LBSR Fills The Gap

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.