KAT Exploration Inc - tag category postings

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.

My apologies for the late post today.  I am a bit busy preparing to head out to the Cape during the end of this week.  I will have more detailed thoughts on both LBSR and KATX along with plenty more penny stocks that come across the radar screen in the days and weeks ahead.  Please bear with me the next few days if posting is somewhat light.

So just a few quick comments on the LBSR and KATX charts today.

LBSR (Liberty Star Uranium Corp) today sold off but once again showed a bottoming demand tail on the candlestick.  This is a short term bullish sign.  However today was also an inside day in that yesterday’s high and low were not tested of taken out.  Volume lightened up today on the decline which is a bullish sign.

The MACD histogram is once again flashing at least a potential sell signal but it is unconfirmed and it will fail as a sell signal if we close above the 8/25 swing high.  However if we close tomorrow (Friday) below the .1022 swing low it will be a confirmed sell signal.  I am also noticing on the intra day chart at least a potential head and shoulders topping formation.  If we close down tomorrow it may begin to form the head and then the neckline would be at .08 which is likely going to be good support.

At the risk of sounding repetitive, I continue to believe that LBSR is trading into news and we would advise caution after news is released as it can tend to act as a strong reason to sell even if the news is extremely positive.

At some point LBSR is going to have to start building sideways cause again.  It has already exceeded the high tight flag formation measured move and is now in the stratosphere.  So key for 8/27/2010 is whether or not LBSR can print a new high AND close at a new high.  If it does that then expect higher prices early next week.  If it closes below the 8/26 low then expect some early weakness next week.

The penny stock KAT Exploration KATX has different dynamics taking place in its penny stock chart, much different than LBSR.  Today KATX did a deep retracement of yesterdays big belt hold candlestick (a big candlestick that shows strong close and strong move right from the get go).  In fact today’s (8/26) deep retracement makes the candlestick pattern look like a potentially bearish piercing pattern (this is when you get a deep retracement into a bullish candlestick the day before that covers 50% or more of the body of the previous candlestick.  The potential bearishness of this pattern will not be confirmed unless we get a close under .115

On the plus side, the deep 8/26 retracement on KATX was on 1 million less shares, a bullish sign.  Still the most important consideration is to try to see the forest for the trees on this penny stock.  I can talk to you about daily price action all day long, but what about the bigger picture on KATX?

The bigger picture involves the 6/1/2010 price peak and the long downward slanting consolidation we have had since then.  The key points are that we have been trading in a consolidation in descending fashion.  This simply means that we have a series of lower tops each time we have tried to rally.   This is a concern because you usually do not want to see lower tops over an extended period because it shows that there is consistent supply coming into a stock (selling).

However, on the plus side we see that .11 has been tested 3 times so far and has consistently held support.  We have had 3 nice upward reactions off of this support line showing demand.

So the battle will eventually be lost or won.  If KATX breaks below .11 and closes below .105 then I have to assume that the sellers won and a new potential bullish scenario is lost.

If KATX on the other hand in the first week or two of September can break above .15 or higher, then we can start to assume that a new bullish phase may begin.

These are the trading dynamics of this penny stock. The battle is either going to be won or lost.  There is no reason to get emotional about it.  It all comes down to supply or demand.  A break below .105 would put us in a situation of saying that we cannot recommend holding onto KATX any longer.  Why? Because that would show a violation of support.

The problem with penny stocks is that when they turn long term bearish they do not make it very obvious.  They tend to die a slow drifting down death.  Those who do not pay attention to the clear signals ahead of time stand to risk riding a penny stock all the way back down to where it began its journey.  I can name you plenty of penny stocks that have suffered this fate.

But at least as of right now I can tell you that no clear major sell signal or new bullish signal has been activated yet.

I should also mention that if the gold price can somehow manage to blast higher to new life time highs, it may help to support the micro cap mining stocks.  My current technical analysis of the gold price suggests that it may in fact do that in September.  Also, September is the seasonally MOST bullish month for mining stocks and precious metals.  So it would seem that the wind can be in the favor of many penny mining stocks.

