Aura Minerals Inc. trying to reverse a steep decline

Apr 13th, 2011 – Comment

The gap down in November of 2010 on the release of Q3 results that missed forecast was the first signal to get out of Dodge.


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HI LOU,

COULD YOU GIVE ME YOUR VIEWS ON AURA MINERALS,I HAVE HELD THEM FOR SOME TIME NOW,AND THEY SEEM TO BE DYING ON THE VINE SO TO SPEAK.

YOUR THOUGHT WOULD BE MUCH APPRICIATED.
THANKS,
JAMES.

 

Hi James,

Thanks for the assignment. The case of Aura Minerals Inc. (ORA TSX) is one of investors holding on when the stock was telling you to take your profits and let this horse get to the barn for some oats and a cool down. The first sell signal came in November of 2010 when Q3 results missed expectations.  After that it was a series of breaks below support levels that just couldn’t hold as investors who had been sitting on substantial profits decided it was time to hit the silk.

Consulting the charts will tells us what has been and what could be when it comes to ORA.

The three year chart provides an illustration of the the profits that were generated from the December 2008 lows below $0.50 and the highs at $5.00 in December of 2009. After that its been a case of going sideways looking for a break towards the $10.00 highs of April 2008.

Unfortunatley the only only break has been to the downside.The gap down in November of 2010 on the release of Q3 results that missed forecast was the first signal to get out of Dodge.

The six month chart depicts the rough road investors have travelled. The MACD generated two decisive sell signals. Once in November of 2010 and the second in March of 2011. Acting on those signals would have preserved capital in the order of 32% in both cases on a top to bottom basis.

At this point it looks like ORA is trying to reverse the selling. There appears to be a double bottom forming but neither the MACD or the RSI are yet signalling a move to the upside. If some buying starts to come in it could run to $3.20 without much resistance.  If the stock can’t make the turn at these levels it may have to retest $2.00.

ORA is worth watching given that they expect to increase production by 2012. There have been technical problems that have driven up costs and recent changes in management. But it looks like the worst of the bad news is out and that we could get a lift off of these levels.

Happy Capitalism!

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