Will The Support Be Unbroken

Jul 9th, 2009 – Comment

I sold Paladin Energy up around $4.65 and thought it would go back to $3.80 It has done this. Should I be trying to buy it back here ? I appreciate your thoughts. Steve   Hi Steve, Paladin Energy ( PDN TSX) has been advancing a number of uranium projects and doing a good job at it […]


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I sold Paladin Energy up around $4.65 and thought it would go back to $3.80

It has done this. Should I be trying to buy it back here ?

I appreciate your thoughts.

Steve

 

Hi Steve,

Paladin Energy ( PDN TSX) has been advancing a number of uranium projects and doing a good job at it in a very challenging environment for the mining industry in general. The Langer Heinrich mine in Namibia which completed its Phase I construction in January of 2007 and just got board approval for Phase III expansion on June 30, 2009 is doing the heavy lifting.

 

The Kayelekera mine in Malawi is expected t o come into full production in January 2010. The company is sitting on about $140M in cash. From a fundamental basis you have to like the story of a management team that has been advancing its projects to completion. But we don’t own stories we own stocks and they trade and the question is buy, sell, or hold.

 

pdn2

The chart is showing a nice recovery from the lows but some resistance at $4.80 which has the stock pulling back. I would have liked it to hold onto support  on its 50 day moving average but it hasn’t.

 

 

 

 

pdn21

The next level of support is at $3.80 which is where you bought in before. In Wednesday’s session you can see from the candle stick that buying came in below that level to keep it from breaching support.

Despite the buying that salvaged  support at $3.80 I’m not sure I like the signals generated by the RSI or the MACD .The fact that the uptrend line has been broken and that we have been getting lower highs and lower lows since June suggest that an entry point at previous support might be in question.

If it doesn’t hold $3.80 there isn’t much support till $3.00 so if you decide to try and catch a bounce off of $3.80 be aware of downside and the other signals on the chart. For my money I would say that the support at $3.80 is good not great and given that you have booked a profit on the last trade you might want to play a bit of defence.

Happy Capitalism!

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