Still, the levels are clear in KATX and must be respected.  I will have more coverage of LBSR and KATX in the days and weeks ahead as well as more detailed charts and analysis.  We try to provide the best penny stock coverage and the most depth because it matters.

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KAT Exploration Inc today showed a sign of strength once again and bounced off the very critical .11 cents range showing renewed demand for this gold penny stock.

At this point it looks like KAT Exploration Inc has passed the test of holding key support at .11 cents.  I mentioned before about how important that level was to hold to keep the overall chart structure intact.

The good news now is that if KATX can get a breakout going topside out of this large descending wedge it could lead to a test of the highs near .24 cents and maybe beyond.

The volume ticked up nicely today as well.  The daily MACD histogram looks bullish and the WEEKLY MACD histogram will flash a buy signal if we can get a close above this weeks closing weekly high.  This would be a potentially very important weekly buy signal if it is confirmed next week.

This gold penny stock is a typical well behaving penny stock that has decent liquidity to trade just like regular stocks.  Still, it is important to consider that as of this writing KATX has not actually achieve a topside breakthrough of that red dotted down trend line.  This means that it still has important work to do to prove itself.

But so far so good.  KATX holders should be pleased that this penny stock has been able to hold .11 so far which was definitely not a given in this risky sector.

Pennystocks penny stocks first mentioned KATX way back at around 5 cents.  We also recently mentioned the gold and uranium penny stock LBSR at around 3 cents.  Clearly penny mining stocks are the place to be right now in the overall penny stock sector. . .

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.

KAT Exploration, Inc. is possibly setting up for a very important breakout above the recent trading range.  I was looking at KATX very critically over recent weeks and wanted to be sure that it would not break below 5.5 cents.  It has not broken this support and is an internal sign of strength.

The overall structure of KAT Exploration, Inc. is looking quite bullish and I am upgrading the penny stock rating on KATX to a 1 (our highest rating level). Why?

Well because KATX has now shown us that it is unwilling to break down below 5.5 cents and it wants to maintain the current strong longer term trading range and is now at the top of the trading range for the THIRD TIME.

Usually a stock or index will succeed on its third attempt at breakout out.  Usually, not always. But I like the recent three day move and I also like today’s intra day reversal.  The candlestick looks great.

It is also nice to see KATX performing so well given the recent overall market weakness and the general sloppy trading and weakness in the gold price.  This is a very good sign.

KAT Exploration, Inc meets most of the criteria I look for in a superb penny stock trading setup.  It reminds me of the setup that Sarissa Resources had over a year ago.

I like the fact that KATX has a lot of SIDEWAYS CAUSE and has not broken down.  KATX is a great example of the type of penny stock we like to identify here!  If you ever see a penny stock with a similar setup to this one please do tell us about it so we can share it with our readers!

If KATX is able to hold and maintain a full price candlestick above .092 (possibly next week ?) then it has a clear path to about .17 cents.  There is almost no resistance all the way up to that point and it could be reached in short order.

Certainly a huge gold price breakout would help things along as well, but for now KAT Exploration, Inc seems to be doing quite well on its own too.

According to bloomberg.com KATX currently has a market cap near the 37 million dollar range.  This is a bit of a concern as it become increasingly rare to see ANY penny stock trade above a 100 million dollar market cap.

Assuming KATX is able to successfully trade to the .17 range, then the next level of resistance is the .45 range. 

For KATX to get to .45 range it is going to have to once again form another sideways base of many months duration.

If things get wild enough in the gold market and the gold price is able to get a super spike going then I think it could be reasonable to see KATX eventually reach the above mentioned targets.  A lot of the next moves do depend on the gold price in my opinion!

You might notice that I have not even mentioned any fundamentals about this penny stock.  The only thing I need to know is that it is a gold stock and that the gold market so far is still in  bullish stance.  The chart itself right now is speaking enough to me that it is all I really need to know for now.

The strength of KAT Exploration stock in the last few days despite overall market weakness is a great example of how many times you will see penny stocks trade completely independent of other market indices.  It is almost unbelievable how they do it.  But in a certain sense they become safe havens to the rest of the market.  But for this to happen the stock must have some very strong hands, a very good story and some committed shareholders.