-- Posted Thursday, 3 July 2003 | Digg This Article
This is a bit off the beaten track, but it has a very promising chart and is therefore worthy of consideration, especially as, due to the current very low price, it clearly has massive potential leverage in a major mining sector bull market.
I want to make it clear right now that I have no fundamental knowledge of this company, aside from the knowledge that it has promising properties, and is engaged in extensive exploration, in Peru – and I’m not referring to looting Inca trinkets.
If we look now at the longer-term chart, going back 5 years, we can see that the stock declined severely between 1999 and 2001, and, by the look of the chart, it came very close to going under in 2001 – 2002, it looks like trading was suspended on a couple of occasions.
However, the picture changed dramatically from December last year, when a wave of heavy buying appeared, which has persisted through this year, heavy that is, compared to the preceding norm for this stock. Despite this buying interest the price has not been greatly affected – so far. I view this heavy volume during this period as a probable smart money footprint – as obvious as the one in the riverbed in the 1950’s sci-fi horror movie “The Attack of the 50 Foot Woman”, which nowadays is just a laugh.
The stock appears to be either in the middle or later stages of a “Flat Pan” or “Saucer” basing area. Were it not for the volume indication I would have judged it to be a little way past the centre of this pattern – implying that it would likely continue basing for perhaps a year or so longer. But that heavy volume, plus the “coiled spring” effect which is rapidly developing in gold and in gold stocks, suggests to me that this may get moving sooner rather than later.
If we look now at the one-year chart we can see a number of price spikes accompanied by heavy volume; this is urgent buying implying that these people know something. We can also see that it spiked up briefly to $0.24 a few weeks ago, but has, over the past few days, fallen back to a much better entry point around $0.15.
I classify this stock as a good speculative punt; it is at a very low price now, and, within its own pattern, it is not overbought at all. It has huge upside potential in the great gold bull market ahead of us. Here I must caution readers that this stock is not suitable for everyone. It is speculative, and anything can happen with these smaller companies. It should not be bought by investors who are of a nervous disposition and/or who can’t stomach a loss – it certainly shouldn’t be bought for Aunty Mary with her Post Office money. Investors should only buy an amount of this stock appropriate to its speculative nature and to their overall portfolio. It should also be noted that this stock at times trades very thinly, therefore limit, possibly staggered, buy orders are a good idea and traders should sell on up days with good volume, as this should ensure a sale and reduce spreads. Having said that I think that it is very likely that this stock will turn out to be a hugely rewarding “buy and hold” situation for the next several years, and, as the price accelerates upwards and the general investing public become more interested in gold stocks, liquidity will no longer be a problem.
To conclude, for those who are up for it, I view this as a good, potentially outstanding speculative investment. I consider that there is a good likelihood that it will get moving over the next several months, while recognizing that it may remain in the saucer base pattern for 6 months or a year yet. I repeat that I have not checked the credentials or fundamentals of this company, my analysis is based solely on the chart. All interested parties should do their own due diligence.
Code CHD.V on CDNX
Closed at $0.15 on 2nd July 2003
By Clive Maund, no responsibility can be accepted for losses that may result as a consequence of trading on the basis of this analysis.
Disclaimer: I do not own any shares in Chariot Resources Ltd.
Kaufbeuren, Germany, 3rd July 2003
-- Posted Thursday, 3 July 2003 | Digg This Article
