that turned out to eventually destroy the uptrend.

But again, I don’t want to be too premature with LBSR. I still expect support at .07 to .08 to hold and then another move higher after that.  I need the price chart to fill itself out more before I can make a better determination whether the damage done on 9/2/2010 was enough to completely destroy the uptrend.  For now I do not believe it was, but it is just something to keep in mind as the trading range develops.

With penny stocks one can never take anything for granted.  The unpredictable is pretty much a given and one has to remain on guard for both bullish and bearish possibilities at any time.

LBSR today filled the gap just as I predicted yesterday and also traded down hard into the close creating a bearish piercing candlestick pattern into yesterdays up candle.

The forecast has not really changed since my last post.  We filled the gap as expected and now are indicating price weakness again and should drift down to get some type of test of the crash low near .06 range.

The level that we stop at will be KEY in determining the future strength of LBSR. It will take some patience because volatility is dying down now and price is likely to drift around a bit as it tries to find its way to the lows again.

This is called a trading range and can be discouraging to those who are not prepared for it ahead of time.

Volume dried up significantly today and confirms my stance that the stock is moving into a trading range and a retest.

So far so good, patience is key now as the trading picture plays itself out.  Penny stocks penny stocks has made some very accurate directional calls in LBSR since .03 cents.  Admittedly we picked the top too early but we did catch the final top and the reaction low as well as the reaction up again.

Stay tuned for more LBSR coverage in the days ahead.  LBSR continues to show itself as one of the most interesting penny stocks for 2010.

Liberty Star Resources filled part of its huge down gap today as predicted in yesterday’s post.  It did not fully fill the opening down gap today but came close.  I don’t know if we will fully fill the gap tomorrow or not, we might.  It is a possible scenario for September 8, 2010 (Wednesday’s Trading) that LBSR rallies very early in the day near the open to fully fill the gap, but then by end of day prints a reversal candlestick and either closes down for the day or prints a shooting star or reversal hammer candlestick.

If the above mini scenario happens tomorrow which seems quite plausible, then one would expect LBSR to shift momentum again and start to slide down again for an eventual (not immediate) retest near the .06 to .09 range.  How low it would go on a retest is unknown at this time.

I have to say that today’s strong upwards reaction after the massive sell off is quite encouraging.  Sometimes you will see penny stocks do a lousy dead cat bounce after such a massive drop.  That is the first sure sign of a dead penny stock.  But instead LBSR got large upwards reaction with big and wide price bars showing that demand is still healthy for this stock.

The points I made in my previous post still are basically the same.  That LBSR is likely to trading in a sideways swing trading consolidation range for a month or so, maybe longer.

After a stock suffers severe technical damage, it is extremely unlikely for it to just pick itself up and blast higher vertical again.  The ones who bought at the top still are fearful and want to get out if they get a second chance.. and so you see some supply come into the penny stock.

LBSR continues to be interesting to track and while I do not intend for this penny stock to be the only one I talk about here, I like to focus on what is interesting to me at the moment.

I will cover other penny stocks here in the future, but keep in mind that only penny stocks that I give a rating of ‘1’ are the ones I feel the most confident in.  All other penny stocks that I mention here may be promising but I am not giving them my 100% full vote of confidence.

LBSR went into a high volume correction and is currently in a very high volatility state.  It tested the lower range of support near .06 cents and reversed higher very strongly to close the week out.  This penny stock will now move from a high volatility state to a low volatility state that will likely take several weeks.

We pointed out in our last post on this gold and uranium mining penny stock that we likely topped out because of the one day volume reversal doji.  It looks like our timing was spot on in that regard.

The big heavy volume drop right from the highs is usually not something you want to see.  KATX had a similar very high volume drop from its .25 price point and now it has eventually broken under support and the uptrend has pretty much ended.

I suspect that LBSR will trade higher in the days ahead as it springs back in rubber band like fashion back to the top of the range.  I think it will trade higher in the days ahead to the point where it might even fill that large opening gap down of 2 days ago.  This should cause some supply to come into this penny stock and lead to an eventual reversal down again to create a trading range.

