You can click on the chart of PGCR above to see it full size (note please ignore the x axis monthly dates because they are incorrect, the price is correct but the dates are wrong. It is the only way I could get the data in my charting program).  I still like the way PGCR is trading so far.  It continues to trade sideways now near the longer term triple bottom support area. 

I continue to believe that PGCR could be close to a spike rally north.  If I am wrong then I think the best alternative is to see PGCR trade sideways for a longer period of time. The 13 day moving average has still not crossed above the 50 day moving average but it is awfully close.  Volume has really dried up as of late, but is that surprising in August? 

If PGCR is able to keep trading sideways without breaking below .002 then to me it would be a bullish longer term development because the stock could be building a big base and longer term cause for the eventual move up.  But it is imperative that PGCR is able to hold .002 .  Perhaps the best shot PGCR has for a repeat type super spike rally is the October to January 2009 time frame.  Rest assured I will post here when I see important new developments.

I have said before that I would love to see the gold price spike up and break 1000 sometime in the next month.  In my opinion it would go a long way towards support PGCR’s longer term potentially bullish setup.

PGCR may get an upward spike at any time however and some of the indicators that I follow are telling me that PGCR could spike up as soon as this week.  But please do not take that prediction to the bank. 

PGCR needs to get above .0045 before I can say with more clarity that it has truly finished bottoming.

Placer gold has the clear potential to spike to .01 to .03 cents in a matter of days in my opinion.  But a spike like that may need to be triggered by news which has not been out since June 9th, 2009.

I still feel we are dealing with a powerful setup, but the main risk is that PGCR stays flat for many many months and never really gets a rally going.

With a little luck we will get the gold price to start cooperating so that a public obsession with gold stocks can start .

The penny stock Placer Gold Corp (PGCR) which trades on the pinksheets forms a chart that is worth studying in my opinion.  The chart you see above (click on it to make it full size) is a longer term 2 year daily price chart of PGCR. 

It is worth studying because in my opinion there are some well defined parameters that make for clear cost benefit analysis.  Many penny stock charts that I look at are not so clear.  Typically there is a lot of congestion, noise, lack of price data, and just general confusion in the price chart. Or the price movement has wide swings all over the place and it is difficult to define clear trends or parameters that are worth acting on.

Reason 1

But with PGCR I want to tell you about a few important observations I have made.  For starters, I see long term support at the .002 level.  The .002 level is a significant level and a level that PGCR must hold in order for me to remain open to bullish possibilities.

It was touched 3 separate times in 2008 in what looks like a well defined triple bottom.  After that triple bottom, PGCR was able to get a rally going from .004 to .11 cents in about 1 months time.  That was clearly a huge sign of strength rally that came off of the triple bottom.

Since that time PGCR has drifted down in a seemingly endless price decay back down to the current time frame of August 2009.  But price so far has held above .002 .  I can tell you that I like how price has slowly retraced back down to the support of the triple bottom range.  I have seen this happen before in several other penny stocks and it has the potential to result in a huge snap back reaction rally to the upside. 

The most memorable penny stock that I can remember doing this last was INBG.  It went from .004 to .30 cents in a few days.  But the float was very very tiny on INBG, but still the pattern was similar.  A long slow retest of a previous congestion area.

So clearly .002 is a key level for PGCR.  For me to remain bullish on the longer term time frames, the .002 level must hold.  Another encouraging sign on the recent test of .002 is that we have seen to very large volume spikes (not shown on the chart) off of this level.  I am reading them as accumulation and support off of the bottom of .002.  To me they are an encouraging sign, although admittedly shorter term signs.

Another positive is that the previous mega rally occurred in the December 2008 time frame.  We are coming up on December 2009 in a few months.  It is not a huge point but I have noticed on some occasions that you will sometimes find pattern seasonality trades in certain penny stocks.  PGCR may fall into this category come December 2009.  The other positive about this mega rally is that in general, I like to see penny stocks show me in ADVANCE what they are capable of doing.  It is better for me to see that a penny stock already had a previous super strong rally as an indication that it may happen again.  It is not so favorable to see a penny stock that for the past few years was never really able to get any kind of super strong rally going.

Reason 2

But PGCR is a gold penny stock.  And that is the wild card that could either accelerate this overall pattern in PGCR or change it to something less favorable.  The gold price is trying to get a breakout going now, but it is at the point where it needs to do something soon, otherwise the whole breakout scenario could be in doubt.  I recently wrote a post on a different site that defines some of the near term parameters on the gold price. 

If the gold price can manage to get a breakout going, I would view that as highly favorable for a PGCR renewed upside run.  It may take a while to develop but there is a lot to be said for a massive breakout in the gold price affecting positive sentiment on almost all gold stocks, including the pennies.  The problem is I cannot say for sure if we will get a mega breakout in gold or not by September.  If we do get a mega breakout in the gold price by end of September 2009, then PGCR merits very close watching in my opinion.

There have been examples of previous gold price spikes ( for example the one in 2006) that have caused gold penny stocks to go ballistic to the upside.  I remember there was a bankrupt gold penny stock that was trading at .0001 and it shot up to .15 cents in about 10 trading days.  That occurred during the most bullish up phase of the gold price spike. 

So there are a lot of ‘ifs’ in my comments above.  But they are big ifs and if activated could create a very bullish scenario for PGCR.

Reason 3

As long as PGCR can hold and maintain .002 level then I think there is merit for accumulation for an eventual upside return to 11 cents.

The reason why I am saying 11 cents is because of a simple principle of stock price movement (all stocks, not just penny stocks).  If price fails to take out the previous highs, then it will try to take out the previous lows.  If price then fails to take out the previous lows, then it will try to take out the previous highs.  Rinse wash and repeat.. That is the process of price movement.

PGCR did a triple bottom onto .002 in 2008 and it failed to take out the previous lows.  Then it got a super mega rally into .11 and failed to take out the previous highs.  Then it drifted down to where we are now and I do not know yet if it will be able to take out the previous lows of .002.  BUT IF IT CANNOT then it says to me we will see an eventual run back to .11 to try to take out the previous highs again.

PGCR getting above .0045 is the First Guidepost

If PGCR can get a close above .0045, then it would be in my opinion a first guidepost telling us that a new uptrend can begin.  It might not be a bad idea to set a price notification email alert on PGCR over at CBS Marketwatch or your other favorite stock price alert service.  I would simply set it to trigger an email notification upon a northward break of the .0045 level.

In my opinion that would be a powerful sign that we could see the beginning of a resumed run to .11

I have watched the intra day action on Level II for PGCR and I can tell you based on my observations that the penny stock trades very thin and it can be difficult to acquire a position.  This is both good and bad.  It is good in the sense that when and if real upside volume comes in there is the potential for swift price movement.  It is bad in the sense that it is hard to get a favorable price and can make for difficult risk management.

So in summary, a cooperating bullish gold price, a hold of support at .002 and a price thrust up and over .0045 could all be the ‘perfect storm’ that launches PGCR into another attack on 11 cents.