Orbite V.S.P.A. is pulling back after a massive advance

Apr 18th, 2011 – Comment

What concerns me is that the MACD looks to be turning down indicating that for the moment at least that we can expect selling to come into the picture.


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Hi Lou,

A friend of mine recommended ORT.A to me a couple of weeks ago, problem is that there isn’t much info in English and no coverage. The share price is up over 400% already this year and 3,000% in the last year ! Should I continue to add to my position and take profits along the way ?

Thanks,

 Mario

Hi Mario,

Orbite V.S.P.A. ( ORT.A TSXV)  has had a brilliant run on the development of both its alumina clay deposit and its patented extraction technology. Alumina is the base from which aluminum is made and if the company’s patented technology can move from the  pilot plant stage  to commercial operations they could have a tiger by the tail. Currently Canadian aluminum producers import $2-3 billion in alumina every year. If ORT.A can displace the imports of alumina with a domestic supply from their Quebec deposits which could also yield rare earth metals and semiconductor materials then the stock has more upside.

But lets not forget that the operative word in the last sentence is “  If ” and a its big one at that. Taking a process to commercial stage is not without risk. Often times the move up the volume scale to create an economically viable process is not possible. That’s not to say that it can’t be done but that there are still lots of questions that need to be answered.

The charts will give us a better idea of what has been and what may yet come.

The three year chart clearly illustrates the extreme liftoff that the stock has enjoyed since August of 2010 when they reported that they had been granted a patent allowance in Canada. The announcement coming just ten days after a $705,000 financing at $0.15 a share plus attached warrants indicates to guys in the know that management knows what it is doing.

The next round of financing that raised $12 million was priced at $0.45 a share plus attached warrants. The warrants were in the money at $0.75 so I would assume that most if not all have been exercised by this point.

The six month chart depicts the steady advance that ORT.A has enjoyed since November of 2010. What concerns me is that the MACD looks to be turning down indicating that for the moment at least that we can expect selling to come into the picture. It doesn’t mean that the stock is about to breakdown but simply that for the moment all the good news has been baked into this cake.

If you are thinking of getting on this ride it might be prudent to pick it up on a pullback. If you have been in it since last year it would be worth thinking about booking some profits and looking to buy back in after it settles down. Clearly the stock has had a good run but trees don’t grow to the sky. In addition the company’s website has all its information in English so you may want to go there to conduct your due diligence.

Happy Capitalism!

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