We should be entering some type of trading range for at least 2 to 3 weeks from this point.  The key will be to see how LBSR does its retest of the .0631 level.  After this reaction up I suspect that we will eventually see a retest of the .0631 level to create some type of double bottom.

If this penny stock is strong enough then it will not be able to be pushed all the way down to .0631 and may hold ground slightly above at .065 or slightly higher on the retest..  That will be the first sign that LBSR still has some strength and will continue to build a constructive trading range which may lead to an eventual breakout higher.

They key word in the last paragraph is ‘may’.  LBSR is not in a volatile trading range and it has to work off some of the overbought situation.  This will take some time for the new form to take shape.  Only at a later point in time will it become clear whether or not this penny stock has the juice for another major run higher.

More updates as warranted…

There is an old adage in stock market lore about the bulls, the bears and the pigs.  All three of these types of market participants exist in the market.  Generally speaking it is never wise to be a pig in the market because usually it can lead to giving back hard earned profits.  Pigs hold on too long to a stock or index in the hopes that a stock will keep going straight up on their time line.  When stocks make life time huge moves there always comes a point where heavy profits will want to be taken. 

Heavy profit taking is what we think is about to happen to LBSR after today.  Penny stocks are famous for making enormous persistent moves when all the ingredients are right.  But they are also famous for dropping like a rock when some serious profit taking sets in.

Today we printed a near perfect doji candlestick in Liberty Star Uranium Corp and volume was also half that of yesterday.  But we also did something very significant in that we went above yesterday’s high, and then closed under it today.  This is a sell signal in terms of volume.

There was also a double top in daily RSI today and a class B divergence.  I don’t have a MACD histogram sell signal yet but that may arrive by end of this week or next week sometime.

I am not saying that this is the final top for the penny stock LBSR.  I am just saying that it is time for a serious correction and a long new base building process for any possible new move higher.

I am looking at .12 and .09 as possible correction targets in the days and week ahead.  .09 on this penny stock would represent the 61.8% fibonacci retracement

level.  If LBSR is extremely strong then it will only correct to about .11 or .13.  I think .09 is more probably but we will just have to wait and see how things shake out.

Identifying sell points is tricky in LBSR but I think it is a done deal from today onward.  That is not to say that we cannot still trade marginally higher after today but I still think it will result in a top.

The trading action after today is going to be very interesting as we will see how strong LBSR truly is in terms of buyer support coming in.  As I said I expect it to come in strong, but the speed of the shakeout will determine the strength of the strong hands.  Penny stocks tend to fall faster than they rise which is true for almost any stock out there.

This penny stock has had one of the most amazing runs we have ever seen since we profiled it at .03 cents.  We expect the story will continue to get interesting.  One thing that surprises me is that we have not as of yet seen any news.  It would seem unlikely that news would come out before the 3 day holiday weekend. So maybe LBSR stays afloat 2 more days this week and then finally goes into correction mode early next week. . .

I am being a bit too dramatic with the title of this post, but to a certain degree it is true.  I mentioned in previous posts on KATX that it must must hold .105 support to keep the bullish scenario alive for breakout later in time.

Today KATX chose to bust support and close at .098 on heavy volume.  It violated support which was very significant support.  It turns out that the 6/14/2010 very high volume down swing was a very significant clue (we talked about this before) that damaged the stock’s uptrend beyond repair.

Today’s close under .105 means that now .105 becomes new resistance and KATX may drift lower for months maybe back to very low pennies.  Only a strong close back up inside the range above .115 will get me bullish again and thinking it has another life in it.  This looks very unlikely at this point although it is not entirely impossible.

Penny stocks transition into many different phases one day at a time.  Keep in mind that I do not hold anything against KATX and there is nothing to take personally here.  It is simply a matter of making a judgment of the chart and determining which way the wind blows.  Right now the wind is blowing very bearish for this stock.  Extreme caution is advised.

I suspect that a lot of capital from KATX is being pumped into LBSR as a transfer trade.  LBSR is in a very different stage of its trading cycle however.  It may soon top later this week.

So for now it is time to say goodbye to KATX…  The long sideways trading channel was showing some possible bullish possibilities but it is important to know when to cut loose and run just as with any other stock.