Great Western Minerals Group Ltd. Off 40% from the highs

Mar 23rd, 2011 – Comment

The trend right now is down and if you are sitting on a profit I think you want to protect it.


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Dear Lou,

Thank you very much for your articles – very helpful and to the point!

I was wondering if you could provide insight on rare-earth company Great Western Minerals Group – GWG-X. It has a very interesting chart, with a huge run-up from $0.15 to $1.23. It has recently pulled back, but there seems to be resistance around $0.70. Is this stock primed for higher gains or am I setting myself up for a big loss?

Thanks,

Konrad
In GWG’s hometown of Saskatoon, Saskatchewan

Hi Konrad,

Thanks for the assignment. I think the issue with Great Western Minerals Group Ltd. (GWG TSXV)  is that the excitement for all things rare earth may have taken a breather. As sure as Carter has pills  the hot money finds a new new thing that is offering some action and having profited it moves on. Lets consult the charts for a sense of direction of this stock.

The three year chart illustrates the aggressive move since the summer of 2010. Nothing wrong with a six bagger in six months. The RSI and MACD both signaled a shift in momentum from the buy side to the sell side as we came into February. You have to expect that investors who were sitting on tidy profits were motivated to book some profits and maybe head over to the Delta Bessborough in Saskatoon and enjoy some some fine dinning.

The six month chart depicts the selling that developed in February taking the stock from the high of $1.20 to a retest of support at $0.70. You have to hate giving up just over 40% in a couple of weeks. There was a bit of a rise to $0.90 then another retest of $0.70 and now another challenge of resistance at $0.90.

The trend right now is down and if you are sitting on a profit I think you want to protect it. The upside always takes care of itself. Its the downside you have to protect. When you are in cash you can always make another decision if GWG starts to mount a new uptrend.

Happy Capitalism.

Categories: Mining
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